FERC Filings
COMMENTS OF THE ELECTRIC POWER SUPPLY ASSOCIATION re: STANDARDIZATION OF GENERATOR INTERCONNECTION AGREEMENTS AND PROCEDURES
EXECUTIVE SUMMARY
Standardization of Generator Interconnection Agreements and Procedures
Docket No. RM02-1-000
The Electric Power Supply Association (“EPSA”) strongly supports the Commission’s efforts to establish a standardized generator interconnection agreement (“IA”) and interconnection procedures (“IPs”), and EPSA urges swift Commission action on a Final Rule. The Notice of Proposed Rulemaking (“NOPR”) reflects, in large measure, the consensus of both Transmission Owners and Generators that participated in the Commission sponsored Advanced NOPR (“ANOPR”) proceeding, as expressed in the “Consensus IA” and “Consensus IPs.” Where consensus could not be reached, the NOPR reflects many of the pro-competitive alternatives proposed by EPSA and the Generators that participated in drafting the IA and IPs.
EPSA commends and thanks the Commission for moving forward in standardizing the interconnection process, which is so critical to the success of competitive markets. As is the case for any transmission service offered under Order No. 888, effective and efficient interconnection service is essential for new entry. As an element of transmission service, interconnection service must be provided without undue discrimination or preference; and the best way to ensure that it is, is to require that the procedures for obtaining the service, and for the service itself to be provided pursuant to standardized agreements and standardized procedures of the sort set forth in the NOPR. Only then will generators know with any certainty the “rules of the road”; and, more importantly, only then will generators not be subject to the myriad of idiosyncrasies, disparate interpretations and parochial positions that have for so long plagued the interconnection process. In these comments, EPSA addresses a number of issues with respect to which the Commission specifically sought comment or where additional changes or clarifications would further its interconnection goals.
• Regional Differences: The Commission should limit departures from the IA and IPs intended to reflect regional variations and not allow such differences to unravel the standardization that has been accomplished in this proceeding. While certain regional differences might properly be accommodated, the time for doing so should be during the compliance phase of this proceeding and not by means of a general allowance for regional differences in the standardized agreement and procedures. EPSA recommends that the Commission follow the approach adopted in Order No. 888 and require proponents of deviations from the IA and IPs to demonstrate that they are consistent with or superior to the IA and IPs. Further, the Commission should explicitly state that all Transmission Providers, including those that presently operate as Independent System Operators, must comply with the Final Rule.
• Transmission Credits: The Commission should remove discriminatory restrictions on the use of credits and clarify that the Commission’s crediting provisions recognize that advanced payments by Generators for network upgrades constitutes a financing arrangement akin to a loan agreement, and are intended to ensure that the crediting mechanism will not inadvertently lead to a taxable event.
• Interest on Amounts Advanced for Network Upgrades: The Commission should tie the interest rate paid to Generators for any advanced payment for network upgrades to the rate of return (“ROR”) that the Transmission Owner would have received, had it built the transmission facilities itself.
• Pricing: The Commission need not resolve in this proceeding what, if any, changes in the crediting mechanism might be necessary to reflect the implementation of standardized market design (“SMD”) and the formation of Regional Transmission Organizations (“RTOs”). The crediting mechanism works well today and should not be adjusted until such time as the Commission actually knows the specific market design and RTO in place that allegedly would require such adjustment.
• Security: The Commission should allow Generators to provide security on a rolling six month basis based on the exposure of the Transmission Provider or Transmission Owner at that time.
• Coordination with Third Party Systems: The Commission must ensure that Third Party Transmission Providers, particularly those which are not public utilities subject to the Commission’s jurisdiction under Sections 205 and 206 of the Federal Power Act, cooperate in completing interconnection studies and upgrades. Such cooperation can be achieved, for example, by strictly enforcing the reciprocity requirements of Order No. 888. In addition, Transmission Owners of third party systems should have the same tax indemnification rights and be subject to the same obligations to Generators as those set forth in Article 5.14 of the IA.
• Tax Provisions: EPSA believes that the Commission should have retained, in Article 5.14, the provisions dealing with “Subsequent Taxable Events” in Section 5.16.5 of the Consensus IA.
• Availability of Network Resource Interconnection Service (“NRIS”): It is essential that the Commission clearly establish that existing Generators, in addition to newly interconnecting Generators, may apply and be studied for NRIS, subject to payment for any additional facilities identified in the NRIS study.
• Third Parties Conducting Studies: The Commission should allow Generators maximum flexibility in employing third parties to conduct studies, subject to certain conditions designed to reassure Transmission Providers that the studies will be properly performed.
• Liquidated Damages: The Commission should retain the liquidated damage provisions in Sections 5.1 and 13.5 in order to give Transmission Providers some incentive to timely complete studies and construction activities.