The rule will reduce interconnection time and cost, help preserve reliability, increase energy supply and lower wholesale prices for the nation’s customers by increasing the number and variety of independent generators that can compete in the wholesale electricity markets, the commission said.
The rule requires public utilities that offer transmission services also to offer non-discriminatory, standardized interconnection service. It amends Order No. 888’s pro forma tariff to remedy remaining undue discrimination under the open access required by Order No. 888.
FERC Chairman Pat Wood III said, “Adequate infrastructure, balanced market rules and vigilant market oversight are critical to fully competitive energy markets. Interconnection is a critical factor for open access transmission service, and its standardization will encourage needed investment in new infrastructure. As the electric power industry continues the transition to a more competitive marketplace, the commission is intent on having clear rules of the road in place that will bring lower-cost, reliable energy supplies to the nation’s energy customers.”
The rule clarifies who pays for interconnection costs when the transmission provider is not independent. The generator pays for facilities on its side of the point of interconnection. The cost of upgrades to the transmission provider’s transmission system to accommodate the new generator is initially funded by the generator. The transmission provider then refunds the amounts paid by the generator during the five years following commercial operation of the generator.
The rule sets out standard large generator interconnection procedures that the transmission provider and an interconnection customer must follow throughout the interconnection process. Included in the procedures are a standard application form and procedures for studies that would be conducted to assess the proposed interconnection’s effect on the transmission system. The standard large generator interconnection agreements sets out the legal rights and obligations of the parties, including cost responsibility, milestones for the project’s completion and a process for resolving disputes.
The rule would apply to any new generator larger than 20 MW in capacity that wants to interconnect to a public utility’s transmission system. The rule does not require changes to individual interconnection agreements filed with the commission prior to the effective date of Wednesday’s rule.
The rule would apply to independent transmission providers, such as RTOs and ISOs as well as non-independent transmission providers. Independent transmission providers would be allowed more flexibility in proposing alternative interconnection policies for both pricing and non-pricing matters.