Summary of FERC’s Proposed Rule on Small Generator Interconnection Agreements and Procedures

FERC RM13-2-000: Small Generator Interconnection Agreements and Procedures
Proposed Rule, Feb. 1, 2013

Read the full text of the proposed rule here.

OVERVIEW:

In response to a request from the Solar Energy Industries Association (SEIA), FERC has proposed to revise the pro forma Small Generator Interconnection Procedures (SGIP) and pro forma Small Generator Interconnection Agreement (SGIA), which establish a process for interconnection of facilities generating 20 MW or less. Both FERC’s current and revised small generator regulations apply only to interconnection with a public utility’s transmission facilities or jurisdictional distribution facilities. Therefore, FERC’s revised small generator interconnection rules are not expected to affect many MHK projects, which are small, located in remote areas, and are likely to interconnect with local distribution facilities subject to state rather than FERC jurisdiction. Nevertheless, the FERC rules are important because it is anticipated that they will serve as a model for states seeking to improve access to small generators.

Background:

FERC’s current interconnection procedures establish a streamlined process for interconnection of small generation projects, thus enabling them to bypass costly system impact studies. One of the technical screens used in the Fast Track and 10 kW Inverter processes to determine whether a small project will impact transmission is the 15 Percent Screen:

“For interconnection of a proposed Small Generating Facility to a radial distribution circuit, the aggregated generation, including the proposed Small Generating Facility, on the circuit shall not exceed 15 [percent] of the line section annual peak load as most recently measured at the substation.”[1]

The recent increase in solar and wind generation capacity (almost all of which comes from small generation facilities) has called the 15 Percent Screen into question. If penetration reaches 15 percent on a line section, subsequent facilities will fail the screen—thus presenting an additional obstacle to interconnection.

In February 2012, the Solar Energy Industries Association (SEIA) petitioned FERC for revisions to the pro forma SGIP and SGIA. SEIA claimed that the regulations in their current form “present unreasonable barriers to market entry”[2] and proposed three revisions:

  1. maintain the 15 Percent Screen but require utilities to offer a “well-defined supplemental review”[3] if a facility fails the 15 Percent Screen;
  2. remove the 2 MW threshold for the Fast Track Process, or, alternatively, change it to 10 MW; and
  3. provide (at applicant’s request and cost) independent third-party technical review of proposed upgrades to determine whether there are simpler, cheaper options.

Summary of FERC’s Proposed Rule:

For a $300 fee, an interconnection applicant may request a report from the utility (prior to applying for interconnection services) covering system conditions at the proposed interconnection point. The applicant must “clearly identify” the proposed interconnection point, and the utility has ten business days to provide the report.[4]

  • The utility need only provide existing information; it need not gather new information.
  • To the extent of the available information, the report must cover:
    • other facilities that serve the interconnection point (including capacity, voltage, etc.);
    • the transmission from the interconnection point to the substation that will serve it (including circuit distance, protective devices, voltage-regulating devices, etc.);
    • peak and minimum load data; and
    • any other known constraints.

Eligibility for the Fast Track Process now depends on the characteristics of individual systems and generators (with an maximum cap of 5 MW), as shown in the following table[5]:

Line Voltage Fast Track Eligibility Regardless of Location Fast Track Eligibility on ≥ 600 Ampere Line and ≤ 2.5 Miles from Substation
< 5 kV ≤ 1 MW ≤ 2 MW
≥ 5 kV and < 15 kV ≤ 2 MW ≤ 3 MW
≥ 15 kV and < 30 kV ≤ 3 MW ≤ 4 MW
≥ 30 kV ≤ 4 MW ≤ 5 MW

FERC clarifies and modifies the Fast Track Process’s customer options meeting as follows:

  • If the applicant agrees to pay for minor modifications to the utility’s system, the utility must provide an interconnection agreement within five business days.
  • Supplemental review is conducted at the applicant’s discretion, for a $2,500 fee.
  • Supplemental review includes three additional screens. If a proposed interconnection fails any of the three, the Study Process will be used. The screens are:
    • 100% of minimum load screen (using daytime minimum for solar generators, and absolute minimum load for all others);
    • power quality and voltage screen; and
    • safety and reliability screen.
  • These new screens are designed as a “middle ground”: maintaining the 15 Percent Screen (at the outset of the Fast Track Process) while providing an alternative in case a proposed interconnection fails the Screen. This allows small generation facilities to exceed 15 percent of peak load on a case-by-case basis as long as there are no safety or reliability problems.

The applicant may review and comment on system upgrades required by the utility, but the utility makes the final decision.

How the Proposed Rule May Affect MHK:

As described, most of today’s proposed or existing MHK facilities are small demonstration or pilot projects, remotely located and as such are not likely to qualify for FERC’s interconnection procedures.  However, the potential for a higher threshold would be helpful in the future as MHK continues to expand. Still, those projects facing interconnection challenges at the state level may use the FERC process to negotiate a better alternative with the utility or as a model for modifying state rules.

Moreover, the MHK industry will eventually advance, at which point the new FERC rules could prove useful in several ways. Any small-generation energy producer could benefit from the ability to request a report from an interconnection provider prior to officially submitting an interconnection application. In the case of MHK and other offshore facilities, this “frontloading” of information is especially beneficial; due to the unique geography of these projects, connecting to the grid can present significant engineering challenges, and MHK developers may have few options when considering potential interconnection points. By making information available earlier in the process, the proposed rule would therefore encourage MHK development. Additionally, changing the threshold for the Fast Track Process would benefit small-generation developers overall.

While the proposed changes to supplemental review are better than the status quo, they may not be the best way to solve the problem. Because most renewable energy comes from small generation facilities, the 15 Percent Screen operates as a penalty for developing in an area that has strong renewable portfolio standards and/or distributed generation standards. The proposed rule creates a “workaround” by allowing facilities to exceed the 15 Percent Screen on a case-by-case basis, but this two-step process is inefficient and may be unnecessary because the 15 percent figure is rather arbitrary. (FERC describes it as “derived by using a ‘rule of thumb.’”[6])

Comments:

Due June 3, 2013

Workshop for stakeholders to discuss proposals: to be held before end of comment period (date will be announced by April 2, 2013)

OREC intends to file comments on the proposed FERC rules. To this end, we seek input from members, particularly developers who have already gone through the interconnection process.  Do you believe that the FERC rule will be helpful to MHK developers as a model for states? Are there other elements that the proposed rule should include to expedite the interconnection process? Finally, for our foreign members, what procedures are in place for interconnection in your respective countries, and might they be helpful to inform the process here in the United States.

Please submit comments to Carolyn Elefant, carolyn@oceanrenewable.com, or our new associate counsel Len Rubin, len@oceanrenewable.com, who will be drafting OREC’s comments.

Read the full text of the proposed rule here.


[1] Small Generator Interconnection Agreements and Procedures, 78 Fed. Reg. 7524, 7526 (proposed Feb. 1, 2013) (quoting pro forma SGIP § 2.2.1.2).

[2] Id.

[3] Id.

[4] Id. at 7528.

[5] Id. at 7528–29.

[6] Id. at 7526 n. 17.

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