---------------------------------------------------------------------------

    381. ITC and Six Cities support the NOPR proposal that the costs of
all additional studies should be borne by the interconnection
customer.\676\
---------------------------------------------------------------------------

    \676\ ITC 2017 Comments at 18, Six Cities 2017 Comments at 5.
---------------------------------------------------------------------------

    382. SoCal Edison takes a middle view, stating that the necessary
studies would depend on the specifics of each interconnecting
project.\677\ It states that, based on its experience, the cost to
study a generating facility at less than its full capacity is either
the same as or higher than a regular process.\678\ SoCal Edison
suggests that dual technologies (e.g., solar coupled with energy
storage) will require more study time than normal,\679\ and would
actually have higher study costs, despite the fact that the output is
limited, as two or three different scenarios would need to be evaluated
for stability and post-transient voltage performance.\680\
---------------------------------------------------------------------------

    \677\ SoCal Edison 2017 Comments at 7.
    \678\ Id.
    \679\ Id.
    \680\ Id.
---------------------------------------------------------------------------

ii. Commission Determination
    383. We adopt the NOPR proposal that the transmission provider will
study requests for interconnection service at the level of
interconnection service requested by the interconnection customer for
purposes of interconnection facilities, network upgrades, and
associated costs, but may, at the transmission provider's discretion as
clarified below, also perform other studies at the full generating
facility capacity to ensure safety and reliability of the transmission
system, with the study costs borne by the interconnection customer.
    384. We clarify that, if the transmission provider determines,
based on good utility practice and related engineering considerations
and after accounting for the proposed control technology, that studies
at the full generating facility capacity are necessary to ensure safety
and reliability of the transmission system when an interconnection
customer requests interconnection service that is lower than full
generating facility capacity, then it must provide a detailed
explanation for such a determination in writing to the interconnection
customer. For example, some interconnection customers may have proposed
generating facilities that may raise short-circuit/fault-duty concerns
that require certain studies to be performed at full generating
facility capacity, even if the generating facilities will normally be
limited to operation below full generating facility capacity. If the
transmission provider determines in accordance with good utility
practice and related engineering considerations after accounting for
the proposed control technology that additional network upgrades are
needed based on these studies, the transmission provider must: (1)
Specify which additional network upgrade costs are based on which
studies; and (2) provide a detailed explanation why the additional
network upgrades are needed.
    385. In response to Duke's comment that transmission providers
should always perform system impact studies and facilities studies at
full generating facility capacity for reliability reasons, we reiterate
that, if the transmission provider either accepts the interconnection
customer's proposed control technology or designs its own control
technology as part of the system protection facilities for the
interconnection, then the transmission provider should, subject to the
limited exception discussed above, perform the necessary studies to
ensure safety and reliability of the transmission system and evaluate
system performance to interconnect the generating facility at the
requested generating facility capacity level. In addition, to improve
transparency, we clarify that the transmission provider must inform the
interconnection customer, after the feasibility study phase regarding
which studies (e.g., steady-state, short circuit/fault duty, and
dynamic stability analysis) will be performed at which generating
facility capacity level.
    386. We further clarify that, if disputes related to the
transmission provider's use of discretion while processing
interconnection requests for interconnection service that is lower than
full generating facility capacity cannot be resolved, the parties may
seek dispute resolution through any process that may be available in
the relevant LGIP, LGIA or through DRS, and/or may bring the dispute to
the Commission under a FPA section 206 complaint or, if appropriate, as
part of the transmission provider's filing of an unexecuted LGIA.
d. Limits on Energy Injection/Monitoring/Control
i. Comments
    387. Many commenters focus on ways to ensure that generating
facilities do not exceed the energy injection limits in the
interconnection agreement. Almost all agree that appropriate control
technology is necessary to prevent interconnection customers from
exceeding the approved interconnection service limit.\681\ Most agree
that such tools are available, though there is wide variation in
suggested implementation. For example, Portland agrees that sufficient
mechanical and electronic tools exist that can restrain an
interconnection customer from operating above its allowed service
level, and also that transmission providers should establish such
arrangements.\682\
---------------------------------------------------------------------------

    \681\ AFPA 2017 Comments at 14; ESA 2017 Comments at 12; AWEA
2017 Comment at 54; California Energy Storage Alliance 2017 Comments
at 5-6; PJM 2017 Comments at 24; Duke 2017 Comments at 18-19; EEI
2017 Comments 2017 at 54; TDU Systems 2017 Comments at 27-28.
    \682\ Portland 2017 Comments at 7.
---------------------------------------------------------------------------

    388. AWEA notes that programmable meters and other technologies
that allow plant operators to self-curtail are widely available,\683\
and ESA and NextEra state that wind and solar projects already use
software control systems and inverters to modulate their output, and
that equipment failure is rare.\684\
---------------------------------------------------------------------------

    \683\ AWEA 2017 Comments at 54.
    \684\ ESA 2017 Comments at 12, NextEra 2017 Comments at 39.
---------------------------------------------------------------------------

    389. CAISO states that exceeding studied interconnection capacity
can result in serious safety and reliability risks to the grid and the
generator itself.\685\ It argues that it is more critical to have
tested and well-maintained protection schemes that enforce these limits
and operate circuit breakers to disconnect the generator from the
transmission system than an interconnection customer's contractual
commitment to do so.\686\ CAISO supports strict enforcement of
interconnection capacity limits, including opening breakers as
enforcement and, if needed, terminating LGIAs.\687\ NYISO also states
that it and the connecting transmission owner should be able to take
action as necessary to maintain reliability--e.g., the ability to
curtail the resource.\688\ Non-Profit Utility Trade Associations note
that control equipment ensuring appropriate power flows is a critical
reliability feature.\689\
---------------------------------------------------------------------------

    \685\ CAISO 2017 Comments at 27.
    \686\ Id.
    \687\ Id.
    \688\ NYISO 2017 Comments at 36-37.
    \689\ Non-Profit Utility Trade Associations 2017 Comments at 22.
---------------------------------------------------------------------------

    390. PJM explains that it currently requires that interconnection
customers install appropriate power flow monitoring and control
technologies at their generating facilities to limit the facilities'
allowable injection on to the transmission system.\690\ ISO-NE argues

that any control equipment proposed to restrict the generating
facility's output to the requested interconnection service levels must
be identified in the project description at the beginning of the study
process.\691\
---------------------------------------------------------------------------

    \690\ PJM 2017 Comments at 24-25.
    \691\ ISO-NE 2017 Comments at 41-42.
---------------------------------------------------------------------------

    391. SoCal Edison states that, to mitigate the risk of exceeding an
interconnection service limit, the interconnection customer should have
to install a control system that meters total output at the high side
of the main transformer banks.\692\
---------------------------------------------------------------------------

    \692\ SoCal Edison 2017 Comments at 6.
---------------------------------------------------------------------------

    392. The Non-Profit Utility Trade Associations also argue that
interconnection customers should bear the costs of control technologies
and protection system costs because such equipment is not useful to
other customers.\693\ MISO TOs, Duke and TDU Systems state that the
interconnection customer should be obliged to install or pay for the
necessary control technologies.\694\
---------------------------------------------------------------------------

    \693\ Non-Profit Utility Trade Associations 2017 Comments at 4,
21-22.
    \694\ MISO TOs 2017 Comments at 36; Duke 2017 Comments at 18-19;
TDU Systems 2017 Comments at 27-28.
---------------------------------------------------------------------------

    393. NextEra further explains that an over-delivery would only
result from a failure of the generation control system or inverter
controls, akin to a computer malfunction, which NextEra notes is
theoretically possible, but very rare.\695\ NextEra also argues that,
if a malfunction were to occur, protective relay controls could be
installed that manually trip breakers when output levels exceed
specified levels at the point of interconnection, establishing a
secondary and redundant control mechanism.\696\
---------------------------------------------------------------------------

    \695\ NextEra 2017 Comments at 40.
    \696\ Id. n.26.
---------------------------------------------------------------------------

    394. In contrast, while MidAmerican agrees that the generating
facility output must not exceed the level of interconnection service,
it does not support a universal requirement for special hardware or
software systems.\697\ MidAmerican sees no clear reason why resources
having interconnection service at levels below their full output should
be singled out for special hardware or software requirements. Further,
it argues that the Commission's proposal for ``provisional'' service
appears functionally equivalent to operating a generating facility for
a period of time below its rated generating facility capacity, yet the
proposal for provisional service makes no mention of special hardware
or software schemes.\698\
---------------------------------------------------------------------------

    \697\ MidAmerican 2017 Comments at 18.
    \698\ Id.
---------------------------------------------------------------------------

    395. Xcel also advises the Commission to not regulate specific
technical processes used to limit dispatch as technology may evolve and
each region's processes are unique. Xcel notes that it uses a manual
process for its net-zero facility in MISO, and believes its process is
sufficient.\699\ Similarly, for inverter-based resources, California
Energy Storage Alliance asks the Commission not to impose a requirement
for burdensome and expensive protection equipment that may duplicate
similar utility equipment.\700\
---------------------------------------------------------------------------

    \699\ Xcel 2017 Comments at 17.
    \700\ California Energy Storage Alliance 2017 Comments at 5-6.
---------------------------------------------------------------------------

ii. Commission Determination
    396. As discussed above, we find that the revisions and
clarifications in this rulemaking coupled with existing provisions of
the pro forma LGIA adequately address the Commission's proposal to
require that any interconnection customer that seeks interconnection
service below its generating facility capacity install appropriate
monitoring and control technologies at its generating facility. We
agree with ISO-NE's argument that any control technologies proposed by
the interconnection customer to restrict the generating facility's
output to the requested interconnection service levels must be
identified in the project description at the beginning of the study
process. We clarify that we see no reason to preclude a customer from
relying on the transmission provider to identify protection and control
technologies in the first instance. Indeed, as discussed earlier, the
existing system protection facilities provisions in the pro forma LGIA
already allow the transmission provider to identify and require the
installation of appropriate system protection facilities.\701\
---------------------------------------------------------------------------

    \701\ As discussed earlier, any protection and control
technologies necessary to restrict the generating facility's output
to the requested interconnection service levels would be components
of the system protection facilities associated with that generating
facility's interconnection.
---------------------------------------------------------------------------

    397. With respect to SoCal Edison's argument that the
interconnection customer's control technologies should have to meter
total output at the high side of the main transformer banks, we see no
need for this requirement because the pro forma LGIP and pro forma LGIA
require transmission providers to make such engineering judgments
consistent with good utility practice.
    398. With respect to the Non-Profit Utility Trade Associations'
argument that control technologies and protection system costs should
be treated as directly assigned costs, as discussed earlier, we find
that these control and protection technologies are system protection
facilities as defined in existing pro forma LGIA article <IP_ADDRESS>, which
already directly assigns these costs to the interconnection customer.
    399. MidAmerican and NextEra argue that facilities without special
control systems are no more likely to over-deliver than generators that
have not requested interconnection service below their facility
capacity. As an example, MidAmerican points out the case of a generator
operating under provisional interconnection service, which has the
ability to over-generate if it does not adhere to its interconnection
service request level. NextEra makes a similar observation with respect
to thermal generation generally.\702\ We appreciate these points, and
note further that many generators of various types interconnected under
ERIS may have the technical capability to generate beyond the level to
which they are limited by the terms of their LGIAs providing for ERIS.
However, we note that article <IP_ADDRESS> of the pro forma LGIA already
generally allows a transmission provider to require appropriate control
technologies for limiting injection from interconnection customers. The
revisions to sections 3.1 and 8.2 of the pro forma LGIP that we adopt
here with regard to control technologies serve to make such provisions
explicit in the pro forma LGIP in the case where interconnection
service is requested below generating facility capacity, in recognition
of the fact that, in such instances, the generating facility may be
coordinating output from multiple generating facilities, and may
therefore have unique control characteristics and challenges.
---------------------------------------------------------------------------

    \702\ NextEra 2017 Comments at 45.
---------------------------------------------------------------------------

    400. With regard to the type of control strategy/design that
NextEra proposed, we expect a transmission provider to find such a
control system, or a control system of equal dependability, acceptable
for the purposes of evaluating interconnection requests for
interconnection service that is lower than full generating facility
capacity. There may be circumstances in which a transmission provider
could reasonably find that additional back-ups or other functions are
necessary for a control system to be acceptable. We stress that the
transmission provider should identify such circumstances based on
relevant technical details, reliability requirements, and good utility
practice,

and that it should make such determinations in a manner that is not
unduly discriminatory or preferential.
e. Process for Changing an Interconnection Request
i. Comments
    401. As discussed further below, in the pro forma LGIP,
interconnection customers are allowed to reduce the level of their
generating facility capacity at two points: prior to the system impact
study and prior to the facilities study. Commenters suggest that the
Commission should consider provisions to allow customers to also
request reduced interconnection service at varying points through the
interconnection process, though they do not necessarily agree on the
details. For example, AWEA and EEI argue that, if an interconnection
customer wishes to change service levels at a later time, the
interconnection customer should be required to submit an additional
interconnection request for the new level of service unless the new
level of service was previously studied.\703\
---------------------------------------------------------------------------

    \703\ AWEA 2017 Comments at 54-55; EEI 2017 Comments at 54.
---------------------------------------------------------------------------

    402. Similarly, Idaho Power, Portland, and Southern assert that, if
the customer has a future request to operate at a higher MW level, a
new system impact study should be required.\704\ Southern further
states that an interconnection customer's request to modify the
interconnection service amount to less than the generating facility
capacity should constitute a material modification to its
interconnection request.\705\ In a related vein, NEPOOL states that
some of its participants want flexibility for the interconnection
customer. They request that the customer be able to base necessary
upgrades on either a smaller generating facility that has been approved
as non-material or based on an agreement to limit the generating
facility output below the originally requested service. They argue that
the customer should be able to do this once studies have started or
after studies are completed and the transmission provider has provided
estimates regarding upgrade costs, all without losing queue
position.\706\ NEPOOL contends that some developers might consider
particularly high upgrade costs unacceptable, which could result in
more queue withdrawals if interconnection customers cannot reduce their
requested generating facility capacity without losing their queue
position.\707\ NEPOOL states that, in some cases even a small reduction
in the requested amount of interconnection service can significantly
reduce interconnection upgrade costs and make projects viable.\708\
NEPOOL requests that the final action clarify when interconnection
customers can reduce their requested level of interconnection service
and provide guidance on the appropriateness of affording any
flexibility to reduce capacity for purposes of determining upgrades
after interconnection studies have started or are complete.\709\
---------------------------------------------------------------------------

    \704\ Idaho Power 2017 Comments at 5; Portland 2017 Comments at
6; Southern 2017 Comments at 25.
    \705\ Id. at 25-26.
    \706\ NEPOOL 2017 Comments at 15.
    \707\ Id.
    \708\ Id. at 15-16.
    \709\ Id. at 16.
---------------------------------------------------------------------------

    403. Similarly, Idaho Power argues that the NOPR fails to address a
situation where a customer agrees to accept a lower level of service to
shift network upgrade costs to other interconnection customers behind
in the queue that may be vying for limited capacity (i.e., by delaying
operation to the higher capacity until network upgrades have been
funded by these projects).\710\ ITC goes further, arguing that, where a
generator has already executed an LGIA, a request for reduced
generating facility capacity could undermine the study assumptions for
lower-queued projects, and therefore, the Commission should permit
transmission providers to deny requests for reduced service where
granting such a request would cause cascading adverse impacts.\711\
---------------------------------------------------------------------------

    \710\ Idaho Power 2017 Comments at 5.
    \711\ ITC 2017 Comments at 18-19.
---------------------------------------------------------------------------

    404. Non-Profit Utility Trade Associations argue that the
Commission should allow for cost-sharing of upgraded systems funded by
subsequent interconnecting customers if the generation-limited entity
chooses to take advantage of that additional investment by subsequently
increasing output.\712\ They state that there could be instances where
a generation-limited entity may wish to increase its output as a result
of subsequent interconnection customers that fund network upgrades that
increase system capabilities. They indicate that, in such instances,
the upgrade users, including the generation-limited entity, should
share the costs to guard against gaming by entities that would attempt
to ``foist upgrade costs upon subsequent interconnecting entities.''
\713\
---------------------------------------------------------------------------

    \712\ Non-Profit Utility Trade Associations 2017 Comments at 4,
21-22.
    \713\ Id. at 23.
---------------------------------------------------------------------------

ii. Commission Determination
    405. The Commission agrees with those commenters that suggest that
interconnection customers should be able to request reduced
interconnection service after submitting an interconnection request.
However, we do not believe this flexibility can be without limit, or it
could adversely impact the interconnection process. As will be
explained further below, interconnection customers already have the
right to reduce the generating facility capacity at certain points in
the interconnection process, even though such reductions may impact
interconnection requests later in the queue. The provisions that allow
an interconnection customer to reduce its requested generating facility
capacity do not currently allow an interconnection customer to reduce
its requested level of interconnection service at the same points.
Therefore, in this final action, we are revising the pro forma LGIP to
allow an interconnection customer to either request interconnection
service below generating facility capacity at the outset or reduce its
level of requested interconnection service at the same two points in
the interconnection process, as set forth below. An interconnection
customer may choose to do so if doing so is, in its business judgment,
advantageous and if it is willing to abide by the limitations of
interconnection service below generating facility capacity.
Accordingly, as described further below, the Commission revises pro
forma LGIP sections 4.4.1 and 4.4.2 to permit interconnection customers
to reduce their requested level of interconnection service at the same
points in the interconnection process as they are currently able to
reduce their generating facility capacity. Specifically, this final
action requires that interconnection customers can submit a request for
interconnection service below generating facility capacity as its
initial interconnection request, or may submit a request to reduce
interconnection service below generating facility capacity at two
points after the interconnection process has begun: (1) As a revision
of its interconnection request prior to when the interconnection
customer returns an executed system impact study agreement to the
transmission provider; and (2) as a revision of its interconnection
request prior to when the interconnection customer returns an executed
facility study agreement to the transmission provider. These decision
points are based on existing sections 4.4.1 and 4.4.2 of the pro forma
LGIP.

    406. Section 4.4.1 of the pro forma LGIP allows interconnection
customers to decrease the electrical output of the proposed project by
up to 60 percent before the interconnection customer returns an
executed system impact study agreement to the transmission
provider.\714\ Additionally, section 4.4.2 of the pro forma LGIP allows
customers to decrease the plant size by an additional 15 percent prior
to the return of an executed facility study agreement.\715\ As
originally written, these sections allow interconnection customers to
reduce the generating facility capacity from that proposed in the
original interconnection request (i.e., interconnection customers may
request to build a smaller plant). In other words, as originally
written, these sections do not allow for reductions in interconnection
service (i.e., for interconnection customers to lower interconnection
service levels without altering the size of the generating facility).
However, with the appropriate transmission provider-approved control
technologies in place, we see no reason why interconnection customers
should not also have the option of reducing the level of
interconnection service at these two stages of the interconnection
process. Therefore, we revise pro forma LGIP sections 4.4.1 and 4.4.2
as follows (with new text in italics):
---------------------------------------------------------------------------

    \714\ Pro forma LGIP Section 4.4.1. Prior to the return of the
executed Interconnection System Impact Study Agreement to the
Transmission Provider, modifications permitted under this Section
shall include specifically: (a) a reduction up to 60 percent (MW) of
electrical output of the proposed project; (b) modifying the
technical parameters associated with the Large Generating Facility
technology or the Large Generating Facility step-up transformer
impedance characteristics; and (c) modifying the interconnection
configuration. For plant increases, the incremental increase in
plant output will go to the end of the queue for the purposes of
cost allocation and study analysis.
    \715\ Pro forma LGIP Section 4.4.2. Prior to the return of the
executed Interconnection Facility Study Agreement to the
Transmission Provider, the modifications permitted under this
Section shall include specifically: (a) additional 15 percent
decrease in plant size (MW), and (b) Large Generating Facility
technical parameters associated with modifications to Large
Generating Facility technology and transformer impedances; provided,
however, the incremental costs associated with those modifications
are the responsibility of the requesting Interconnection Customer.

    4.4.1. Prior to the return of the executed Interconnection
System Impact Study Agreement to the Transmission Provider,
modifications permitted under this Section shall include
specifically: (a) a reduction up to 60 percent (MW) of electrical
output of the proposed project, through either (1) a decrease in
plant size or (2) a decrease in interconnection service level
(consistent with the process described in Section 3.1) accomplished
by applying transmission provider-approved injection-limiting
equipment; (b) modifying the technical parameters associated with
the Large Generating Facility technology or the Large Generating
Facility step-up transformer impedance characteristics; and (c)
modifying the interconnection configuration. For plant increases,
the incremental increase in plant output will go to the end of the
queue for the purposes of cost allocation and study analysis.
    4.4.2. Prior to the return of the executed Interconnection
Facility Study Agreement to the Transmission Provider, the
modifications permitted under this Section shall include
specifically: (a) additional 15 percent decrease of electrical
output of the proposed project through either (1) a decrease in
plant size (MW) or (2) a decrease in interconnection service level
(consistent with the process described in Section 3.1) accomplished
by applying transmission provider-approved injection-limiting
equipment, and (b) Large Generating Facility technical parameters
associated with modifications to Large Generating Facility
technology and transformer impedances; provided, however, the
incremental costs associated with those modifications are the
responsibility of the requesting Interconnection Customer.

    407. We disagree with Southern's contention that an interconnection
customer's request to modify the interconnection service amount to less
than the generating facility capacity should always constitute a
material modification of its interconnection request. A request to
reduce the interconnection service amount is similar in many respects
to a request to reduce generating facility capacity. Because the pro
forma LGIP already permits reductions in generating facility capacity
at certain points in the interconnection process without triggering
material modification provisions, the Commission finds that requests to
reduce the interconnection service amount at those same points within
the interconnection process should also not trigger material
modification provisions. We also note that the phrase ``additional 15
percent'' is meant to allow a total of up to a 75 percent reduction (60
percent plus 15 percent) from the original interconnection request.
    408. ITC argues that transmission providers should be able to deny
requests to reduce interconnection service where such a request would
adversely affect lower-queued interconnection requests. Similarly,
Idaho Power and Non-Profit Utility Trade Associations argue that the
Commission has either failed to address the situation where a request
to reduce interconnection service would adversely affect lower-queued
interconnection requests or that appropriate cost-sharing provisions
should apply if a below-generating facility capacity interconnection
customer later requests an increase in interconnection service to take
advantage of upgraded systems funded by subsequent interconnection
requests. We find that no additional LGIP or LGIA revisions are
necessary to address these scenarios because reductions in
interconnection service level are similar in their queue-related
impacts to reductions in generating facility capacity, which the
existing pro forma LGIP already permits.
    409. Furthermore, lower-queued interconnection requests have always
faced potential impacts from the decisions of higher-queued
interconnection requests. For example, lower-queued interconnection
requests are frequently impacted by the withdrawal of higher-queued
interconnection requests. The impact on lower-queued interconnection
requests from a withdrawal higher in the queue is similar to what would
happen when a higher-queued interconnection customer requests a
reduction in interconnection service level. In both cases, the higher-
queued interconnection request could avoid paying for some level of
network upgrades (if such upgrades are required), and lower-queued
interconnection requests could be impacted as a result. Furthermore, if
an interconnection customer limited in output to below generating
facility capacity later seeks an increase in interconnection service,
this will be a new interconnection request with a new position at the
end of the interconnection queue, very similar to the situation where a
higher-queued interconnection request withdraws and later re-enters the
queue. While we recognize that these two scenarios are not identical in
all respects, we nevertheless believe that they are similar enough that
the normal queue management and interconnection processes, including
being subject to the full slate of interconnection studies and being
potentially responsible for the cost of new network upgrades, can
adequately address the issues raised by commenters.
f. Penalties
i. Comments
    410. Commenters disagree regarding penalties for over-generation.
Some argue that no additional penalties are necessary. NextEra, NYISO,
ESA, and MidAmerican argue that existing provisions in the pro forma
LGIA are

sufficient.\716\ NextEra explains that in CAISO, their combined solar/
battery storage project relies solely on the remedies provided for in
the existing LGIA. According to NextEra, one other LGIA for a project
in CAISO includes additional language about the ability to curtail, but
it does not provide for penalties. NextEra notes that MISO has also
taken a similar approach. NextEra states that PJM has added significant
language to its interconnection agreements below full generating
capacity but notes that this language repeats the pro forma
indemnification responsibilities. NextEra and ESA also argue that any
other financial penalties would be punitive and inconsistent with
existing and reasonable practices in CAISO, MISO and PJM.\717\
---------------------------------------------------------------------------

    \716\ NextEra 2017 Comments at 43; NYISO 2017 Comments at 36-37;
ESA 2017 Comments at 13; MidAmerican 2017 Comments at 18.
    \717\ NextEra 2017 Comments at 43; ESA 2017 Comments at 13.
---------------------------------------------------------------------------

    411. NextEra also notes that thermal generation may be able to
produce higher levels of output under certain conditions and does not
have any additional requirements, nor are there special requirements
for the operation of System Protection Facilities.\718\ NextEra argues
that, if the Commission creates any additional penalties, it would need
to do so equally to all generation under all circumstances to avoid
undue discrimination.\719\
---------------------------------------------------------------------------

    \718\ NextEra 2017 Comments at 45.
    \719\ Id.
---------------------------------------------------------------------------

    412. Xcel states that, although penalties may sometimes be
appropriate, if the system can reliably accept the energy, over-
generation may sometimes be beneficial or may not be a significant
reliability or free rider issue.\720\
---------------------------------------------------------------------------

    \720\ Xcel 2017 Comments at 17-18.
---------------------------------------------------------------------------

    413. Some commenters see the value of additional penalties. For
instance, Bonneville, ITC, TDU Systems, Six Cities, SoCal Edison, Xcel,
Portland, and Duke support both financial and non-financial penalties,
including curtailment, if an interconnection customer exceeds its
service limit to maintain reliability.\721\ MISO TOs support imposition
of penalties for exceeding authorized levels of service but defer to
RTOs/ISOs to develop the specifics of such penalties.\722\
---------------------------------------------------------------------------

    \721\ Bonneville 2017 Comments at 7; ITC 2017 Comments at 18;
Duke 2017 Comments at 18; TDU Systems 2017 Comments at 27-28; Six
Cities 2017 Comments at 5; SoCal Edison 2017 Comments at 6; Xcel
2017 Comment at 17; Portland 2017 Comments at 6.
    \722\ MISO TOs 2017 Comments at 36.
---------------------------------------------------------------------------

    414. Six Cities observes that a requirement to pay incremental
network upgrade costs may be most appropriate in circumstances where an
interconnection customer has consistently exceeded its specified level
of interconnection service over some period of time, while a monetary
penalty may be most appropriate to address isolated exceedances. Six
Cities argues that RTOs/ISOs are in the best position to develop
appropriate penalty proposals for application in their respective
regions.\723\
---------------------------------------------------------------------------

    \723\ Six Cities 2017 Comments at 5.
---------------------------------------------------------------------------

    415. SoCal Edison requests that the Commission clarify that
penalties apply to interconnection customers whose agreed-upon
interconnection service level is for the full generating facility
capacity, not just those whose agreed-upon interconnection service
levels are below the full generating facility capacity.\724\ SoCal
Edison suggests that penalties should range from temporary disruption
of service to permanent termination of service.\725\
---------------------------------------------------------------------------

    \724\ SoCal Edison 2017 Comments at 6.
    \725\ Id. at 6.
---------------------------------------------------------------------------

ii. Commission Determination
    416. With respect to penalties, based on the record here, we find
that current provisions in the pro forma LGIA, which allow a
transmission provider to curtail service or terminate an LGIA, are
sufficient to ensure proper behavior by interconnection customers. As
noted by NextEra, thermal generation may be able to produce higher
levels of output than the interconnection service level under certain
conditions, such as lower than benchmark ambient air temperature, and
does not face any additional penalty requirements beyond curtailment of
service or termination of its LGIA for breach if a party defaults and
fails to cure that default.\726\ The Commission agrees that this is an
analogous situation to interconnection below generating facility
capacity, and therefore the same treatment with respect to penalties
should apply. Furthermore, as NextEra also notes, there are no special
penalty requirements beyond these for the operation of system
protection facilities. As discussed earlier, this final action finds
that the control technologies at issue are system protection
facilities. Based on these facts, we decline to generically adopt into
the pro forma LGIP any additional financial penalties for exceeding the
limitations for interconnection service established in the
interconnection agreements. However, if a transmission provider can
justify a need for additional penalties, it may propose such penalties
in a section 205 filing.
---------------------------------------------------------------------------

    \726\ NextEra 2017 Comments at 45.
---------------------------------------------------------------------------

    417. As mentioned above, article 17 of the pro forma LGIA provides
a process for termination of an LGIA if a party defaults \727\ on its
obligations and fails to cure such defaults. Given the potential
reliability and operational ramifications, failure to adhere to the
injection limits included in a below-generating facility capacity LGIA
could rise to the level of default, and termination of the LGIA would
be a serious consequence for an interconnection customer, as the
resulting disconnection and idling of the generating facility could
cause significant economic losses. Furthermore, existing article 9.7.2
of the LGIA allows the transmission provider to reduce deliveries from
(i.e., curtail) an interconnection customer if required by good utility
practice. Because of these existing provisions, and the fact that no
other consequences currently apply in the analogous situations
described above, we see no need to devise new penalties at this time.
---------------------------------------------------------------------------

    \727\ The pro forma LGIA defines default as ``the failure of a
Breaching Party to cure its Breach in accordance with Article 17.''
Pro forma LGIA Art. 1 (Definitions). A breach is ``the failure of a
Party to perform or observe any material condition'' of the pro
forma LGIA. Id.
---------------------------------------------------------------------------

g. Changes to the Definitions of Large and Small Generating Facilities
i. Comments
    418. TDU Systems conditionally support the Commission's proposal to
change the definitions of Large Generating Facility and Small
Generating Facility in the pro forma LGIP and pro forma LGIA to base
them on the level of interconnection service actually provided, rather
than on the generating facility's capacity, subject to the transmission
provider being able to study the full generating facility capacity if
it believes there is a need to do so at the cost of the interconnection
customer.\728\ However, TDU Systems urge the Commission to ensure that
the interconnection customer (or potential interconnection customer)
knows what upgrade costs it may incur if seeks to use the generating
facility's full capacity.\729\
---------------------------------------------------------------------------

    \728\ TDU Systems 2017 Comments at 27.
    \729\ Id.
---------------------------------------------------------------------------

    419. Similarly, IECA argues that industrial combined heat and power
and waste heat recovery facilities with net generating capacities in
excess of 20 MW can export far less total electricity to the grid than
a wind or solar facility with similar or less generating facility
capacity.\730\ IECA indicates that a generator's size classification
should be based on the maximum amount of power that could be exported
to the grid

under normal manufacturing operations at the combined heat and power
and waste heat recovery facility location, rather than being based on
net generation.\731\
---------------------------------------------------------------------------

    \730\ IECA 2017 Comments at 3.
    \731\ Id. at 3-4.
---------------------------------------------------------------------------

    420. On the other hand, Portland opposes the proposal to redefine
the term generating facility based on the level of interconnection
service. Instead, Portland argues that generating facility definitions
should be based on nameplate capacity.\732\ TVA thinks that the
Commission should define generating facility capacity more
specifically, particularly with regard to certain parameters such as
what power factor is measured and whether it is gross or net of station
service load.\733\ It also notes that many transmission owners and
providers have MW thresholds that trigger more robust interconnection
facility requirements, and states that interconnection for less than
the full generator output should not be allowed to circumvent these
thresholds.\734\
---------------------------------------------------------------------------

    \732\ Portland 2017 Comments at 7.
    \733\ TVA 2017 Comments at 15.
    \734\ Id. at 15-16.
---------------------------------------------------------------------------

    421. Six Cities states it is not sure what the Commission means by
the statement that these definition changes ``are not intended to
conflict with any applicable [NERC] Reliability Standards or NERC's
compliance registration process.'' \735\ Six Cities seeks clarity as to
whether the current NERC compliance registration criteria for
generating facilities will continue to be based on nameplate ratings
irrespective of the requested level of interconnection service, or if
the Commission intends for the registration criteria to be revised
based upon the level of interconnection service that is requested and
implemented.\736\
---------------------------------------------------------------------------

    \735\ Six City 2017 Comments at 7 (citing NOPR, FERC Stats. &
Regs. ] 32,719 at P 180).
    \736\ Id.
---------------------------------------------------------------------------

ii. Commission Determination
    422. Upon consideration of the comments, we withdraw the NOPR
proposal to change the definitions of large and small generating
facilities so that they are based on the level of interconnection
service for the generating facility rather than the generating facility
capacity.\737\ Our particular concern is the possibility of unintended
and unforeseen consequences with respect to the interconnection study
process and NERC compliance registration process.
---------------------------------------------------------------------------

    \737\ As a result of the withdrawal of this proposal, the
determination of whether a generator is large or small, including
for purposes of whether it qualifies for the LGIP or SGIP, will
continue to be based on the generating facility capacity.
---------------------------------------------------------------------------

    423. As we have withdrawn this proposal, there is no need to
address comments on the proposal or to address IECA's argument that a
transmission provider should base a combined heat and power and waste
heat recovery facility's size classification on the maximum amount of
power that could be exported to the grid under normal manufacturing
operations.
2. Provisional Interconnection Service
a. NOPR Proposal
    424. The Commission proposed to allow interconnection customers to
enter into provisional agreements for limited interconnection service
prior to the completion of the full interconnection process. Under this
proposal, interconnection customers with provisional agreements would
be able to begin operation up to the MW level permitted by a previously
conducted, readily available interconnection study (available study),
additional studies as necessary, and regularly updated studies. In the
NOPR, the Commission noted that the transmission provider may require
milestone payments prior to submission of the provisional agreement.
The provisional agreement would be in effect while awaiting the final
results of the interconnection studies, the execution of a LGIA, and
the construction of any additional interconnection facilities and/or
network upgrades that may result from the full interconnection process.
The Commission also proposed that provisional large generator
interconnection agreements and the associated provisional
interconnection service would terminate upon completion of construction
of network upgrades required for the interconnection customer's full
level of service.\738\
---------------------------------------------------------------------------

    \738\ NOPR, FERC Stats. & Regs. ] 32,719 at P 186.
---------------------------------------------------------------------------

    425. The Commission proposed that interconnection customers with
provisional agreements must still assume all risk and liabilities
associated with the required interconnection facilities and network
upgrades for their interconnection that are identified pursuant to the
full set of interconnection studies for the requested interconnection
service.\739\
---------------------------------------------------------------------------

    \739\ Id. P 187.
---------------------------------------------------------------------------

    426. The Commission therefore proposed to require that transmission
providers allow interconnection customers to request provisional
interconnection service and operate under provisional interconnection
agreements based on available or additional studies as necessary and
regularly updated studies that demonstrate that necessary
interconnection facilities and network upgrades are in place to meet
applicable NERC or other regional reliability requirements for new,
modified, and/or expanded generating facilities. If available studies
do not demonstrate whether the transmission provider can reliably
accommodate provisional interconnection service, the transmission
provider would perform additional studies as necessary. An evaluation
of provisional service by the transmission provider would determine
whether stability, short circuit, and/or voltage issues would arise if
the interconnection customer seeking provisional interconnection
service interconnects without modifications to the generating facility
or the transmission provider's system. The Commission also proposed
that transmission providers must assess any safety or reliability
concerns posed by provisional agreements, and establish a process for
the interconnection customer to mitigate any reliability risks
associated with operation pursuant to provisional agreements.\740\
---------------------------------------------------------------------------

    \740\ Id. P 188.
---------------------------------------------------------------------------

    427. The Commission sought additional comment on the proposal and
the means by which transmission providers and interconnection customers
could mitigate any risks and/or liabilities for provisional
interconnection service. The Commission, acknowledging that
transmission providers have limited resources to conduct studies, also
sought comment on the circumstances under which provisional
interconnection service would be beneficial and how common such
circumstances would be for potential interconnection customers.\741\
---------------------------------------------------------------------------

    \741\ Id.
---------------------------------------------------------------------------

    428. The Commission proposed to add the following new definitions
to Section 1 of the pro forma LGIP, and to article 1 of the pro forma
LGIA (with proposed additions in italics):

    Provisional Interconnection Service shall mean interconnection
service provided by the Transmission Provider associated with
interconnecting the Interconnection Customer's Generating Facility
to the Transmission Provider's Transmission System and enabling that
Transmission System to receive electric energy and capacity from the
Generating Facility at the Point of Interconnection, pursuant to the
terms of the Provisional Large Generator

Interconnection Agreement and, if applicable, the Tariff.\742\
---------------------------------------------------------------------------

    \742\ In this final action, the adopted language differs
slightly from the NOPR language because we remove the word ``the''
before ``Transmission Provider.''
---------------------------------------------------------------------------

    Provisional Large Generator Interconnection Agreement shall mean
the interconnection agreement for Provisional Interconnection
Service established between the Transmission Provider and/or the
Transmission Owner and the Interconnection Customer. This agreement
shall take the form of the Large Generator Interconnection
Agreement, modified for provisional purposes.\743\
---------------------------------------------------------------------------

    \743\ Id. P 189. In this final action, the adopted language
differs slightly from the NOPR language because we remove the word
``the'' before ``Transmission Provider.''

    429. Additionally, the Commission proposed a new article 5.10 for
the pro forma LGIA that defines the requirements for transmission
providers to provide provisional interconnection service and the
responsibilities of the interconnection customer. The Commission did
not propose a pro forma Provisional Large Generator Interconnection
Agreement, reasoning that parties could develop such agreements on an
ad hoc basis or transmission providers could establish their own pro
forma agreements. Nonetheless, the Commission sought comment on the
need to establish a pro forma Provisional Large Generator
Interconnection Agreement as well as any details related to
interconnection service. The proposed new article 5.10 to the pro forma
---------------------------------------------------------------------------
LGIA reads as follows (with proposed text in italics):

    5.10 Provisional Interconnection Service.
    Upon the request of Interconnection Customer, and prior to
completion of requisite Network Upgrades, the Transmission Provider
may execute a Provisional Large Generator Interconnection Agreement
or Interconnection Customer may request the filing of an unexecuted
Provisional Large Generator Interconnection Agreement with the
Interconnection Customer for limited interconnection service at the
discretion of Transmission Provider based upon an evaluation that
will consider the results of available studies. Transmission
Provider shall determine, through available studies or additional
studies as necessary, whether stability, short circuit, thermal,
and/or voltage issues would arise if Interconnection Customer
interconnects without modifications to the Generating Facility or
Transmission Provider's system. Transmission Provider shall
determine whether any Network Upgrades, Interconnection Facilities,
Distribution Upgrades, or System Protection Facilities that are
necessary to meet the requirements of NERC, or any applicable
Regional Entity for the interconnection of a new, modified and/or
expanded Generating Facility are in place prior to the commencement
of interconnection service from the Generating Facility. Where
available studies indicate that such Network Upgrades,
Interconnection Facilities, Distribution Upgrades, and/or System
Protection Facilities that are required for the interconnection of a
new, modified and/or expanded Generating Facility are not currently
in place, Transmission Provider will perform a study, at the
Interconnection Customer's expense, to confirm the facilities that
are required for provisional interconnection service. The maximum
permissible output of the Generating Facility in the Provisional
Large Generator Interconnection Agreement shall be studied and
updated on a quarterly basis. Interconnection Customer assumes all
risk and liabilities with respect to changes between the Provisional
Large Generator Interconnection Agreement and the Large Generator
Interconnection Agreement, including changes in output limits and
Network Upgrades, Interconnection Facilities, Distribution Upgrades,
and/or System Protection Facilities cost responsibilities.\744\
---------------------------------------------------------------------------

    \744\ Id. P 190.
---------------------------------------------------------------------------

b. General
i. Comments
    430. Most responsive commenters either support the proposal \745\
or do not oppose it.\746\ ISO-NE, Tri-State, and TVA oppose the
proposal.\747\ NEPOOL takes no position, but states that it would
oppose the proposal if it raises system reliability concerns,
introduces interconnection study delays, or degrades ISO-NE's
interconnection/forward capacity market processes.\748\
---------------------------------------------------------------------------

    \745\ AES 2017 Comments at 11; Alevo 2017 Comments at 9; AFPA
2017 Comments at 15; AWEA 2017 Comments at 56; Bonneville 2017
Comments at 8; California Energy Storage Alliance 2017 Comments at
13; Duke 2017 Comments at 20; Forecasting Coalition 2017 Comments at
4; EDP 2017 Comments at 8; ELCON 2017 Comments at 7; ESA 2017
Comments at 15; Idaho Power 2017 Comments at 6; IECA 2017 Comments
at 3; ITC 2017 Comments at 19; Joint Renewable Parties 2017 Comments
at 12; MidAmerican 2017 Comments at 18-19; NextEra 2017 Comments at
46; Public Interest Organizations 2017 Comments at 6; TDU Systems
2017 Comments at 28-29; Xcel 2017 Comments at 18.
    \746\ Non-Profit Utility Trade Associations 2017 Comments at 24;
NYISO 2017 Comments at 37; PJM 2017 Comments at 25.
    \747\ ISO-NE 2017 Comments at 43-44; Tri-State 2017 Comments at
9; TVA 2017 Comments at 16.
    \748\ NEPOOL 2017 Comments at 16-17.
---------------------------------------------------------------------------

    431. Alevo, ITC, MISO TOs, NextEra, and Six Cities agree that the
interconnection customers should assume all associated risks and
liabilities with regard to provisional interconnection service.\749\
Alevo asks for clarification on whether a provisional interconnection
can become permanent at the provisional MW level.\750\
---------------------------------------------------------------------------

    \749\ Alevo 2017 Comments at 9; ITC 2017 Comments at 19; MISO
TOs 2017 Comments at 37-38; NextEra 2017 Comments at 46; PJM 2017
Comments at 25-26; and Six Cities 2017 Comments at 6.
    \750\ Alevo 2017 Comments at 9.
---------------------------------------------------------------------------

    432. As noted in the NOPR, certain regions already include some
form of provisional interconnection service.\751\ Bonneville states
that it already allows limited facility operation using existing
interconnection capacity prior to the completion of upgrades needed for
the full interconnection request.\752\ MISO states that its GIP
includes a process for obtaining a provisional GIA that is subject to
study and the maximum permissible output of the facility is updated on
a quarterly basis. MISO notes that the provisional GIA is replaced by a
``permanent'' GIA upon the completion of the interconnection customer's
assigned network upgrades.\753\ NYISO states that it already provides
provisional interconnection service under the limited operation
provision of NYISO's LGIA.\754\ However, Indicated NYTOs state that the
Commission must ensure that any final action to accommodate provisional
interconnection service does not diminish the superior interconnection
standards in regions like NYISO.\755\
---------------------------------------------------------------------------

    \751\ NOPR, FERC Stats. & Regs. ] 32,719 at P 183.
    \752\ Bonneville 2017 Comments at 8.
    \753\ MISO 2017 Comments at 34-35.
    \754\ NYISO 2017 Comments at 37.
    \755\ Indicated NYTOs 2017 Comments at 9.
---------------------------------------------------------------------------

    433. CAISO provides different avenues for ``provisional''
interconnection service.\756\ However, CAISO requests clarification
regarding the NOPR statement that ``in some cases, there is a certain
amount of interconnection capacity that has already been studied.''
\757\ It argues that the only interconnection capacity that it has
studied is already in use or planned to be in use soon. CAISO supports
the proposal to the extent that the NOPR is consistent with this
understanding.\758\ PG&E states that interconnection customers are able
to obtain limited interconnection service prior to the completion of
the full interconnection process in some circumstances, and CAISO
conducts a limited operation study six months ahead of a project's in-
service date and allows phased projects and energy-only projects to
interconnect before certain upgrades or studies are completed.\759\
---------------------------------------------------------------------------

    \756\ CAISO 2017 Comments at 28.
    \757\ Id. (citing NOPR, FERC Stats. & Regs. ] 32,719 at P 181).
    \758\ Id.
    \759\ PG&E 2017 Comments at 8.
---------------------------------------------------------------------------

    434. SoCal Edison supports the existing CAISO process but argues
that the NOPR proposal may unintentionally

degrade safety and reliability.\760\ SoCal Edison states that, while
interconnection capacity may be temporarily available due to
construction delay, there is no assurance that short-circuit duty
levels will be within allowable limits or that overall system
performance would meet all NERC reliability criteria.\761\
---------------------------------------------------------------------------

    \760\ SoCal Edison 2017 Comments at 8.
    \761\ Id.
---------------------------------------------------------------------------

    435. Eversource states that transmission providers should have
discretion to determine whether there is capacity available to
accommodate provisional interconnection service.\762\ It also states
that any provisional process should be tailored, adapted to, and
consistent with each region's existing interconnection and market
rules.\763\
---------------------------------------------------------------------------

    \762\ Eversource 2017 Comments at 16.
    \763\ Id.
---------------------------------------------------------------------------

    436. EEI states that an interconnection customer should only be
able to use provisional interconnection service when: (1) Studies
indicate that there is a level of interconnection that can occur
without any additional upgrades and the interconnection customer wishes
to make use of that level of interconnection while the upgrades
required for its full interconnection request are completed; and (2)
where a previously completed study indicates there is a level of
interconnection that can occur without any additional upgrades while
such study is updated.\764\ Southern agrees that all provisional
service should be limited to the amount of service that can be provided
until all required network upgrades identified by interconnection
studies are in service.\765\
---------------------------------------------------------------------------

    \764\ EEI 2017 Comments at 57.
    \765\ Southern 2017 Comments at 26.
---------------------------------------------------------------------------

    437. ISO-NE opposes the establishment of provisional
interconnection service, arguing that it would unnecessarily increase
uncertainty and create difficult obligations for system operators.\766\
ISO-NE further argues that the proposal would allow an interconnection
customer requesting provisional interconnection service to jump ahead
of a higher-queued interconnection request and would require the
transmission provider to conduct studies for the provisional
interconnection request before completing a higher-queued project's
studies.\767\ It states that, if the proposal is adopted, the
Commission should provide regional flexibility for ISO-NE to deviate
from the final action.\768\
---------------------------------------------------------------------------

    \766\ ISO-NE 2017 Comments at 43-44.
    \767\ Id. at 45-46.
    \768\ Id. at 47.
---------------------------------------------------------------------------

ii. Commission Determination
    438. In this final action, we adopt the NOPR proposal to define
Provisional Interconnection Service and Provisional Large Generator
Interconnection Agreement in section 1 of the pro forma LGIP and
article 1 of the pro forma LGIA; and add article 5.9.2 \769\ to the pro
forma LGIA, as modified below. We require transmission providers to
make the changes to their LGIPs and LGIAs so that all interconnection
customers may request provisional interconnection service, but we
modify the proposed pro forma LGIA provisions to allow transmission
providers to determine the frequency for updating provisional
interconnection studies, and to clarify the cost responsibilities of
the interconnection customer.
---------------------------------------------------------------------------

    \769\ To avoid extensive renumbering of the article 5 of the pro
forma LGIA, the Commission is re-titling article 5.9 ``Other
Interconnection Options.'' Existing article 5.9 Limited Operation
will now be article ``5.9.1 Limited Operation,'' and the newly
adopted Provisional Interconnection Service provision will be
article 5.9.2 instead of 5.10.
---------------------------------------------------------------------------

    439. In response to Alevo's question regarding whether provisional
interconnection service could become permanent, we clarify that
provisional interconnection service could not become permanent because
it is only available to interconnection customers awaiting the
completion of the full interconnection process and will terminate upon
completion of construction of interconnection facilities and network
upgrades.
    440. In response to CAISO, we clarify that ``a certain amount of
capacity already studied'' \770\ refers to situations where, for
example, available studies or additional studies as necessary indicate
that there is a certain amount of interconnection service available
without the need for additional network upgrades and the transmission
provider can reliably accommodate the interconnection service. In such
cases, an interconnection customer may use the identified
interconnection service while it awaits the completion of the full
interconnection process.
---------------------------------------------------------------------------

    \770\ NOPR, FERC Stats. & Regs. ] 32,719 at P 181.
---------------------------------------------------------------------------

    441. In response to requests for clarification of the conditions
for requesting provisional interconnection service, we clarify that
interconnection customers may seek provisional interconnection service
when available studies or additional studies as necessary indicate that
there is a level of interconnection that can occur without any
additional interconnection facilities and/or network upgrades and the
interconnection customer wishes to make use of that level of
interconnection service while the facilities required for its full
interconnection request are completed.
    442. In response to ISO-NE's objection that the provisional
interconnection service proposal could cause lower-queued projects to
``leapfrog'' higher-queued interconnection customers, we acknowledge
that there may be instances when a lower-queued project may
interconnect and receive provisional interconnection service before a
higher-queued project completes the full interconnection process. It is
possible that the resources needed to complete the transmission
provider's interconnection studies may be required to perform
provisional studies for a lower-queued interconnection customer. But, a
higher-queued interconnection customer should have the opportunity to
request provisional service prior to a lower-queued interconnection
customer. The availability of this service would not unduly
disadvantage higher-queued interconnection customers, which would have
the first chance to use any available provisional service, but may have
been unable or uninterested in doing so. In addition, the availability
of provisional service should not advantage lower-queued
interconnection customers in the processing of their full
interconnection service request. We emphasize that provisional
interconnection service may not provide an interconnection customer its
full requested level of interconnection service. We further note that
any interconnection customer, regardless of queue position, may request
provisional interconnection service.
c. Pro Forma Provisional Interconnection Agreement
i. Comments
    443. Duke, Xcel, and Southern see no need for the Commission to
develop a pro forma provisional interconnection service agreement at
this time.\771\ MISO agrees because its GIP includes a process for
obtaining a provisional GIA and because MISO already conducts quarterly
provisional interconnection service studies.\772\ NYISO states that a
separate provisional interconnection agreement would unnecessarily
complicate and prolong the interconnection agreement negotiations.\773\
PJM opposes the creation of a separate provisional interconnection
agreement because

PJM's current interconnection agreement already provides for the
service.\774\
---------------------------------------------------------------------------

    \771\ Duke 2017 Comments at 21; Xcel 2017 Comment at 18;
Southern 2017 Comments at 26.
    \772\ MISO 2017 Comments at 34-35.
    \773\ NYISO 2017 Comments at 38.
    \774\ PJM 2017 Comments at 26.
---------------------------------------------------------------------------

ii. Commission Determination
    444. In this final action, we agree with commenters and decline to
adopt a separate pro forma Provisional Large Generator Interconnection
Agreement.
d. Additional Studies
i. Comments
    445. EEI argues that a transmission provider should not have to
perform additional studies to offer provisional interconnection service
and should not have to perform periodic studies to update the level of
maximum permissible provisional interconnection service.\775\ Southern
agrees and also argues that transmission providers should have
discretion over granting provisional interconnection service based on
standard interconnection studies or any other applicable and valid
studies.\776\
---------------------------------------------------------------------------

    \775\ EEI 2017 Comments at 58.
    \776\ Southern 2017 Comments at 26.
---------------------------------------------------------------------------

    446. Duke and NYISO oppose the requirement to conduct quarterly
restudies.\777\ Instead, NYISO proposes to define a timeframe for which
provisional service will be provided, and study the proposed project to
determine the permissible output level of the project over the entire
defined provisional timeframe. NYISO further proposes to retain the
discretion to update its analysis as necessary based on system
changes.\778\
---------------------------------------------------------------------------

    \777\ Duke 2017 Comments at 21; NYISO 2017 Comments at 38.
    \778\ Id.
---------------------------------------------------------------------------

    447. Eversource argues that additional studies could turn the
interconnection process into a protracted iterative design process
while the interconnection customer determines its cheapest option for
network upgrades.\779\ Six Cities also has concerns that additional
studies may prolong the interconnection process.\780\ Tri-State and TVA
argue that the proposal burdens transmission providers because it
requires regularly-updated or additional studies,\781\ or imposes
distracting monitoring and/or mitigation burdens.\782\
---------------------------------------------------------------------------

    \779\ Eversource 2017 Comments at 17.
    \780\ Six Cities 2017 Comments at 6.
    \781\ Tri-State 2017 Comments at 9.
    \782\ TVA 2017 Comments at 16.
---------------------------------------------------------------------------

ii. Commission Determination
    448. In this final action, we modify the NOPR proposal and article
5.9.2 of the pro forma LGIA, Provisional Interconnection Service, to
allow transmission providers to determine the frequency for updating
provisional interconnection studies. This flexibility will allow
transmission providers to determine a study frequency that best suits
their individual needs. However, the determined frequency should be
consistent across all interconnection customers seeking provisional
interconnection service. In addition, we modify the NOPR proposal, and
add article 5.9.2 of the pro forma LGIA, to clarify that any study
performed by the transmission provider to update the available maximum
provisional interconnection service will be at the expense of the
interconnection customer. To effectuate this change, we renumber
existing article 5.9 as follows (deleting bracketed text and adding the
italicized text):

    5.9 [Limited Operation] Other Interconnection Options
    5.9.1 Limited Operation
* * * * *

    449. We also revise article 5.9.2 of the LGIA from the version
proposed in the NOPR as follows (deleting bracketed, un-italicized text
and adding the italicized text):

    5.9.[1]2[0] Provisional Interconnection Service.
    Upon the request of Interconnection Customer, and prior to
completion of requisite Interconnection Facilities, Network
Upgrades, Distribution Upgrades, or System Protection Facilities
[the ]Transmission Provider may execute a Provisional Large
Generator Interconnection Agreement or Interconnection Customer may
request the filing of an unexecuted Provisional Large Generator
Interconnection Agreement with the Interconnection Customer for
limited interconnection service at the discretion of Transmission
Provider based upon an evaluation that will consider the results of
available studies. Transmission Provider shall determine, through
available studies or additional studies as necessary, whether
stability, short circuit, thermal, and/or voltage issues would arise
if Interconnection Customer interconnects without modifications to
the Generating Facility or Transmission Provider's system.
Transmission Provider shall determine whether any [Network
Upgrades,] Interconnection Facilities, Network Upgrades,
Distribution Upgrades, or System Protection Facilities that are
necessary to meet the requirements of NERC, or any applicable
Regional Entity for the interconnection of a new, modified and/or
expanded Generating Facility are in place prior to the commencement
of interconnection service from the Generating Facility. Where
available studies indicate that such [Network Upgrades,]
Interconnection Facilities, Network Upgrades, Distribution Upgrades,
and/or System Protection Facilities that are required for the
interconnection of a new, modified and/or expanded Generating
Facility are not currently in place, Transmission Provider will
perform a study, at the Interconnection Customer's expense, to
confirm the facilities that are required for Provisional
Interconnection Service. The maximum permissible output of the
Generating Facility in the Provisional Large Generator
Interconnection Agreement shall be studied and updated [on a
frequency determined by Transmission Provider and at the
Interconnection Customer's expense.] [on a quarterly basis].
Interconnection Customer assumes all risk and liabilities with
respect to changes between the Provisional Large Generator
Interconnection Agreement and the Large Generator Interconnection
Agreement, including changes in output limits and [Network
Upgrades,] Interconnection Facilities, Network Upgrades,
Distribution Upgrades, and/or System Protection Facilities cost
responsibilities.\783\
---------------------------------------------------------------------------

    \783\ NOPR, FERC Stats. & Regs. ] 32,719 at P 190.

    450. In response to Tri-State's and TVA's concern about the
additional burden associated with providing provisional interconnection
service, and Eversource's and Six Cities' concern that provisional
interconnection service will prolong the interconnection process, we
acknowledge that providing provisional interconnection service may
require additional studies, which could prolong the interconnection
process for some interconnection customers. However, because
provisional interconnection service is partly based on the results of
available studies, and the studies to confirm that provisional service
continues to be available are less intensive than full interconnection
studies, interconnection customers in the queue that do not select
provisional interconnection service should not experience additional
significant delay. In the regions where provisional interconnection
service is currently available, the Commission is unaware of any delays
to the interconnection process due to transmission provider processing
of provisional studies. Furthermore, as stated above, we recognize the
individual needs of the transmission providers, and the modification
from the NOPR proposal to allow transmission providers the flexibility
to determine the frequency to study and update the maximum permissible
output of the generating facility should further minimize delays and
lessen any burden.
e. Other
i. Comments
    451. Imperial and Modesto ask the Commission to clarify how the
provisional service would be subject to section 3.5 of the pro forma
LGIP, which provides for coordination of any study required to
determine the

interconnection request's impact on affected systems, and how the
transmission provider would conduct the studies for provisional
interconnection service in conjunction with affected systems.\784\
---------------------------------------------------------------------------

    \784\ Imperial 2017 Comments at 13; Modesto 2017 Comments at 18.
---------------------------------------------------------------------------

ii. Commission Determination
    452. In response to concerns about negative effects to other
systems or system reliability, we emphasize that available studies or
additional studies as necessary performed by transmission providers at
the interconnection customer's expense, should identify any associated
negative effects on system reliability. We also reiterate that
Commission staff convened a technical conference in Docket No. AD18-8-
000 to explore issues related to the coordination of affected systems
raised in this proceeding and from a complaint filed in Docket No.
EL18-26-000. Thus, while the Commission is not taking action on
affected systems issues in this rulemaking, the Commission is
considering these kinds of issues. As a reminder, the Notice Inviting
Post-Technical Conference Comments in Docket No. AD18-8-000, which
issued concurrently with this final action, states that initial and
reply comments are due within 30 days and 45 days, respectively, from
the date of the notice's issuance.
3. Utilization of Surplus Interconnection Service
a. NOPR Proposal
    453. In the NOPR, the Commission proposed to add a new definition
for Surplus Interconnection Service to section 1 of the pro forma LGIP
and to article 1 of the pro forma LGIA, and a requirement that
transmission providers provide an expedited process for interconnection
customers to utilize or transfer surplus interconnection service at
existing generating facilities.\785\ The intent of this proposal was to
allow another interconnecting resource owned by an existing generating
facility owner or an affiliated owner the ability to use any surplus
interconnection service associated with the existing generating
facility. The Commission also proposed that transmission providers
establish open and transparent processes for generating facilities that
wish to transfer that surplus interconnection service to others if the
generating facility owner and its affiliates elect not to use it.\786\
---------------------------------------------------------------------------

    \785\ NOPR, FERC Stats. & Regs. ] 32,719 at P 201.
    \786\ Id.
---------------------------------------------------------------------------

    454. In the NOPR, the Commission pointed to MISO's Net Zero
Interconnection Service, which is offered under MISO's tariff. MISO
designed this service ``to allow an existing interconnection customer
to increase the gross generating capacity at the point of
interconnection of an existing generating facility without increasing
the total interconnection service at the point of interconnection.''
\787\ In its order accepting MISO's proposal for Net Zero
Interconnection Service, the Commission directed MISO to submit a
compliance filing to ensure that MISO offered Net Zero Interconnection
Service ``on a fair, transparent, and non-discriminatory basis.'' \788\
---------------------------------------------------------------------------

    \787\ Id. P 193 (citing MISO FERC Electric Tariff, Attachment X,
Section 1 (Definitions) (47.0.0) (``Net Zero Interconnection Service
shall mean a form of Energy Resource Interconnection Service that
allows an interconnection customer to alter the characteristics of
an existing generating facility, with the consent of the existing
generating facility, at the same [point of interconnection] such
that the Interconnection Service limit remains the same'')).
    \788\ Midwest Indep. Transmission Sys. Operator, Inc., 138 FERC
] 61,233, at P 302 (2012).
---------------------------------------------------------------------------

    455. To ensure system reliability, the Commission proposed to
require reactive power, short circuit/fault duty, and stability
analyses studies for this service, and that transmission providers
perform steady-state (thermal/voltage) analyses as necessary to ensure
evaluation of all required reliability conditions.\789\ The Commission
also proposed that, if the transmission provider does not study surplus
interconnection service under off-peak conditions, it would perform
off-peak steady state analyses to the level necessary to demonstrate
reliability.\790\ The Commission further proposed that, if the original
system impact study is not available while the surplus interconnection
service is going through the study process, both off-peak and peak
analyses may be necessary for the existing generating facility
associated with the request for surplus interconnection service.\791\
Additionally, the Commission proposed that a process for the use or
transfer of surplus interconnection service be available for any
quantity of surplus interconnection service that currently exists.\792\
---------------------------------------------------------------------------

    \789\ NOPR, FERC Stats. & Regs. ] 32,719 at P 202.
    \790\ Id.
    \791\ Id.
    \792\ Id.
---------------------------------------------------------------------------

    456. The Commission proposed to require that the transmission
provider, transmission owner (as applicable), and the surplus
interconnection service customer execute, or file unexecuted, a new
agreement for surplus interconnection service. The Commission noted
that the surplus interconnection customer could be the interconnection
customer for the existing generating facility, one of its affiliates,
or a new interconnection customer selected through an open and
transparent solicitation process.\793\ In addition to the new
interconnection agreement for surplus interconnection service, the
Commission recognized that other contractual arrangements may be
necessary.\794\
---------------------------------------------------------------------------

    \793\ Id. P 203.
    \794\ Id.
---------------------------------------------------------------------------

    457. While the Commission did not propose specific contractual
arrangements with respect to surplus interconnection service in the
NOPR, the Commission sought comment on how these arrangements should
work and on whether requirements for such arrangements should be
established in the Commission's pro forma LGIP and pro forma LGIA.\795\
The Commission also sought comment on whether the interconnection
agreement for surplus interconnection service should terminate upon the
retirement of the existing generating facility, or whether there are
circumstances under which the surplus interconnection service customer
may operate its generating facility under the terms of the surplus
interconnection service agreement after the retirement of the existing
generating facility.\796\
---------------------------------------------------------------------------

    \795\ Id. P 204.
    \796\ Id.
---------------------------------------------------------------------------

    458. Under the NOPR proposal, an existing generating facility owner
or its affiliate would have priority to use any surplus interconnection
service and would be able to execute or request the filing of an
unexecuted surplus interconnection service agreement without posting
that service to OASIS or going through an open solicitation
process.\797\ However, if an existing generating facility owner that
has surplus interconnection service wished to transfer it but did not
wish to use the surplus interconnection service itself or to transfer
it to one of its affiliates, the existing generator would conduct an
open and transparent solicitation process for that surplus
interconnection service.\798\ While the Commission proposed that
priority be given to the existing generating facility owner of the
surplus interconnection service or its affiliates, the Commission
sought comment on the need for further limitations on the entities with
priority use of that surplus interconnection service.\799\
---------------------------------------------------------------------------

    \797\ Id. P 206.
    \798\ Id.
    \799\ Id.

---------------------------------------------------------------------------

    459. With regard to specific requirements, the Commission proposed
to add the following new definition to section 1 of the pro forma LGIP
---------------------------------------------------------------------------
and to article 1 of the pro forma LGIA (with proposed text in italics):

    Surplus Interconnection Service shall mean any unused portion of
Interconnection Service established in a Large Generator
Interconnection Agreement, such that if Surplus Interconnection
Service is utilized the Interconnection Service limit at the Point
of Interconnection would remain the same.\800\
---------------------------------------------------------------------------

    \800\ Id. P 208. With respect to these new additions to the pro
forma LGIP and pro forma LGIA, we make minor clarifying edits to the
pro forma tariff language originally proposed in the NOPR, as shown
in Appendices B and C to Order No. 845. Specifically, the term
``unused'' is replaced with the term ``unneeded,'' and the term
``Interconnection Service limit'' is replaced with ``total amount of
Interconnection Service.''

    460. The Commission proposed to add a new section 3.3 to the pro
forma LGIP that requires the transmission provider to establish a
process for the use of surplus interconnection service as follows (with
---------------------------------------------------------------------------
proposed text in italics):

    Utilization of Surplus Interconnection Service. The Transmission
Provider must provide a process that allows an Interconnection
Customer to utilize or transfer Surplus Interconnection Service at
an existing Generating Facility. The original Interconnection
Customer or one of its affiliates shall have priority to utilize
Surplus Interconnection Service. If the existing Interconnection
Customer or one of its affiliates does not exercise its priority,
then that service may be made available to other potential
interconnection customers through an open and transparent
solicitation process.\801\
---------------------------------------------------------------------------

    \801\ Id. P 209. With respect to these new additions to the pro
forma LGIP, we make minor clarifying edits to the pro forma tariff
language originally proposed in the NOPR, as shown in Appendix B to
Order No 845. Specifically, in the first sentence, the words
``Generating Facility'' are replaced with the words ``Point of
Interconnection'' and in the last sentence, the words ``through an
open and transparent solicitation process'' are struck.

    461. The Commission proposed to add a new section 3.3.1 to the pro
forma LGIP that describes the process for using surplus interconnection
---------------------------------------------------------------------------
service (with proposed text in italics):

    Surplus Interconnection Service Requests. Surplus
Interconnection Service requests may be made by the existing
Generating Facility or one of its affiliates. Surplus
Interconnection Service requests also may be made by another
Interconnection Customer selected through an open and transparent
solicitation process. The Transmission Provider shall provide a
process for evaluating interconnection requests for Surplus
Interconnection Service. Studies for Surplus Interconnection Service
shall consist of reactive power, short circuit/fault duty, stability
analyses, and any other appropriate studies. Steady-state (thermal/
voltage) analyses may be performed as necessary to ensure that all
required reliability conditions are studied. If the Surplus
Interconnection Service was not studied under off-peak conditions,
off-peak steady state analyses shall be performed to the required
level necessary to demonstrate reliable operation of the Surplus
Interconnection Service. If the original System Impact Study is not
available for the Surplus Interconnection Service, both off-peak and
peak analysis may need to be performed for the existing Generating
Facility associated with the request for Surplus Interconnection
Service. The reactive power, short circuit/fault duty, stability,
and steady-state analyses for Surplus Interconnection Service will
identify any additional Interconnection Facilities and/or Network
Upgrades necessary.\802\
---------------------------------------------------------------------------

    \802\ Id. P 210. With respect to these new additions to the pro
forma LGIP, we make minor clarifying edits to the pro forma tariff
language originally proposed in the NOPR, as shown in Appendix B to
Order No. 845. Specifically, the first sentence is modified as
follows (with additions made in italics): ``Surplus Interconnection
Service requests may be made by the existing Interconnection
Customer whose Generating Facility is already interconnected or one
of its affiliates.'' Additionally, the second sentence is modified
by striking the words ``selected through an open and transparent
solicitation process.'' We also remove the word ``the'' before
``Transmission Provider.''

    462. Finally, the Commission proposed to add a new section 3.3.2 to
the pro forma LGIP that establishes the open and transparent
solicitation process for surplus interconnection service (with proposed
---------------------------------------------------------------------------
text in italics):

    Solicitation Process for Surplus Interconnection Service. If the
existing Generating Facility owner elects to transfer rights for
Surplus Interconnection Service to an unaffiliated Interconnection
Customer, it must do so through an open and transparent solicitation
process. The existing Generating Facility owner must first request
that the Transmission Provider post on its website that it is
willing to accept requests for Surplus Interconnection Service at
the existing Point of Interconnection. Such posting will include the
name of the existing Generating Facility, the exact electrical
location of the physical termination point of the Surplus
Interconnection Service, including proposed breaker position(s)
within its substation, the state and county of the existing
Generating Facility, and a valid email address and phone number to
contact the representative of the existing Generating Facility. The
existing Generating Facility owner must provide the Transmission
Provider with the System Impact Study performed for the existing
Generating Facility with its request for posting Surplus
Interconnection Service or indicate that such study is not
available.
    After the existing Generating Facility owner requests that the
Transmission Provider post the availability of Surplus
Interconnection Service, the Transmission Provider will also post on
its website a description of the selection process for transferring
rights to the Surplus Interconnection Service that will include a
timeline and the selection criteria developed by the existing
Generating Facility owner. The selection process may vary among
existing Generating Facility owners but the existing Generating
Facility owner will choose the winning request after all necessary
studies have been performed by the Transmission Provider. The
existing Generating Facility owner will submit to the Transmission
Provider, for posting on the Transmission Provider's website, the
results of the selection process and will include a description of
whose proposal for the Surplus Interconnection Service was selected
and why. After an Interconnection Customer has been chosen, the new
Interconnection Customer will execute, or request the filing of an
unexecuted, interconnection agreement with the Transmission Provider
and Transmission Owner (as applicable) upon completion of all
necessary studies for its new Generating Facility.\803\
---------------------------------------------------------------------------

    \803\ Id. P 211.
---------------------------------------------------------------------------

b. General
i. Comments
    463. Several commenters support this proposal. ESA supports the
proposal and the ability to transfer interconnection capacity between
parties because it may encourage co-location of storage and generation.
It also states that the net-zero model developed by MISO, following the
Commission's guidance in that proceeding, does not meet the objective
of encouraging the use of surplus interconnection service and that a
separate, faster process to transfer surplus is necessary.\804\ AWEA
states that better use of interconnection capacity would reduce system
costs and improve competition. AWEA argues that an interconnection
customer would benefit from being able to split its GIA into multiple
GIAs when it is a party to a Power Purchase Agreement that does not
account for all of the capacity under the customer's interconnection
agreement.\805\ Xcel supports a ``net-zero-like'' interconnection
service and argues that existing interconnection customers or
affiliates should have priority to use any available surplus
interconnection service.\806\ Duke supports the proposal if it is like
MISO's net-zero program and suggests that MISO's interconnection
agreement is a good model for such transactions.\807\ FTC states that
transferred interconnection capacity rights can play a significant role
in providing transmission capacity for use by generation entrants
quickly and at low cost.\808\ TDU Systems argue that the

transmission provider must give comparable service to non-affiliates as
they do to their own affiliates.\809\ MISO generally supports the
Commission's proposal, as do Alliant, ITC, MidAmerican, MISO TOs, and
TDU Systems.\810\
---------------------------------------------------------------------------

    \804\ ESA 2017 Comments at 13-14.
    \805\ AWEA 2017 Comments at 58.
    \806\ Xcel 2017 Comments at 19.
    \807\ Duke 2017 Comments at 22.
    \808\ FTC 2017 Comments at 10.
    \809\ TDU Systems 2017 Comments at 19-20.
    \810\ MISO 2017 Comments at 5; Alliant 2017 Comments at 8; ITC
2017 Comments at 121; MidAmerican 2017 Comments at 19; MISO TOs 2017
Comments at 40; TDU Systems 2017 Comments at 19-20.
---------------------------------------------------------------------------

    464. Several commenters express concerns with some aspects of, but
do not completely oppose, the Commission's proposal. For example, EEI
states that the concept is reasonable but would burden transmission
providers and should thus be optional.\811\ NYISO opposes simple
transfer of capacity from an interconnection customer to another party
because more than just MW capacity is needed for safe and reliable
interconnection (for example, evaluation of short circuit issues). If
the new interconnection customer is under 20 MW, NYISO suggests that it
might be easier to use the SGIP and SGIA where it is easier to waive
certain studies.\812\ PJM does not support the proposed open
solicitation for transfer of any surplus interconnection service. PJM
contends that there are no surplus capacity rights on its system
because capacity is based on tested output. PJM asserts that it would
have to create some form of energy rights that could be transferred.
PJM prefers to continue using the transfer process contained in its
tariffs and manuals.\813\
---------------------------------------------------------------------------

    \811\ EEI 2017 Comments at 59.
    \812\ NYISO 2017 Comments at 39.
    \813\ PJM 2017 Comments at 27-28.
---------------------------------------------------------------------------

    465. Other commenters, including several RTOs/ISOs, oppose the
proposal entirely. For example, ISO-NE states that its markets are
already managing surplus transfers through its process that integrates
its forward capacity market with its interconnection queue. ISO-NE
argues that the Commission proposal would significantly disrupt or
misalign this process.\814\ CAISO appeals to the Commission to ``not
sacrifice reliability studies on the altar of convenience.'' \815\
CAISO questions the need for this proposal, stating that
interconnection customers can already retire/replace, repower, or
assign available capacity through bilateral transactions, which
according to CAISO work better than the administrative process in the
NOPR.\816\ SoCal Edison supports the Commission's goal but does not
support the NOPR due to the expedited process and concerns that the
expedited NOPR process: (1) May be inferior to current processes like
CAISO's Material Modification Assessment; (2) may encourage
interconnection customers to request more interconnection service than
they intend to use; and (3) should not enable a surplus interconnection
customer to avoid the installation of necessary facilities to enable a
safe and reliable interconnection.\817\ SEIA does not support the
creation of a process to reassign surplus interconnection
capacity.\818\ NYISO asserts that the NOPR may conflict with the
principle of open access and might allow for undue discrimination by
establishing a process that favors affiliates of an existing
interconnection customer over other interconnection customers.\819\ AES
states that this proposal could reduce flexibility to the transmission
provider or reliability coordinator, and they would prefer that RTOs/
ISOs determine for themselves how to address the topic of transferring
surplus capacity.\820\
---------------------------------------------------------------------------

    \814\ ISO-NE 2017 Comments at 48.
    \815\ CAISO 2017 Comments at 32.
    \816\ Id. at 34.
    \817\ SoCal Edison 2017 Comments at 9-13.
    \818\ SEIA 2017 Comments at 21.
    \819\ NYISO 2017 Comments at 39-40 (citing Midwest Indep.
Transmission Sys. Operator, Inc., 140 FERC ] 61,237, at PP 50-51
(2012), and Midwest Indep. Transmission Sys. Operator, Inc., 155
FERC ] 61,274, at P 19 (2016)).
    \820\ AES 2017 Comments at 11-12.
---------------------------------------------------------------------------

    466. Several commenters state that either there is no surplus on
their systems or that it is unclear what ``surplus'' means. For
example, CAISO questions how to define surplus interconnection capacity
and states that it assigns interconnection capacity by the actual size
of the generator; thus, there is no surplus service in its region.\821\
Similarly, PJM states that it does not permit excess capacity to be
obtained through the initial request. PJM rates interconnection
capacity at the tested output of the generator after installation.\822\
Southern questions whether capacity being ``surplus'' should refer to
its lack of use in operation, in the interconnection study, or in the
interconnection request.\823\ NYISO's LGIA requires interconnection
customers to inform NYISO if the built generating facility is smaller
than what had been proposed, which initiates a process to consider
amending the interconnection agreement, or requires a new
interconnection request if the interconnection customer proposes to
expand its facility.\824\ NYISO allows interconnection customers to pay
for larger network upgrades than required for the initial project, as
long as they are reasonably related to the interconnection of the
proposed project.\825\ According to NYISO, another later
interconnection customer can also use these network upgrades, so long
as it reimburses the earlier interconnection customer that paid for
them.\826\
---------------------------------------------------------------------------

    \821\ CAISO 2017 Comments at 31-32.
    \822\ PJM 2017 Comments at 27.
    \823\ Southern 2017 Comments at 28.
    \824\ NYISO 2017 Comments at 40.
    \825\ Id. at 42.
    \826\ Id.
---------------------------------------------------------------------------

ii. Commission Determination
    467. In this final action, we adopt, with certain modifications and
clarifications, the NOPR proposals to: (1) Add a definition for
``Surplus Interconnection Service'' to section 1 of the pro forma LGIP
and to article 1 of the pro forma LGIA; (2) add a new section 3.3 to
the pro forma LGIP that requires the transmission provider to establish
a process for the use of surplus interconnection service; and (3) add a
new section 3.3.1 to the pro forma LGIP that describes the process for
using surplus interconnection service.\827\ As described in more detail
below, we will withdraw the NOPR proposal to add a new section 3.3.2 to
the pro forma LGIP that establishes an open and transparent
solicitation process for surplus interconnection service. We affirm
that requiring transmission providers to establish an expedited
process, separate from the interconnection queue, for the use of
surplus interconnection service could reduce costs for interconnection
customers by increasing the utilization of existing interconnection
facilities and network upgrades rather than requiring new ones, improve
wholesale market competition by enabling more entities to compete
through the more efficient use of surplus existing interconnection
capacity, and remove economic barriers to the development of
complementary technologies such as electric storage resources that may
be able to easily tailor their use of interconnection service to adhere
to the limitations of the surplus interconnection service that may
exist. Further, we find that facilitating the use of surplus
interconnection service could improve capabilities at existing
generating facilities, prevent stranded costs, and improve access to
the transmission system.
---------------------------------------------------------------------------

    \827\ With respect to these new additions to the pro forma LGIP
and pro forma LGIA, we make minor clarifying edits to the pro forma
tariff language originally proposed in the NOPR, as shown in
Appendix B and C to Order No. 845.
---------------------------------------------------------------------------

    468. We clarify that surplus interconnection service is created
because generating facilities may not operate at full capacity at all
times. Consistent with the requirements of

Order No. 2003, transmission providers assume that each interconnection
customer is fully utilizing its interconnection service when studying
other requests for new interconnections. Thus, currently, even if a
generating facility only operates a few days a year, or routinely
operates at a level below its maximum capacity, the remaining, unused
interconnection service is assumed to be unavailable to other
prospective interconnection customers.
    469. As noted above, Order No. 2003 mandates that transmission
providers assume that generating facilities operate at their full
capacity. To illustrate this, we note that Order No. 2003 listed, as
separate services, Energy Resource Interconnection Service (ERIS),\828\
a ``basic or minimum interconnection service,'' \829\ and Network
Resource Interconnection Service (NRIS),\830\ a ``more flexible and
comprehensive service.'' \831\ In Order No. 2003, the Commission stated
that, for a generating facility with ERIS, ``[t]he Interconnection
Studies to be performed . . . would identify the Interconnection
Facilities required as well as the Network Upgrades needed to allow the
proposed Generating Facility to operate at full output'' and ``the
maximum allowed output of the Generating Facility without Network
Upgrades.'' \832\
---------------------------------------------------------------------------

    \828\ Energy Resource Interconnection Service:
    shall mean an Interconnection Service that allows the
Interconnection Customer to connect its Generating Facility to the
Transmission Provider's Transmission System to be eligible to
deliver the Generating Facility's electric output using the existing
firm or nonfirm capacity of the Transmission Provider's Transmission
System on an as available basis. Energy Resource Interconnection
Service in and of itself does not convey transmission service.
    Pro forma LGIP Section 1 (Definitions).
    \829\ Order No. 2003, FERC Stats. & Regs. ] 31,146 at P 752.
    \830\ Network Resource Interconnection Service:
    shall mean an Interconnection Service that allows the
Interconnection Customer to integrate its Large Generating Facility
with the Transmission Provider's Transmission System (1) in a manner
comparable to that in which the Transmission Provider integrates its
generating facilities to serve native load customers; or (2) in an
RTO or ISO with market based congestion management, in the same
manner as all other Network Resources. Network Resource
Interconnection Service in and of itself does not convey
transmission service.
    Pro forma LGIP Section 1 (Definitions).
    \831\ Order No. 2003, FERC Stats. & Regs. ] 31,146 at P 752.
    \832\ Id. P 753 (emphasis added).
---------------------------------------------------------------------------

    470. Similarly, Order No. 2003 stated that NRIS ``provides for all
of the Network Upgrades that would be needed to allow the
Interconnection Customer to designate its Generating Facility as a
Network Resource and obtain Network Integration Transmission Service''
so that for ``an Interconnection Customer [that] has obtained Network
Resource Interconnection Service, any future transmission service
request for delivery from the Generating Facility would not require
additional studies or Network Upgrades.'' \833\ To allow for this,
``[t]he Transmission Provider would study the Transmission System at
peak load, under a variety of severely stressed conditions, to
determine whether, with the Generating Facility at full output, the
aggregate of generation in the local area can be delivered to the
aggregate of load, consistent with the Transmission Provider's
reliability criteria and procedures'' and ``would assume that some
portion of the capacity of existing Network Resources is displaced by
the output of the new Generating Facility.'' \834\
---------------------------------------------------------------------------

    \833\ Id.
    \834\ Id. P 755 (emphasis added).
---------------------------------------------------------------------------

    471. Thus, to provide interconnection service to an original
interconnection customer at a particular point of interconnection, the
transmission provider must conduct a study that assumes that the
generating facility will produce at its full output and that the
interconnection customer will fully utilize the amount of
interconnection service requested. Consequently, it is possible for an
original interconnection customer to have surplus interconnection
service at a particular interconnection point because the generating
facility capacity that the transmission provider originally studied
pursuant to the pro forma LGIP may be in excess of the actual
interconnection service required by the generating facility, at least
during some periods. For these reasons, we find that, where proper
precautions are taken to ensure system reliability, it would be unjust
and unreasonable to deny an original interconnection customer the
ability either to transfer or use for another resource surplus
interconnection service.
    472. As established in this final action and explained further
below, surplus interconnection service cannot exceed the total
interconnection service already provided by the original
interconnection customer's LGIA. Furthermore, if the original LGIA is
for ERIS, any surplus interconnection customer associated with the
original LGIA at the same point of interconnection would also need to
be an ERIS customer in order to avoid the potential need for new
network upgrades. If the original LGIA is for NRIS, then either ERIS or
NRIS service could be offered to the surplus interconnection service
customer. The provisions addressed in this final action will allow an
existing interconnection customer to make a specified and limited
amount of surplus interconnection service available at a particular
interconnection point under a variety of circumstances, including, for
example, on a continuous basis (i.e., a certain number of MW of surplus
interconnection service always available for use by a co-located
generating facility), or on a scheduled, periodic basis (i.e., a
specified number of MW available intermittently).\835\ In contrast, an
interconnection customer making a new interconnection request can
request any level of interconnection service at or below its resource's
generating facility capacity, and ERIS, NRIS, or provisional
interconnection service.
---------------------------------------------------------------------------

    \835\ This would include situations where existing generating
facilities operate infrequently, such as peaker units, or operate
often below their full generating facility capacity, such as
variable generation.
---------------------------------------------------------------------------

    473. We note that, to avoid abuse of this reform, which is intended
to increase utilization of existing, underutilized interconnection
service provided at a particular point of interconnection, we are
restricting surplus interconnection service when new interconnection
service would be more appropriate. Specifically, surplus
interconnection service cannot be offered if the original
interconnection customer's generating facility is scheduled to retire
and permanently cease commercial operation before the surplus
interconnection service customer's generating facility begin commercial
operation. This restriction is consistent with the Commission's
statement in Order No. 2003 that interconnection service is
``associated with interconnecting the Interconnection Customer's
Generating Facility to the Transmission Provider's Transmission
System.'' \836\
---------------------------------------------------------------------------

    \836\ Pro forma LGIP Secction 1 (Definitions); pro forma LGIA
Art. 1 (Definitions).
---------------------------------------------------------------------------

    474. As this statement demonstrates, the interconnection service
provided under an original interconnection customer's LGIA is
associated with interconnecting that interconnection customer's
generating facility. Once that original generating facility retires and
ceases commercial operation, whether that retirement was scheduled or
caused prematurely by unexpected circumstances, there is no longer any
interconnection service being provided under the original
interconnection customer's LGIA. Because surplus interconnection
service is inherently derived from an original interconnection
customer's interconnection service under its LGIA, retirement and
permanent cessation of commercial operation of the original

interconnection customer's generating facility would eliminate any
potential surplus interconnection service that might otherwise have
been available.
    475. We note that this final action makes it possible for a surplus
interconnection service customer to increase the total generating
facility capacity at a point of interconnection, provided that the
total combined generating output at the point of interconnection for
both the original and surplus interconnection customer is limited to
and shall not exceed the maximum level allowed under the original
interconnection customer's LGIA.
    476. Comments on the NOPR reveal substantial regional variation in
the potential availability of surplus interconnection service and
existing or prospective processes that would facilitate its use. To the
extent that a transmission provider believes that it already complies
with the surplus interconnection service requirements of this final
action, it may include an explanation in its compliance filing in
response to this final action.
    477. We clarify that, for a process to be consistent with or
superior to, or an independent entity variation from, the final
action's surplus interconnection service requirements, the transmission
provider must demonstrate, at a minimum, that its tariff: (1) Includes
a definition of surplus interconnection service consistent with the
final action; (2) provides an expedited interconnection process outside
of the interconnection queue for surplus interconnection service,
consistent with the final action; (3) allows affiliates of the original
interconnection customers to use surplus interconnection service for
another interconnecting generating facility consistent with the final
action; (4) allows for the transfer of surplus interconnection service
that the original interconnection customer or one of its affiliates
does not intend to use; and (5) specifies what reliability-related
studies and approvals are necessary to provide surplus interconnection
service and to ensure the reliable use of surplus interconnection
service.
    478. As a threshold consideration, we respond to NYISO's concern
regarding whether the NOPR proposal on surplus interconnection service
is consistent with the principles of open access.
    479. While open access principles are fundamental to the
Commission's regulation of transmission in interstate commerce,\837\ we
find that, in light of the substantial potential benefits of and
inherent practical limitations on the use of surplus interconnection
service, open access requirements such as those the Commission
previously imposed upon MISO's Net Zero Interconnection Service are not
currently necessary to achieve the Commission's open access goals. This
finding is consistent with the perspective that the Commission adopted
in Order No. 807, where the Commission amended:
---------------------------------------------------------------------------

    \837\ See Promoting Wholesale Competition Through Open Access
Non-Discriminatory Transmission Services by Public Utilities;
Recovery of Stranded Costs by Public Utilities and Transmitting
Utilities, Order No. 888, FERC Stats. & Regs. ] 31,036 (1996), order
on reh'g, Order No. 888-A, FERC Stats. & Regs. ] 31,048, order on
reh'g, Order No. 888-B, 81 FERC ] 61,248 (1997), order on reh'g,
Order No. 888-C, 82 FERC ] 61,046 (1998), aff'd in relevant part sub
nom. Transmission Access Policy Study Group v. FERC, 225 F.3d 667
(D.C. Cir. 2000), aff'd sub nom. New York v. FERC, 535 U.S. 1
(2002).

its regulations to waive the Open Access Transmission Tariff (OATT)
requirements of 18 CFR 35.28, the Open Access Same-Time Information
System (OASIS) requirements of 18 CFR 37, and the Standards of
Conduct requirements 18 CFR 358, under certain conditions, for the
ownership, control, or operation of Interconnection Customer's
Interconnection Facilities (ICIF).\838\
---------------------------------------------------------------------------

    \838\ Open Access and Priority Rights on Interconnection
Customer's Interconnection Facilities, Order No. 807, FERC Stats. &
Regs. ] 31,367, at P 1 (Order No. 807), order on reh'g, Order No.
807-A, 153 FERC ] 61,047 (2015).

    In Order No. 807, the Commission concluded that the waived
requirements were not ``necessary to achieve the Commission's open
access goals.'' \839\ In coming to this conclusion, the Commission
stated, among other things, that given the limited nature of the ICIF
and practical benefits provided by Order No. 807, the waived
requirements were not necessary to achieve open access. \840\
---------------------------------------------------------------------------

    \839\ Id. P 18.
    \840\ Id. PP 38, 55.
---------------------------------------------------------------------------

    480. We find that policy considerations comparable to those that
the Commission relied upon to support Order No. 807 are present here.
Surplus interconnection service is not available to third parties
absent some process for allowing the use or transfer of the surplus
interconnection service to another interconnection customer. As
described above, some original interconnection customers do not use the
full generating facility capacity of their interconnection service due
to the nature of their operations. In these circumstances, no other
interconnection customer would be able to obtain interconnection
service associated with the network upgrades funded by the original
interconnection customer. Creation of a surplus interconnection service
that allows another interconnection customer to make use of surplus
interconnection service will enhance access to the transmission system
at the point of interconnection.
    481. The question is then how to align the process for determining
which resources may access surplus interconnection service with the
Commission's goals to promote transparent and nondiscriminatory
practices. We are convinced, as we were in Order No. 807, that certain
requirements and processes--in this instance, a competitive
solicitation--are not necessary to achieve our overall open access
goals. As a general matter, we note that surplus interconnection
service is, by definition, limited in nature. This is because: (1) The
total output of the original interconnection customer plus the surplus
interconnection service customer behind the same point of
interconnection shall be limited to the maximum total amount of
interconnection service granted to the original interconnection
customer; (2) the original interconnection customer must be able to
stipulate the amount of surplus interconnection service that is
available, to designate when that service is available, and to describe
any other conditions under which surplus interconnection service at the
point of interconnection may be used; and (3) surplus interconnection
service shall only be available at the preexisting point of
interconnection of the original interconnection customer.
    482. Furthermore, we note that the Commission is making no changes
to the open access nature of the generator interconnection process
established by Order No. 2003. This final action requirement does not
restrict a new interconnection customer's ability to submit an
interconnection request for any requested point of interconnection
directly with the transmission provider, rather than seeking surplus
interconnection service with respect to an original interconnection
customer's point of interconnection. Therefore, an original
interconnection customer with surplus interconnection service shall not
be capable of preventing a new interconnection customer from exercising
its open access rights to the transmission grid.
    483. In order to realize the benefits of an efficiently-used
transmission system, the final action adopts the NOPR proposal to allow
an original interconnection customer or its affiliate to use any
surplus interconnection service. Additionally, we withdraw the NOPR
proposal to require an open and transparent solicitation process if an
original interconnection customer that has surplus interconnection
service

wishes to transfer this surplus interconnection service to a non-
affiliated third party. Consequently, we will revise proposed pro forma
section 3.3 as follows (deleting the bracketed text from, and adding
the italicized text to, proposed language):

    Utilization of Surplus Interconnection Service. [The
]Transmission Provider must provide a process that allows an
Interconnection Customer to utilize or transfer Surplus
Interconnection Service at an existing [Generating Facility] Point
of Interconnection. The original Interconnection Customer or one of
its affiliates shall have priority to utilize Surplus
Interconnection Service. If the existing Interconnection Customer or
one of its affiliates does not exercise its priority, then that
service may be made available to other potential interconnection
customers [through an open and transparent solicitation
process].\841\
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    \841\ NOPR, FERC Stats. & Regs. ] 32,719 at P 209.

    484. We acknowledge that the requirements adopted here reflect a
change in Commission policy with respect to some of the requirements
previously imposed on MISO's Net Zero Interconnection Service.\842\
Because of the history of that service (namely the fact that only one
party has sought MISO's Net Zero Interconnection Service), and in light
of the record and discussion above, we find it appropriate to revisit
and modify our position on the topic of surplus interconnection
service.
---------------------------------------------------------------------------

    \842\ See, e.g., Midwest Indep. Transmission Sys. Operator, 138
FERC ] 61,233 at P 302.
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c. Expedited Process
i. Comments
    485. Commenters disagree on whether there should be an expedited
process for transferring surplus interconnection capacity. For example,
California Energy Storage Alliance supports a faster process that does
not require additional interconnection studies.\843\ Xcel and AWEA
argue for a new process outside the LGIP that would handle all
transfers of interconnection capacity.\844\ On the other hand, some
transmission providers oppose any expedited process that departs from
the interconnection queue order. SoCal Edison states that, in order to
properly identify required upgrades and define proper cost assignment,
technical studies need to follow a rational order that must be
predicated on relative queue position.\845\ Southern opposes an
expedited process that allows a new interconnection customer to ``jump
up'' in the queue, as this would be unfair to others in the queue.\846\
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    \843\ California Energy Storage Alliance 2017 Comments at 7.
    \844\ Xcel 2017 Comments at 19; AWEA 2017 Comments at 59.
    \845\ SoCal Edison 2017 Comments at 2.
    \846\ Southern 2017 Comments at 31.
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ii. Commission Determination
    486. As described earlier, we adopt the NOPR proposal to add a new
definition for ``Surplus Interconnection Service'' to section 1 of the
pro forma LGIP and to article 1 of the pro forma LGIA that requires
transmission providers to provide an expedited process for
interconnection customers to utilize or transfer surplus
interconnection service at a particular point of interconnection. This
process would be expedited in the sense that it would take place
outside of the interconnection queue. Some commenters argue that this
would result in inappropriate queue jumping.
    487. In response to those comments, we clarify that the use or
transfer of surplus interconnection service does not entail queue
jumping because surplus interconnection service does not compete for
the same potential network upgrades that may be at issue in the normal
interconnection queue. Surplus interconnection service is more limited
interconnection service because it can only be located at the original
interconnection customer's previously studied and approved point of
interconnection. The requirements for the use of surplus
interconnection service: (1) Provide efficient use of the transmission
system; (2) ensure that the use of surplus interconnection service is
safe and reliable; and (3) help mitigate the possibility of unduly
discriminatory treatment. Because the necessary studies for surplus
interconnection service shall confirm that the combination of the
surplus interconnection customer's generating facility with the
original interconnection customer's generating facility does not result
in a need for new network upgrades, it would be inefficient to put
surplus interconnection customers into the interconnection queue.
    488. Furthermore, transmission providers in some regions routinely
conduct similar studies outside of the interconnection process. For
example, MISO frequently conducts Quarterly Operating Limits studies,
which are similar in nature to the studies required for surplus
interconnection service, and the Commission is unaware of any delays to
other customers related to the processing of these studies.\847\ We
also clarify that original interconnection customers are not required
to make surplus interconnection service available to potential
customers. If they do make it available, transmission providers are not
required to execute an interconnection agreement for surplus
interconnection service if arrangements do not meet the definition set
forth in their tariff or if the customer does not agree to the terms of
such service, including any requirements that may be identified by the
transmission provider in the studies for surplus interconnection
service. If the surplus interconnection service customer disputes an
issue in the interconnection agreement for surplus interconnection
service, the transmission provider must file the unexecuted surplus
interconnection service agreement with the Commission if requested to
do so by the surplus interconnection service customer.
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    \847\ See, e.g., MISO, FERC Electric Tariff, Attachment X
(76.0.0), Section 11.5.
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d. Interconnection Capacity Hoarding or Squatting
i. Comments
    489. SoCal Edison expresses concern that the proposal might
encourage interconnection customers to request more interconnection
capacity than they intend to use, in order to create a surplus that
they might sell later.\848\ Southern agrees and adds that this could
create costs for later-queued customers that they otherwise would not
have to pay.\849\ Xcel expresses concerns that such practices could
lead to capacity ``squatting (i.e., hoarding).'' \850\ However,
Competitive Suppliers oppose these positions and state that reductions
in interconnection service to eliminate surplus by transmission
providers amounts to confiscation of the rights of the interconnection
customers.\851\
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    \848\ SoCal Edison 2017 Comments at 10.
    \849\ Southern 2017 Comments at 29-30.
    \850\ Xcel 2017 Comments at 21.
    \851\ Competitive Suppliers 2017 Comments at 8.
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ii. Commission Determination
    490. As discussed earlier, the interconnection service provided
under any LGIA is associated with interconnecting that interconnection