The Federal Energy Regulatory Commission’s (“FERC”) long-awaited Order 845 (Reform of Generator Interconnection Procedures and Agreements) was issued on April 19 after over two years of consideration of the issues. Order 845 is the first grid-wide major reform of FERC’s Generator Interconnection Procedures and Agreements since Order 2003 was issued 15 years ago.  Order 845 adopts reforms that are designed to address three goals: (1) improving certainty for interconnection customers, (2) promoting more informed interconnection decisions, and (3) enhancing the interconnection process.

Order 845 revises FERC’s pro forma Large Generator Interconnection Procedures (“LGIP”) and Large Generator Interconnection Agreement (“LGIA”) to recognize the changing landscape of technology and is intended to provide interconnection customers with new opportunities to interconnect their projects faster and more cost-effectively.  For example, transmission providers must now allow interconnection customers (at the interconnection customer’s option) to build the needed transmission owner interconnection facilities and stand-alone network upgrades in all cases. Previously, interconnection customers only had this option if the transmission owner could not meet the dates proposed by the interconnection customer.  Thus, an interconnection customer has newly granted flexibility in the construction of the transmission owner interconnection facilities and stand-alone network upgrades. If the transmission owner returns a high cost estimate, then the interconnection customer can manage the construction of the transmission owner interconnection facilities. On the other hand, if the transmission owner cost estimate is reasonable, the interconnection customer can choose to leave the construction responsibilities for the transmission owner interconnection facilities and stand-alone network upgrade with the transmission owner. Interconnection customers can now make these decisions based on both timing and cost considerations.

Additionally, transmission providers must design new rules to define types of advanced technologies that can be incorporated at different stages of the interconnection process without being material modifications.  These new rules could provide opportunities for interconnection customers to upgrade their technology to be able to provide different services or gain new revenue streams without having to go to the back of the interconnection queue.

Another key reform mandates that transmission providers allow surplus interconnection to be utilized, either by the same generation owner or through a transfer to another entity, on either a continuous or a scheduled, periodic basis.  Though the surplus is limited by the capacity provided in each LGIA and will only extend for the length of the original LGIA (subject to certain extensions for up to a year), this reform opens up the possibility for co-location of generation and storage—especially in places where queue positions could not previously be held by two companies.  The surplus transfer process is not required to be allocated pursuant to an open solicitation, and thus storage companies can make more targeted relationships with existing generators.  FERC also revised the definition of “Generating Facility” in the LGIA to explicitly include electric storage resources. Especially when paired with FERC’s recent storage rulemaking in Order 841, FERC is eliminating market barriers for storage resources seeking to enter into the wholesale power markets.

Order 845 also seeks to increase transparency during the interconnection process and to provide interconnection customers with the resources to make more informed interconnection decisions while attempting to avoid mandating requirements with significant administrative burdens.  These reforms include requiring transmission providers to make public the method used for determining contingent facilities (i.e., those unbuilt facilities upon which the interconnection customer’s costs, timing and study findings are dependent) and to list the specific study processes and assumptions used in forming network models for interconnection studies, as well as establishing reporting requirements for aggregate interconnection study performance.  But, FERC declined to require transmission providers to post information about curtailment and congestion (although some transmission providers already post such data, and FERC encouraged the continued availability of this information).  Order 845 also requires transmission providers to establish non-binding dispute resolution procedures for interconnection disputes that can be unilaterally invoked by any party.

Order 845 will have a wide-reaching impact as it applies to all transmission providers under FERC jurisdiction, as well as any transmission providers with reciprocal tariffs at FERC (i.e., the non-jurisdictional utilities).  In contrast, many of FERC’s other recent orders, such as the Order 841 storage rulemaking, have only applied to the organized markets.  In addition, there are still open interconnection issues, such as affected system coordination, that FERC may address in a later order. FERC also limited its reforms to large generator interconnections (facilities with capacity over 20 MW), and did not seek to change small generator interconnections (facilities with capacity at or under 20 MW).

The Order has yet to be issued in the Federal Register, but once it is, compliance filings will be due within 90 days. Transmission providers have the option to demonstrate that existing interconnection procedures or new proposed procedures are consistent with or superior to the changes mandated in Order 845. Thus, while Order 845 established a new interconnection baseline, certain utility-by-utility differences in interconnection procedures will continue.