Cal-ISO changes to interconnection process approved by FERC

FERC on March 7 approved several changes to the California ISO’s (Cal-ISO) generator interconnection process, adopting the proposal filed by the grid operator in January without any substantive modifications.

The Cal-ISO is pleased that FERC approved the proposal, and it is grateful to its board and stakeholders, who since 2008 “have helped shape a set of interconnection rules that provide certainty in expectations and support an evolving, modern power generation and transmission delivery network,” a Cal-ISO spokesperson told TransmissionHub March 9.

The proposal was well supported by the Cal-ISO and should enable the grid operator to manage its generation interconnection queue more efficiently and foster generation development in the state, FERC said.

The decision approves all 10 amendments the Cal-ISO sought in order to improve the interconnection process, which represented the second and final set of tariff revisions resulting from the Cal-ISO’s 2015 interconnection enhancement initiative, FERC noted.

As TransmissionHub reported, FERC on Nov. 24, 2015, accepted a tariff revision to close a loophole in the generator interconnection process that allowed generators to significantly reduce their financial burden for cancelling projects in the Cal-ISO interconnection queue.

FERC’s order on the most recent proposal “completes our planned initiatives regarding interconnection tariff refinements, but the ISO will always consider pursuing any needed updates that it or stakeholders identify in the future,” the Cal-ISO spokesperson told TransmissionHub.

The tariff amendments approved in the March 7 order (Docket No. ER16-693) touch on numerous issues, including:

·         Notification by the Cal-ISO, rather than the interconnection customer, of third-party systems regarding proposed generator interconnection requests, and that any affected system would have 60 days to verify whether they are affected and want to be involved in the interconnection study process

·         Application of criteria to determine commercial viability for interconnection customers that want to extend their commercial operation dates beyond the limits set out in the tariff

·         An interconnection deposit will change from $50,000 plus $1,000/MW to a flat $150,000 for both small and large generation projects

·         Clarification on various financial security requirements

·         The timing for when the Cal-ISO will tender a generator interconnection agreement (GIA) for negotiation and execution will be tied to the longest lead time to construct any network upgrades rather than completion of initial studies

·         Interconnection customers undertaking self-build network upgrades will be required to post financial security until the date a GIA is executed

·         The GIA insurance provisions will be updated to be consistent with current industry standards

A few parties commented or sought changes to the Cal-ISO proposal, including the Imperial Irrigation District (Imperial), which challenged the limitation of 60 days for affected systems to notify the Cal-ISO that they want to participate in an interconnection proceeding and sought the ability to extend that time. Imperial asserted that it would be unfair to impose a 60-day limitation if an initial Cal-ISO study provided no indication that a network operator would be adversely affected by a generator interconnection but subsequent actions by the generator or the Cal-ISO indicate otherwise, FERC noted.

The commission found the 60-day window for affected systems to respond to the Cal-ISO notice reasonable and rejected Imperial’s protest. FERC agreed with the Cal-ISO that to permit late responses beyond 60 days from possible affected systems would result in uncertainty about which systems an interconnecting customer must work with to develop a project, undermining the main purpose of the proposal.

However, FERC encouraged the Cal-ISO “to continue to work with its stakeholders to identify opportunities to further improve and clarify the process for coordinating with affected systems” during the generator interconnection process.

Regarding the financial deposit change, FERC noted that the Cal-ISO indicated it is needed because current deposit levels have been insufficient to meet grid study costs, especially for small projects, thereby causing the grid operator and transmission owners to frequently bill interconnection customers for costs incurred beyond the deposit level. Besides the additional administrative burden that places on all parties, the Cal-ISO said many interconnection customers withdraw from the queue without paying such bills and dissolve their companies, forcing the transmission owners to absorb the study costs.

The Cal-ISO said it worked with stakeholders to settle on the flat deposit level of $150,000 to be sufficient to cover reasonably expected grid study costs without creating a barrier to entry for small generation projects, the order noted.

FERC accepted the tariff changes with an effective date of March 8.