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Proposed Rule

Standardizing Generator Interconnection Agreements and Procedures Advance Notice of Proposed Rulemaking

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Start Preamble October 25, 2001.


Federal Energy Regulatory Commission, DOE.


Advance notice of proposed rulemaking.


The Federal Energy Regulatory Commission (Commission) seeks comments on a standard generator interconnection agreement and procedures that would be applicable to all public utilities that own, operate or control transmission facilities under the Federal Power Act.


Written comments must be received by the Commission by December 21, 2001.


Office of the Secretary, Federal Energy Regulatory Commission, 888 First Street, NE., Washington, DC 20426.

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David Faerberg (Legal Information), Office of the General Counsel, Federal Energy Regulatory Commission, 888 First Street, NE., Washington, DC 20426, (202) 208-1275.

Patrick Rooney (Technical Information), Office of Market, Tariffs and Rates, Federal Energy Regulatory Commission, 888 First Street, NE., Washington, DC 20426, (202) 501-5546.

Roland Wentworth (Technical Information), Office of Market, Tariffs and Rates, Federal Energy Regulatory Commission, 888 First Street, NE., Washington, DC 20426, (202) 208-1288.

End Further Info End Preamble Start Supplemental Information


The Federal Energy Regulatory Commission (Commission) intends to adopt a standard generator interconnection agreement and procedures that would be applicable to all public utilities that own, operate or control transmission facilities under the Federal Power Act. As discussed more fully below, the Commission requests comments on these contractual provisions and procedures. After receiving and considering these comments, the Commission will issue a notice of proposed rulemaking (NOPR).

I. Background

In Order No. 888,[1] the Commission mandated that public utilities provide non-discriminatory or comparable open access transmission service. Order No. 888 also established standardized terms and conditions for public utility-provided transmission service, i.e., a pro forma transmission tariff.

However, Order No. 888 does not directly address generator interconnections, which are implicitly included as a part of transmission service. In Tennessee Power Company Start Printed Page 55141(Tennessee),[2] the Commission held that interconnection service is an element of transmission service, that customers have the right to request interconnection separately from the delivery component of transmission service, and that interconnection must be offered under the terms of the pro forma tariff. The Commission has also held that customers have the right to request the transmission provider to file an unexecuted interconnection agreement if a dispute cannot be quickly resolved.[3]

Although a number of parties have requested that the Commission initiate a generic proceeding or industry collaboration to address interconnection concerns, the Commission until now has declined to do so. In addressing these requests, the Commission encouraged utilities to revise their open access transmission tariffs (OATTs) to include procedures for requesting interconnections services and the criteria for evaluating those requests. The Commission has also stated that because a regional transmission organization (RTO) will administer its pro forma tariff, it was the Commission's hope that compliance with the RTO rulemaking in Order No. 2000 [4] would eliminate concerns about interconnection procedures.

Consistent with the Commission's encouragement, a number of transmission providers have filed interconnection procedures as part of their pro forma tariffs.[5] Some of these providers have filed pro forma interconnection agreements, while others have submitted only procedures explaining how interconnection requests will be processed.

While there have been a number of positive developments with respect to interconnection procedures, the Commission recognizes that there is still dissatisfaction and uncertainty with existing interconnection policy and procedures that may have resulted in less investment in infrastructure and less confidence in the competitiveness of the markets. In a number of contexts, the Commission has received comments from both generators and transmission providers concerning existing interconnection policy and procedures.

Generators assert, among other things, that (1) there is difficulty in securing interconnection without requesting delivery, (2) the treatment they receive is not comparable to the treatment received by the transmission provider's own generation, (3) system upgrade costs charged to generators are sometimes not related to the interconnection, (4) there are delays and uncertainty due to the lack of binding commitments and firm deadlines in transmission providers' pro forma tariffs, and (5) there is a lack of transparency of transmission information needed to make an independent assessment of the impact of an interconnection request.

On the other hand, transmission providers argue that they need (1) minimum commitments from generators seeking to interconnect prior to performing studies to weed out those who will likely never interconnect, resulting in a more manageable and realistic queue, (2) assurance that their control area will benefit from, or at least not be burdened by, adding generators, particularly when the new generator seeks to locate on one system but serve load on another, and (3) improved communication between the generators and the loads they serve.

II. Discussion

Generator interconnection is a critical aspect of open access transmission service. In order to fully realize the benefits of open access transmission service, interconnection procedures must be established that will encourage needed investment in infrastructure, remove incentives for transmission providers to favor their own generation, ease entry for competitors, and encourage efficient siting decisions. In the Commission's view, standard interconnection procedures are essential for providing the right incentives for both transmission providers and generators. Accordingly, the Commission intends to adopt a standard generator interconnection agreement and procedures that would be applicable to all public utilities that own, operate or control transmission facilities under the Federal Power Act.

The Commission is considering basing the standard interconnection agreement and procedures on the Standard Generator Interconnection Agreement and Generation Interconnection Procedure of the Electric Reliability Council of Texas (ERCOT),[6] as supplemented and modified by the various “best practices” that have been identified by the Commission in Attachment A to this order. (References in the ERCOT Agreement and Procedure to the Public Utility Commission of Texas should be generally understood for purposes of this ANOPR as references to FERC). These “best practices” are based, in part, on generator interconnection agreements and procedures that have been approved by the Commission in past cases. For purposes of commenting in this proceeding, assume that our current pricing policy as reflected in Attachment B is in effect. However, commenters should not interpret this as an indicator of our preference for a long-term pricing policy. Cost responsibility and pricing will be addressed in a subsequent rulemaking.

Commenters advocating a standard agreement and procedures other than the ERCOT model as supplemented and modified by the “best practices” in Attachment A should specify in detail how their proposals differ from the foregoing and are superior to or more appropriate than the proposal herein. Any approaches suggested by commenters must be in the public interest by promoting competition and economic efficiency .

The Commission strongly encourages interested persons to pursue consensus on these issues through procedures that will be initiated through a separate notice. As part of these procedures and separate from comments on this ANOPR, by December 14, 2001, participants will be required to file a single document reflecting as much consensus as possible on a standard generator interconnection agreement and procedures as well as pros and cons on issues where consensus was not reached. Any consensus reached among all interested persons will be the foundation for the subsequent NOPR, to the extent consistent with the Commission's statutory responsibility and the guidance above. Issues not resolved by consensus among all interested persons will be addressed in the subsequent NOPR consistent with this and the preceding paragraph.

III. Comment Procedures

The Commission invites interested persons to submit comments, data, views and other information concerning matters set out in this notice.

To facilitate the Commission's review of the comments, commenters are requested to provide an executive Start Printed Page 55142summary of their position on the issues raised in the Advance Notice of Proposed Rulemaking (ANOPR). Commenters are requested to identify each specific issue posed by the ANOPR that their discussion addresses and to use appropriate headings. Additional issues the commenters wish to raise should be identified separately. The commenters should double-space their comments.

Comments may be filed on paper or electronically via the Internet and must be received by the Commission by December 21, 2001. Those filing electronically do not need to make a paper filing. For paper filings, the original and 14 copies of such comments should be submitted to the Office of the Secretary, Federal Energy Regulatory Commission, 888 First Street, NE., Washington DC 20426 and should refer to Docket No. RM02-1-000.

Comments filed via the Internet must be prepared in WordPerfect, MS Word, Portable Document Format, or ASCII format. To file the document, access the Commission's website at and click on “e-Filing,” and then follow the instructions for each screen. First time users will have to establish a user name and password. The Commission will send an automatic acknowledgment to the sender's E-Mail address upon receipt of comments.

User assistance for electronic filing is available at 202-208-0258 or by E-Mail to Comments should not be submitted to the E-Mail address. All comments will be placed in the Commission's public files and will be available for inspection in the Commission's Public Reference Room at 888 First Street, NE., Washington DC 20426, during regular business hours. Additionally, all comments may be viewed, printed, or downloaded remotely via the Internet through FERC's Homepage using the RIMS link. User assistance for RIMS is available at 202-208-2222, or by E-mail to

IV. Document Availability

The Commission provides all interested persons an opportunity to view and/or print the contents of this document via the Internet through FERC's Home Page ( and in FERC's Public Reference Room during normal business hours (8:30 a.m. to 5:00 p.m. Eastern time) at 888 First Street, NE., Room 2A, Washington, DC 20426. This document will be published in the Federal Register without the ERCOT Standard Generator Interconnection Agreement and Generation Interconnection Procedure. Those documents can be viewed in the Public Reference Room or via the internet at​electric/​gen_​inter.htm.

From FERC's Home Page on the Internet, this information is available in both the Commission Issuance Posting System (CIPS) and the Records and Information Management System (RIMS).

—CIPS provides access to the texts of formal documents issued by the Commission since November 14, 1994.

—CIPS can be accessed using the CIPS link or the Energy Information Online icon. The full text of this document is available on CIPS in ASCII and WordPerfect 8.0 format for viewing, printing, and/or downloading.

—RIMS contains images of documents submitted to and issued by the Commission after November 16, 1981. Documents from November 1995 to the present can be viewed and printed from FERC's Home Page using the RIMS link or the Energy Information Online icon. Descriptions of documents back to November 16, 1981, are also available from RIMS-on-the-Web; requests for copies of these and other older documents should be submitted to the Public Reference Room.

User assistance is available for RIMS, CIPS, and the Website during normal business hours from our Help line at (202) 208-2222 (E-Mail to or the Public Reference at (202) 208-1371 (E-Mail to

During normal business hours, documents can also be viewed and/or printed in FERC's Public Reference Room, where RIMS, CIPS, and the FERC Website are available. User assistance is also available.

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By direction of the Commission.

David P. Boergers,


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Attachment A—Best Practices

The items discussed in this attachment are intended to be additions or modifications to the ERCOT Interconnection Procedures.

1. Comparable Treatment

Transmission Providers who are also load serving entities are currently permitted to reserve (set aside) transmission capacity for use by future network resources to meet projected load growth. Under the new interconnection procedures, other suppliers such as merchant plants will be allowed to be competing network resources for meeting load and load growth without having to be selected as a designated network resource at the time of interconnection.

2. Generators Must Be Offered Multiple Interconnection Products [7]

Energy Resource: If the Generator elects to become an energy resource, it will be permitted to connect to the Transmission Provider's system and deliver the generating facility's output using the existing capacity of the transmission system on an “as available” basis. The Transmission Provider must conduct the necessary studies and construct minimal network facilities needed to allow the Generator to interconnect its facility to the grid and deliver the output on an “as available” basis.

Capacity Resource: The Transmission Provider must conduct the necessary studies and construct the network facilities needed to integrate the Generators's facility in a manner comparable to that in which the Transmission Provider integrates its generating facilities to serve native load customers.

3. Exemptions

Small generators (20 MW and below), including those owned by Transmission Providers or their affiliates, will be exempt from paying for interconnection studies or network upgrades. Interconnection of generating facilities of this size will not materially affect the Transmission Provider's system. The Transmission Provider will have streamlined procedures in place for administering interconnection requests from small generators (e.g., only conducting a feasibility study at no charge to determine the minimal facilities necessary to accommodate the request).

4. Queuing

If requests are processed on an individual basis, the initial queue position for all interconnection requests will be based on the date that the Transmission Provider receives the request. If requests are processed jointly, the initial queue protocol may be modified. The interconnection procedures will set forth reasonable milestones and requirements which the Generator must meet to retain its position in the queue. In addition to the time line procedures listed in Section 7 of this attachment, if the Generator misses any stipulated milestones or requirements (i.e., milestones tied to obtaining necessary application and Start Printed Page 55143governmental approvals to show the project is on track) it will be given 10 working days to correct any deficiencies or lose its place in the queue (unless the Generator can reasonably demonstrate that extraordinary circumstances prevented it from meeting the deadlines). A Generator will also risk losing its queue position if material changes are made to the initial request (e.g., substantially revising the size or configuration of the facility).

5. Deposits

Generators will be responsible for the costs of all required studies. Generators will be required to submit a $2,000 non-refundable deposit at the time it submits the initial interconnection request; a $10,000 non-refundable deposit and demonstration that it has applied for necessary permits before any feasibility studies commence; a $50,000 deposit if the Transmission Provider is asked to proceed with a System Impact Study (with any amount over the actual study costs refundable); and a $100,000 if the Transmission Provider is asked to proceed with a Facilities Study (with any amount over the actual study costs refundable).

6. Generator Siting

Transmission Providers will post on their web site what, in their view, are the optimal and non-optimal sites on their system for locating prospective generating facilities. Transmission Providers need to identify areas where, for example, due to load growth, siting would require minimal network upgrades. Also, the Transmission Provider should identify areas where, for example, due to transmission constraints, significant network upgrades would be required, and the expected delay before such upgrades will be made.

7. Project Time Lines

The time lines associated with the construction of both Generator's and Transmission Provider's interconnection facilities must be the same. At the Transmission Provider's option, System Impact Studies may be conducted in response to individual requests or, alternatively, all requests received may be studied jointly every six months (e.g., June 30th and December 31st) during the year. If the latter approach is taken, the study completion date would become 90 days after the joint study commencement date.

Review Interconnection Request and Acknowledgment: Within 5 business days.

Perform Initial Feasibility Study: Within 30 business days of receipt of acknowledgment of request.

System Impact Study Agreement Tendered to Generator: Within 15 days of completed study.

Executed System Impact Study Agreement: Within 15 business days of receipt of System Impact Study Agreement.

Completed System Impact Study: Within 60 days of receipt of Executed Agreement.[8]

Facilities Study Agreement Tendered to Generator: Within 30 days of completed System Impact Study.

Executed Facilities Study Agreement Filed: Within 15 days of receipt of Facilities Study Agreement.

Perform Facilities Study: Within 60 days of receipt of Executed Agreement.

Execute or Request Filing of Unexecuted Interconnection Agreement: Within 30 days of receipt of Facilities Study.

Attachment B— Pricing

1. Interconnection Facilities: Direct Assignment

Interconnection Facilities are defined as all facilities needed to establish the direct electrical interconnection between the Generator's facility and the Transmission Provider's network. The Generator is obligated to pay for 100 percent of the cost of all the interconnection facilities.

2. Network Facilities

Network Facilities are defined as all facilities from the point where the generator connects to the grid, including facilities necessary to remedy short-circuit and stability problems. As discussed further below, the costs of these facilities will be borne initially by the Generator and will be credited back to the generator that funded them (including the time value of money) through payments for transmission service.

3. Credits To Follow Transmission Service

In general, the Generator will be required to pay up front for any network upgrades that would not be needed “but for” the interconnecting customer. Generators will then be entitled to a credit, to be applied through future transmission rates, for any such costs that they are required to bear. The transmission rates through which this credit will be applied will include rates for all transmission service utilized by the Generator after the date of the interconnection. Such service will include not only new point to point service taken by the Generator from the location of its new facility, but also any other transmission service taken by that Generator from the Transmission Provider. In addition, the credit will be applied to the rates for any transmission service, including both point to point and network service, used by loads to deliver the output of the new facility to their location.

4. Time Value for Network Upgrade Costs

Generators will be entitled to receive interest on the outstanding balance of network upgrade costs that they are required to bear. Interest will be calculated annually consistent with 18 CFR 35.19a(a)(2) of the Commission's Regulations.

End Supplemental Information


1.  Promoting Wholesale Competition Through Open Access Nondiscriminatory Transmission Services by Public Utilities; Recovery of Stranded Costs by Public Utilities and Transmitting Utilities, Order No. 888, FERC Stats. & Regs. ¶ 31,036 (1996), clarified, 76 FERC ¶ 61,009 and 76 FERC ¶ 61,347 (1996), on reh'g, Order No. 888-A, FERC Stats. & Regs. ¶ 31,048, clarified, 79 FERC ¶ 61,182 (1997), on reh'g, Order No. 888-C, 82 FERC ¶ 61,046 (1998), aff'd sub nom. Transmission Access Policy Study Group v. FERC, 225 F.3d 667 (D.C. Cir. 2000), cert. granted in part and denied in part, 69 U.S.L.W. 3574 (U.S. Feb. 26, 2001).

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2.  90 FERC ¶ 61,238 (2000), order on reh'g, 91 FERC 61,271 (2000).

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3.  See, e.g., American Electric Power Service Corporation, 91 FERC ¶ 61,308 (2000); Commonwealth Edison Company, et al., 92 FERC ¶ 61,018 (2000).

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4.  Regional Transmission Organizations, Order No. 2000, FERC Stats. & Regs. ¶ 31,089 (1999), order on reh'g, Order No. 2000-A, FERC Stats. & Regs. ¶ 31,092 (2000), petitions for review pending sub nom. Public Utility District No. 1 of Snohomish County, Washington v. FERC, Nos. 00-1174, et al.

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5.  See, e.g., American Electric Power Service Corp., 91 FERC ¶ 61,308 (2000); Southwest Power Pool, Inc., 92 FERC ¶ 61,109 (2000); Carolina Power & Light Company, 93 FERC ¶ 61,032 (2000); Virginia Electric and Power Co., 93 FERC 61,307 (2000); Consumers Energy Co., 93 FERC ¶ 61,339 (2000).

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6.  The ERCOT agreement and procedures are attached as Appendix A to this order.

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7.  The definitions are adapted from those used by PJM. See PJM Interconnection L.L.C., 87 FERC ¶ 61,299 (1999).

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8.  Applies only if Transmission Provider elects to conduct studies on an individual basis.

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[FR Doc. 01-27438 Filed 10-31-01; 8:45 am]