cluster study process so that higher-queued interconnection requests
are given a higher-priority than lower-queued interconnection requests.
CREA and NewSun explain that this has worked in CAISO and Bonneville,
which they assert uses a similar mechanism to respect queue positions
in its transmission planning expansion process.
---------------------------------------------------------------------------

    \1540\ CREA and NewSun Initial Comments at 45.
---------------------------------------------------------------------------

    826. Shell requests that the Commission let existing processes
continue for all interconnection customers that have executed a system
impact study agreement or cluster study agreement because such
processes, while not perfect, are functioning ``well enough.'' \1541\
Illinois Commission expresses more general concern about the time
required for a transition process to be completed, noting that PJM's
transition process for a recent set of interconnection queue reforms is
expected to result in significant delays.\1542\ Such delays, Illinois
Commission contends, could prompt withdrawals and less-than-optimal use
of potential new resources, which in turn would undermine state public
policy goals and potentially threaten reliability. Longroad Energy
similarly recommends that the Commission seek to avoid creating a
situation whereby a transmission provider is forced to institute a
pause on reviewing interconnection requests, similar to PJM's recent
proposal to halt its review of interconnection requests for a two-year
period.\1543\
---------------------------------------------------------------------------

    \1541\ Shell Initial Comments at 37.
    \1542\ Illinois Commission Initial Comments at 7.
    \1543\ Longroad Energy Reply Comments at 16-17.
---------------------------------------------------------------------------

iii. Comments on Specific Proposal
(a) Serial Study Eligibility and Transition Process Exceptions
    827. Numerous commenters express support for one or more of the
eligibility

requirements proposed in the NOPR. To proceed with a transitional
serial study, Affected Interconnection Customers agree that
interconnection customers should provide evidence of exclusive site
control, demonstrate commercial readiness, and fund 100% of their
interconnection facility and network upgrade costs upfront.\1544\
Affected Interconnection Customers reason that delays in processing
interconnection requests occur if speculative interconnection requests
without adequate funding are allowed to enter and clog the serial study
process, only to drop out later and cause the need for restudies.
---------------------------------------------------------------------------

    \1544\ Affected Interconnection Customers Initial Comments at
10.
---------------------------------------------------------------------------

    828. However, Bonneville, PJM, OPSI, RWE Renewables, and NextEra
express concern that offering interconnection customers a serial study
option may be inefficient.\1545\ Bonneville states that it has received
52 interconnection requests, totaling 33 GW, in the 90 days since the
NOPR's issuance, and that completing existing studies under the current
process could delay Bonneville's ability to implement a new cluster
study process, thus diminishing its near-term benefits.\1546\ OPSI
calls for the Commission to analyze whether this option could
materially delay the transition process, and if so, consider using a
cluster study process as soon as feasible in the transition.\1547\
Similarly, RWE Renewables assert that all parties should already be on
notice about the pending changes, allowing for swifter movement to new
processes, particularly for those that have not yet had any studies
completed.\1548\ NextEra argues that it is best for all interconnection
customers at the same stage in the interconnection process to abide by
the same transition rules rather than giving them a choice between a
serial or cluster study process.\1549\
---------------------------------------------------------------------------

    \1545\ Bonneville Initial Comments at 14; NextEra Initial
Comments at 28; OPSI Initial Comments at 6; PJM Initial Comments at
42; RWE Renewables Initial Comments at 1-2.
    \1546\ Bonneville Initial Comments at 14.
    \1547\ OPSI Initial Comments at 6.
    \1548\ RWE Renewables Initial Comments at 2.
    \1549\ NextEra Initial Comments at 28.
---------------------------------------------------------------------------

    829. Several commenters suggest broadening opportunities for a
transitional serial study and/or exempting certain interconnection
requests from transitional study. AEE, Clean Energy Associations, and
Pine Gate support allowing interconnection requests with an executed or
unexecuted facilities study agreement to proceed with a serial
study.\1550\ Clean Energy Associations propose serial study eligibility
for any interconnection request that has a system impact study
underway, provided the interconnection customer can meet commercial
readiness demonstration and deposit requirements on par with what would
be required at the equivalent stage of the standard cluster study
process.\1551\ ENGIE supports a process that exempts interconnection
requests with interconnection costs of $5 million or less from a
transitional study.\1552\ ENGIE also proposes that interconnection
requests that do not contribute to the need for network upgrades and/or
do not need facilities studies be permitted to proceed to an LGIA
early.
---------------------------------------------------------------------------

    \1550\ AEE Initial Comments at 27; Clean Energy Associations
Initial Comments at 43; Pine Gate Initial Comments at 37.
    \1551\ Clean Energy Associations Initial Comments at 43.
    \1552\ ENGIE Initial Comments at 7.
---------------------------------------------------------------------------

    830. Cypress Creek suggests that eligibility for a transitional
serial study \1553\ be based on: (1) a specified interconnection queue
window developed through a stakeholder process that extends to late
stage interconnection requests; and (2) an objective assessment of the
plotted distribution of total network upgrades (in terms of millions of
dollars) to which the candidate interconnection request contributes,
such that the total number of interconnection requests eligible for
transitional serial and transitional cluster studies is known so
transitional studies can be completed by a reasonable deadline.\1554\
Cypress Creek states that the distribution curve of network upgrades
will help support eligibility to those interconnection requests on the
lower half of impacts. Finally, Cypress Creek suggests that the
Commission establish a date by which the transitional serial process
would conclude, and by which the transitional cluster process would
begin. Following these transitional studies, Cypress Creek recommends
that the new cluster study process commence, in lieu of the second
transitional cluster proposed by the Commission. Cypress Creek argues
that this more rapid transition process better balances interconnection
rights of late-stage interconnection requests with the need to move to
the new process compared to the proposed transition process.
---------------------------------------------------------------------------

    \1553\ The original term used by Cypress Creek, ``transitional
serial cluster,'' is assumed to mean transitional serial study.
    \1554\ Cypress Creek Initial Comments at 25-26.
---------------------------------------------------------------------------

(b) New Requirements on Existing Interconnection Customers
    831. AEE, Invenergy, NESCOE, and Shell argue that it is wrong, or
could be unfairly burdensome, to impose significant new requirements on
interconnection customers that have entered and proceeded through the
interconnection queue in good faith.\1555\ Invenergy adds that this is
especially true of interconnection customers that may have entered the
interconnection queue years before the NOPR was issued.\1556\ Other
commenters make similar points.\1557\
---------------------------------------------------------------------------

    \1555\ AEE Initial Comments at 26; Invenergy Initial Comments at
37; NESCOE Reply Comments at 10; Shell Initial Comments at 37.
    \1556\ Invenergy Initial Comments at 37.
    \1557\ AEE Initial Comments at 26; EDF Renewables Initial
Comments at 8; ACE-NY Initial Comments at 4; AEE Initial Comments at
26; EDF Renewables Initial Comments at 8; Northwest and
Intermountain Initial Comments at 2, 5.
---------------------------------------------------------------------------

    832. AEE and EDF Renewables stress the importance of not disrupting
or further delaying interconnection requests that are well along in the
interconnection process.\1558\ ACE-NY states, more broadly, that
interconnection requests currently in serial interconnection queues
should not be unduly harmed, adding that any transition process should
not delay the commercial operation date of existing and future
generating facilities.\1559\
---------------------------------------------------------------------------

    \1558\ AEE Initial Comments at 26; EDF Renewables Initial
Comments at 8.
    \1559\ ACE-NY Initial Comments at 4.
---------------------------------------------------------------------------

    833. Clean Energy Associations argue that transition
interconnection customers, whether they be in the serial or cluster
study process, should not be held to higher standards than those
interconnection customers that would proceed with the regular cluster
study process unless the transition process leads to an LGIA and
includes only ready interconnection requests that have been delayed in
the existing interconnection queue.\1560\ Invenergy concurs with this
principle, if the Commission elects to impose requirements on existing
interconnection customers.\1561\
---------------------------------------------------------------------------

    \1560\ Clean Energy Associations Initial Comments at 43.
    \1561\ Invenergy Initial Comments at 38.
---------------------------------------------------------------------------

(c) Deposits
    834. Several commenters object to the proposal to require that
interconnection customers, at the time of execution of the transitional
serial study agreement, provide a deposit equal to 100% of the
interconnection facility and network upgrade costs allocated to them in
the system impact study report.\1562\ AEE and EDF Renewables argue that
the costs assigned at the system impact study stage often vary
significantly from the network upgrade costs provided at

the facilities study stage.\1563\ EDF Renewables also argue that the
NOPR proposal is inconsistent with Order No. 2003, which specifically
rejected such a proposal in favor of requiring security for discrete
portions of these costs.\1564\ EDF Renewables adds that requiring a
full deposit imposes a real cost on interconnection customers, which
typically obtain a letter of credit from a bank.
---------------------------------------------------------------------------

    \1562\ Clean Energy Associations Initial Comments at 43; Cypress
Creek Initial Comments at 26; EDF Renewables Initial Comments at 9;
Invenergy Initial Comments at 38; Pine Gate Initial Comments at 36;
SEIA Initial Comments at 28.
    \1563\ AEE Initial Comments at 26-27; EDF Renewables Initial
Comments at 9.
    \1564\ EDF Renewables Initial Comments at 9 (citing Order No.
2003, 104 FERC ] 61,103 at P 596).
---------------------------------------------------------------------------

    835. Likewise, several commenters object to the proposal to require
a $5 million deposit to proceed to the transitional cluster
study.\1565\ Most of these commenters claim that $5 million dollars is
excessive and/or arbitrary; \1566\ fails to reflect the relative impact
of smaller proposed generating facilities; \1567\ likely is not
indicative of costs across all markets; \1568\ and will prompt
otherwise viable interconnection requests to withdraw.\1569\ With
respect to the NOPR's reliance on PSCo's claim that $5 million is
within the range of interconnection costs on its system, CREA and
NewSun question whether PSCo intended the deposit to serve as a barrier
to its competitors in the generation market.\1570\ CREA and NewSun note
that the three orders cited by the Commission in the NOPR mention a $5
million deposit, but none provide a reasoned decision for acceptance of
this deposit amount.\1571\ Conversely, Xcel asserts that $5 million
dollars is a low estimate of costs that may ultimately be allocated to
interconnection customers.\1572\
---------------------------------------------------------------------------

    \1565\ AEE Initial Comments at 26; Clean Energy Associations
Initial Comments at 43; CREA and NewSun Initial Comments at 81; EDF
Renewables Initial Comments at 9; Invenergy Initial Comments at 38;
Northwest and Intermountain Initial Comments at 5; Pine Gate Initial
Comments at 36.
    \1566\ AEE Initial Comments at 26; Clean Energy Associations
Initial Comments at 43; CREA and NewSun Initial Comments at 81; EDF
Renewables Initial Comments at 9; Pine Gate Initial Comments at 36.
    \1567\ CREA and NewSun Initial Comments at 81; EDF Renewables
Initial Comments at 9.
    \1568\ AEE Initial Comments at 26; CREA and NewSun Initial
Comments at 81; Pine Gate Initial Comments at 36.
    \1569\ AEE Initial Comments at 26.
    \1570\ CREA and NewSun Initial Comments at 81.
    \1571\ Id. at 81-82 (citing Pub. Serv. Co. of Colo., 169 FERC ]
61,182; Tri-State Generation & Transmission Ass'n, Inc., 173 FERC ]
61,015; Tri-State Generation & Transmission Ass'n, Inc., 174 FERC ]
61,021 (2021).
    \1572\ Xcel Initial Comments at 36.
---------------------------------------------------------------------------

    836. AEE, Invenergy, and Pine Gate recommend that the deposit for
either the transitional serial facilities study agreement or
transitional cluster study agreement reflect a percentage of the
network upgrade costs allocated to the interconnection customer, with
Invenergy recommending 20%.\1573\ Northwest and Intermountain and Xcel
recommend that the final rule require transmission providers to propose
a deposit amount for transitional studies that is appropriate to their
interconnection queue and their specific system configurations.\1574\
Xcel suggests that the Commission should accept proposals that use an
average of actual historical estimates of costs allocated to
interconnection customers with executed LGIAs to determine the security
required to enter the transitional cluster.\1575\
---------------------------------------------------------------------------

    \1573\ AEE Initial Comments at 26; Invenergy Initial Comments at
38; Pine Gate Initial Comments at 36.
    \1574\ Northwest and Intermountain Initial Comments at 5; Xcel
Initial Comments at 36.
    \1575\ Xcel Initial Comments at 36.
---------------------------------------------------------------------------

(d) Commercial Readiness and Site Control
    837. Idaho Power and Xcel emphasize the importance of requiring a
commercial readiness demonstration to enter the transition
process.\1576\ Xcel argues that if a readiness demonstration is not
required, unready interconnection requests may be in the study models
for more than three years after they execute an LGIA and when they
ultimately withdraw, which will cause delays and cascading
restudies.\1577\ Idaho Power asserts that commercial readiness
demonstrations for interconnection customers with executed LGIAs are
also critical, as their resource and network upgrades will need to be
modeled in the transitional cluster study.\1578\ NRECA proposes that
interconnection customers that show requisite site control and
commercial readiness proceed to the ``front of the line'' as ``first-
ready'' in the transition cluster process without additional
evaluation.\1579\ Both Idaho Power and EEI recommend that
interconnection customers with LGIAs, but that have suspended
interconnection-related construction, be required to meet the
commercial readiness requirements, with EEI also recommending that they
be required to demonstrate site control.\1580\
---------------------------------------------------------------------------

    \1576\ Idaho Power Initial Comments at 9; NRECA Initial Comments
at 31; Pattern Energy Initial Comments at 35; Xcel Initial Comments
at 36.
    \1577\ Xcel Initial Comments at 36.
    \1578\ Idaho Power Initial Comments at 9.
    \1579\ NRECA Initial Comments at 31.
    \1580\ EEI Initial Comments at 9-10; Idaho Power Initial
Comments at 9.
---------------------------------------------------------------------------

    838. In addition to the proposed commercial readiness demonstration
requirements, Affected Interconnection Customers recommend that
interconnection customers also be allowed to provide evidence of (1)
major equipment either contracted to purchase or owned as part of an
existing equipment fleet or (2) a completed engineering package under
provisional LGIAs.\1581\ SEIA recommends that interconnection customers
be allowed to demonstrate commercial readiness by providing a
commitment to participate in RTO/ISO markets or an application for a
site permit.\1582\
---------------------------------------------------------------------------

    \1581\ Affected Interconnection Customers Initial Comments at
10-11.
    \1582\ SEIA Reply Comments at 12.
---------------------------------------------------------------------------

    839. A number of commenters oppose the NOPR's proposed commercial
readiness requirements, as applied to the transition process.\1583\
SEIA states that the proposed requirements will be nearly impossible
for an independent power producer to meet and ignore the very nature of
a capacity market, which is to allow independent power producers to
sell capacity into a market.\1584\
---------------------------------------------------------------------------

    \1583\ AEE Initial Comments at 26; CREA and NewSun Initial
Comments at 79; Pine Gate Initial Comments at 36; SEIA Initial
Comments at 29.
    \1584\ SEIA Initial Comments at 28.
---------------------------------------------------------------------------

    840. Several commenters support allowing a deposit in lieu of
demonstrating commercial readiness, as applied to the transition
process.\1585\ Pattern Energy argues for this option to be available
specifically for the transitional cluster study and recommends a $5
million deposit value.\1586\ Pattern Energy claims that this would
balance the need for interconnection customers that may have been
waiting for years to have their interconnection requests studied with
the need to transition to a new process. SEIA and Pine Gate recommend
that a commercial readiness deposit should be the norm, not the
exception, with SEIA also recommending that interconnection customers
be required to provide evidence of site control.\1587\ Pine Gate
recommends a readiness deposit framework that requires interconnection
customers to make incrementally at-risk payments throughout the
interconnection process.\1588\
---------------------------------------------------------------------------

    \1585\ AEE Initial Comments at 26; EDF Renewables Initial
Comments at 9; Invenergy Initial Comments at 38; Pattern Energy
Initial Comments at 35.
    \1586\ Pattern Energy Initial Comments at 35.
    \1587\ SEIA Initial Comments at 29.
    \1588\ Pine Gate Initial Comments at 36.
---------------------------------------------------------------------------

    841. At the same time, several commenters oppose permitting
deposits in lieu of demonstrating commercial readiness, as applied to
the transition process.\1589\ Ameren calls such deposits
``opportunities for delay'' that will not facilitate the
interconnection of

interconnection requests for which the interconnection customer has
demonstrated commercial readiness.\1590\ Idaho Power opposes the option
because the transitional cluster study is an expedited, combined system
impact and interconnection facilities study.\1591\ If the Commission
does allow a deposit, EEI argues that the option should apply only in
specific circumstances, and should be sufficiently high to deter
interconnection requests that are not ready from entering the
transitional cluster.\1592\
---------------------------------------------------------------------------

    \1589\ Ameren Initial Comments at 19; EEI Initial Comments at
10; Idaho Power Initial Comments at 9; Xcel Initial Comments at 36.
    \1590\ Ameren Initial Comments at 19.
    \1591\ Idaho Power Initial Comments at 9.
    \1592\ EEI Reply Comments at 10.
---------------------------------------------------------------------------

(e) Withdrawal Penalties
    842. Many commenters oppose the NOPR's proposed transition process
withdrawal penalties.\1593\ CREA and NewSun, Pine Gate, and
[Oslash]rsted call the penalties harsh or draconian.\1594\
[Oslash]rsted notes that offshore wind project interconnection
customers with contracts awarded via a state-sponsored resource
solicitation process have already spent tens of millions of dollars to
secure leaseholds, conduct extensive geotechnical studies of these
lease areas, and engineering studies.\1595\ Given these investments,
[Oslash]rsted contends that the decision to withdraw from the
interconnection queue is most likely going to be based on some issue
outside of the control of the interconnection customer, such as supply
chain constraints, and not because the interconnection request will not
go forward at some point.
---------------------------------------------------------------------------

    \1593\ AEE Initial Comments at 26; AES Initial Comments at 20;
CREA and NewSun Initial Comments at 79; EDF Renewables Initial
Comments at 8; [Oslash]rsted Initial Comments at 14; Pine Gate
Initial Comments at 36; SEIA Initial Comments at 37.
    \1594\ CREA and NewSun Initial Comments at 79; [Oslash]rsted
Initial Comments at 14; Pine Gate Initial Comments at 36.
    \1595\ [Oslash]rsted Initial Comments at 14.
---------------------------------------------------------------------------

    843. AES states that withdrawal should be penalty-free if an
interconnection customer decides not to move forward with a proposed
generating facility during the transition.\1596\ EDF Renewables asserts
that a transition process should offer existing interconnection
customers an opportunity to exit the interconnection queue in line with
what they expected when entering.\1597\ SEIA recommends that the
withdrawal penalty for interconnection customers in the transitional
cluster study be capped at the withdrawing interconnection request's
allocation of network upgrade costs.\1598\
---------------------------------------------------------------------------

    \1596\ AES Initial Comments at 20.
    \1597\ EDF Renewables Initial Comments at 8.
    \1598\ SEIA Initial Comments at 37.
---------------------------------------------------------------------------

(f) Compliance Timeline
    844. NRECA supports the NOPR's proposed timeline for
compliance.\1599\ NRECA states that the 180-day \1600\ period proposed
in the NOPR would be sufficient to allow interconnection customers to
get their deposits, site control, and commercial readiness
demonstrations in order.\1601\ PPL states that transmission providers
should continue moving requests to the LGIA execution stage and have
interconnection customers demonstrate commercial readiness as normal
until the effective date of the transition process.\1602\
---------------------------------------------------------------------------

    \1599\ NRECA Initial Comments at 32; PPL Initial Comments at 18.
    \1600\ Note that the proposed deadline for transmission
providers to submit a compliance filing is within 180 calendar days
of the effective date of the final rule. The proposed deadline for
interconnection customers to meet the requirements for transitional
serial study or transitional cluster study is 60 calendar days after
the Commission-approved effective date of a transmission provider's
filing in compliance with this final rule.
    \1601\ NRECA Initial Comments at 32.
    \1602\ PPL Initial Comments at 18.
---------------------------------------------------------------------------

    845. AES, CREA and NewSun, and Invenergy assert that the NOPR's
proposed 60-day deadline for compliance is difficult or impossible to
meet for most interconnection customers.\1603\ Invenergy adds that the
fact of the rulemaking's existence is insufficient to put
interconnection customers on notice of potential reforms, given that
any aspect of the NOPR could be modified in the final rule and be
subject to variations in compliance filings.\1604\ AES states that it
does not oppose requiring interconnection customers to demonstrate site
control and meet commercial readiness criteria but recommends that at
least six months be given for compliance.\1605\
---------------------------------------------------------------------------

    \1603\ AES Initial Comments at 20; CREA and NewSun Initial
Comments at 79; Invenergy Initial Comments at 37-38.
    \1604\ Invenergy Initial Comments at 37.
    \1605\ AES Initial Comments at 20.
---------------------------------------------------------------------------

(g) Alternatives
    846. Shell argues that the final rule should allow an opt-out
provision for the transition process under which transmission providers
can demonstrate their existing processes' efficiencies by detailing
their prior performance on certain measures, such as the average
duration of each interconnection study and the average length of time
from submission of an interconnection request to execution of an LGIA
or filing of an unexecuted LGIA.\1606\
---------------------------------------------------------------------------

    \1606\ Shell Initial Comments at 37.
---------------------------------------------------------------------------

    847. In cases where the transition process is slow due to the sheer
scale of change, Illinois Commission calls for an accelerated process
for interconnection requests that allow states to ensure reliability
and meet statutory obligations and public policy objectives.\1607\
Illinois Commission adds that such a process could be accomplished in a
narrowly tailored manner and would be more efficient than allowing
RTOs/ISOs an extended period to clear out prior interconnection queue
backlogs.
---------------------------------------------------------------------------

    \1607\ Illinois Commission Initial Comments at 7-8.
---------------------------------------------------------------------------

    848. CREA and NewSun propose, and SEIA supports, a transitional
cluster study process for transmission providers facing an otherwise
unmanageable volume of interconnection requests.\1608\ CREA and NewSun
assert that such a process would expedite interconnection study,
eliminate excessive deposits and penalties, permit withdrawals without
penalty if no burden is imposed on other interconnection customers,
respect queue positions and associated investment expectations of
queued interconnection requests, and avoid ``years of bottlenecks and
market distorting problems'' associated with solutions based on
readiness requirements.\1609\ CREA and NewSun state that this proposed
process draws on Bonneville, CAISO, and MISO's current practices as
examples and would take an estimated 460 days to complete,
incorporating four milestones with increasing deposits and two off-
ramps (or decision points).\1610\
---------------------------------------------------------------------------

    \1608\ SEIA Reply Comments at 12.
    \1609\ CREA and NewSun Initial Comments at 82, Ex. A at 4.
    \1610\ Id., Ex. A at 3.
---------------------------------------------------------------------------

    849. CREA and NewSun further propose to respect queue positions by
providing a separate cluster study for existing interconnection
customers that have advanced to the system impact study stage and
having interconnection requests retain queue position even as they are
studied in a cluster.\1611\ CREA and NewSun also propose to allow
interconnection customers to trade queue positions.\1612\
---------------------------------------------------------------------------

    \1611\ Id., Ex. A at 2.
    \1612\ Id., Ex., at 2-3.
---------------------------------------------------------------------------

(h) Tariff Language
    850. Southern notes that under proposed section <IP_ADDRESS>(2) of the
pro forma LGIP, the true-up of actual construction costs must be
completed within 30 days of a generating facility achieving commercial
operation, which appears to conflict with the true-up provisions in pro
forma LGIA article 12.2 (Final Invoice), which, Southern states,
provides that the true-up is due within six months.\1613\ Southern
requests that the Commission make

these provisions consistent at six months.
---------------------------------------------------------------------------

    \1613\ Southern Initial Comments at 35.
---------------------------------------------------------------------------

iv. Requests for Flexibility and Clarification
    851. Several commenters argue that a one-size-fits-all transition
plan is not appropriate, given the diversity of processes currently
used by transmission providers and the varying volumes of
interconnection requests in their interconnection queues.\1614\ For
instance, Duke Southeast Utilities references the Commission's
recognition that transmission providers that already have a Commission-
approved LGIP and LGIA based on a first-ready, first-served cluster
study process may not need another transition process. Duke adds that
requiring a second transition process would likely add confusion and
potentially result in waiver requests filed with the Commission.\1615\
ISO-NE states that New England does not currently suffer
interconnection queue backlogs to the same extent as other regions, and
transition provisions could have a significant impact on
interconnection requests that are currently proceeding through the
existing interconnection process.\1616\ WAPA claims that it needs
sufficient flexibility to develop new programs within its existing
appropriations (or to seek additional appropriations or spending
authority) and to accommodate Federal contracting timelines (because it
hires contractors to conduct facilities studies).\1617\
---------------------------------------------------------------------------

    \1614\ Ameren Initial Comments at 19; Avangrid Initial Comments
at 8; Bonneville Initial Comments at 13; CAISO Initial Comments at
24; Duke Southeast Utilities Initial Comments at 11; EEI Initial
Comments at 10; Indicated PJM TOs Reply Comments at 42; Invenergy
Initial Comments at 39; ISO-NE Initial Comments at 33; MISO Initial
Comments at 70; NARUC Initial Comments at 10-11; National Grid
Initial Comments at 28; NEPOOL Initial Comments at 14; NYISO Initial
Comments at 12; NYTOs Initial Comments at 21; WAPA Initial Comments
at 8-9; see also Invenergy Initial Comments at 41 (asserting that,
while many of the NOPR proposals should be prospective only,
affected systems reform should apply immediately to all pending
requests and active studies).
    \1615\ Duke Southeast Utilities Initial Comments at 11.
    \1616\ ISO-NE Initial Comments at 33-34.
    \1617\ WAPA Initial Comments at 8-9.
---------------------------------------------------------------------------

    852. CAISO, Duke Southeast Utilities, and Invenergy call on the
Commission to permit transmission providers in regions that already use
a first-ready, first-served cluster study process to minimize or omit a
transition process.\1618\ CAISO recommends that transmission providers
be permitted to propose just and reasonable effective dates for each
reform.\1619\ CAISO adds that it anticipates that most reforms should
be effective with the beginning of the next cluster study after a
compliance filing is approved, but some reforms could be implemented
for existing interconnection requests in the queue, especially for
interconnection customers that may not have executed an LGIA.
Conversely, Tri-State states that a transition period will be
necessary, even for those transmission providers already employing a
first-ready, first-served cluster study process, due to changes beyond
the overarching structure of the interconnection queue, such as a
requirement for 100% site control.\1620\
---------------------------------------------------------------------------

    \1618\ CAISO Initial Comments at 25.
    \1618\ Id.; Duke Southeast Utilities Initial Comments at 11;
Invenergy Initial Comments at 39.
    \1619\ CAISO Initial Comments at 25.
    \1620\ Tri-State Initial Comments at 17.
---------------------------------------------------------------------------

    853. Several commenters ask the Commission to let transmission
providers establish their own transition plans.\1621\ MISO notes that
this previously occurred after the 2008 interconnection queue technical
conference, where transmission providers were able to propose their own
transition plan in adopting a first-ready, first-served model.\1622\
Ameren, National Grid, and NEPOOL call for RTOs/ISOs, in particular, to
be allowed flexibility to develop a transition process with input from
stakeholders.\1623\ Avangrid notes that determining an equitable and
achievable transition plan was among the most challenging aspects of
the stakeholder process that led to PJM's recent interconnection queue
reform filing and asserts that other regions should have the chance for
similar deliberations.\1624\ NYTOs argue that transmission providers
should be allowed to propose: (1) setting an effective date for new
interconnection requests that will be subject to the new cluster study
process; (2) establishing an approach for the existing interconnection
queue to be seen through to completion; and (3) determining a high-
level process, including a high-level time frame for updating tariffs,
if the proposed reforms are approved.\1625\
---------------------------------------------------------------------------

    \1621\ Ameren Initial Comments at 19; Avangrid Initial Comments
at 37; MISO Initial Comments at 70; National Grid Initial Comments
at 28-29; NEPOOL Initial Comments at 14; NESCOE Reply Comments at
10; NYTOs Initial Comments at 21-22.
    \1622\ MISO Initial Comments at 70.
    \1623\ Ameren Initial Comments at 19; National Grid Initial
Comments at 28; NEPOOL Initial Comments at 14.
    \1624\ Avangrid Initial Comments at 8, 36-37.
    \1625\ NYTOs Initial Comments at 21-22.
---------------------------------------------------------------------------

    854. Several commenters request that the Commission clarify how the
NOPR's proposed transition process relates to PJM's transition process
accepted as part of its recent interconnection queue reforms.\1626\
OPSI requests that the final rule not extend any transition process
beyond what PJM proposed.\1627\ Indicated PJM TOs request that the
Commission allow PJM to implement its carefully negotiated transition
process to a first-ready, first-served cluster study process.\1628\ PJM
suggests that the Commission hold in abeyance any compliance filing
obligations in this proceeding until PJM has completed its proposed
transition process.\1629\ PJM argues that this would be in keeping with
the Commission's statement that it will review any filings that result
from transmission provider interconnection queue reform efforts ``based
on the record before us in those proceedings and not based on whether
they comply with the proposed reforms in this NOPR.'' \1630\ PJM also
asserts that, given the size of its interconnection queue backlog,
allowing interconnection customers the option of a transitional serial
study process will delay implementation of PJM's cluster study process
by several years and create uncertainty regarding that process.\1631\
PJM emphasizes that elsewhere in the NOPR, the Commission acknowledges
the importance of allowing transmission providers to clear their
interconnection queue backlogs quickly.\1632\
---------------------------------------------------------------------------

    \1626\ Indicated PJM TOs Initial Comments at 34; OPSI Initial
Comments at 7; Pennsylvania Commission Initial Comments at 15; PJM
Initial Comments at 42; see also PJM Interconnection, L.L.C., 181
FERC ] 61,162 at PP 60-69.
    \1627\ OPSI Initial Comments at 7.
    \1628\ Indicated PJM TOs Initial Comments at 34.
    \1629\ PJM Initial Comments at 42.
    \1630\ Id. at 42-43 (citing NOPR, 179 FERC ] 61,194 at P 6).
    \1631\ Id. at 43.
    \1632\ PJM Reply Comments at 8-9.
---------------------------------------------------------------------------

c. Commission Determination
    855. We adopt the NOPR proposal to modify section 5 of the pro
forma LGIP to establish a transition process for moving to the first-
ready, first-served cluster study process adopted in this final rule
from the existing first-come, first-served serial study process.
Specifically, we adopt the NOPR proposal to require transmission
providers to offer existing interconnection customers up to three
transition options, depending on which phase of the serial study
process their interconnection requests are in: (1) a transitional
serial study comprised of a facilities study (i.e., a transitional
serial interconnection facilities study), (2) a transitional cluster
study comprised of a clustered system impact study and individual
facilities studies, or (3) withdrawal from the interconnection

queue without penalty. We also adopt definitions for the reports issued
in association with options (1) and (2), respectively (i.e., a
transitional serial interconnection facilities study report and a
transitional cluster study report). As discussed below, regarding
eligibility for the transitional serial study, we modify the NOPR
proposal to require transmission providers to offer the transitional
serial study option to interconnection customers that have been
tendered a facilities study agreement, even if they have not yet
executed that agreement, as of 30 calendar days after the filing date
of the transmission provider's initial filing to comply with this final
rule. Similarly, regarding eligibility for the transitional cluster
study, we modify the NOPR proposal to require transmission providers to
offer the transitional cluster study option to interconnection
customers with an assigned queue position as of 30 calendar days after
the filing date of the transmission provider's initial filing to comply
with this final rule. We also adopt the NOPR proposals for transition
process deposits, withdrawal penalties, and deadlines. We decline to
adopt the proposal to impose a commercial readiness demonstration
requirement and adopt, with modification, the NOPR proposal for site
control requirements.
    856. We concur with commenters that, given current interconnection
queue backlogs in multiple regions, it is essential that the Commission
craft a transition process. Doing so will give interconnection
customers, along with other market participants, time to adjust to new
processes and requirements. We note that many responsive commenters
support the proposed three options and, in particular, support
providing interconnection customers at the facilities study stage the
option for a transitional serial study.\1633\ We concur with NRECA that
the NOPR's proposed transition process will create an efficient way to
prioritize and process interconnection requests, based on how far they
have advanced through the interconnection process and their level of
commercial readiness. We further find that the transition process, as
adopted herein, appropriately balances the need to move expeditiously
to the new cluster study process with the need to respect the
investments and expectations of interconnection customers at an
advanced stage in the existing interconnection process.\1634\
---------------------------------------------------------------------------

    \1633\ Clean Energy Associations Initial Comments at 42-43;
Consumers Energy Initial Comments at 5; ENGIE Initial Comments at 7;
Longroad Energy Reply Comments at 16; NARUC Initial Comments at 10;
NextEra Initial Comments at 28; [Oslash]rsted Initial Comments at
13; Pine Gate Initial Comments at 35-36.
    \1634\ See e.g., Pub. Serv. Co. of Colo., 169 FERC ] 61,182.
---------------------------------------------------------------------------

    857. We disagree with commenters that contend that the NOPR's
proposed transition process is unnecessary, should be optional, or
poses an undue risk of delay. As stated in the NOPR and affirmed in our
findings in section II of this final rule, we believe that
interconnection queue backlogs exist throughout the country, in part,
because the pro forma LGIP creates an incentive for interconnection
customers to submit multiple interconnection requests for a given
potential generating facility and remain in the interconnection queue
to determine which of those interconnection requests has the lowest
costs to interconnect.\1635\ Given this, simply moving to the new
cluster study process, as CREA and NewSun suggest, risks creating large
initial clusters, which may prevent interconnection customers from
being able to interconnect in a reliable, efficient, transparent, and
timely manner. Similarly, if transmission providers only used serial
study processes to transition, it could put existing interconnection
requests at greater risk of cascading withdrawals that would delay the
adoption of standard cluster study processes. With respect to concerns
that a transition process could introduce delays, we note that the
serial study portion of the transition process is limited to 90
calendar days, after which point the transitional cluster study
commences.
---------------------------------------------------------------------------

    \1635\ NOPR, 179 FERC ] 61,194 at PP 24-35.
---------------------------------------------------------------------------

    858. We decline requests to modify the proposed transitional
cluster study process to give higher-queued interconnection requests a
higher queue position than lower-queued interconnection requests. As
stated above, to address the interconnection queue backlogs that
currently exist, it is necessary to move the bulk of existing
interconnection requests to the cluster study process, and as such,
interconnection requests studied in the same cluster have equal queue
priority to avoid undue discrimination.
    859. We also decline calls to modify the NOPR proposal to require
that: (1) interconnection customers electing the transitional serial
study must provide a deposit equal to 100% of the interconnection
facility and network upgrade costs allocated to the interconnection
customer in the system impact study; and (2) interconnection customers
electing the transitional cluster study must provide a deposit equal to
$5 million. As noted earlier, the transition process is anticipated to
involve more interconnection customers than standard annual clusters
(due to existing interconnection queue backlogs), which greatly
increases the risk of late-stage withdrawals. Adopting deposit
requirements for the transitional studies higher than those adopted for
the cluster study process will help to ensure that the transitional
process is used by interconnection customers that intend to proceed
with their proposed generating facilities. In response to arguments
that the proposed deposit amounts are arbitrary and/or excessive, we
note that they are based on expected costs to the extent practicable
and that only a portion of these deposits are ultimately at-risk. That
is, the withdrawal penalty is set at nine times the study cost, as
discussed below, with the remainder of deposits to be refunded.\1636\
We also note that existing interconnection customers that are currently
in an interconnection queue can opt to withdraw their interconnection
requests without penalty and wait for the first standard cluster study
with associated lower deposit requirements. Finally, with respect to
EDF Renewable's claim that the transitional serial study deposit
conflicts with the Commission's intentions in Order No. 2003, we find
that the heightened need to avoid late-stage withdrawals during the
transition process--a need that the Commission could not have
anticipated in Order No. 2003--warrants the transitional use of this
requirement for the transitional serial study.
---------------------------------------------------------------------------

    \1636\ See supra section III.A.7.a. Also, as one indicator of
study costs, NV Energy states that, on average, it spends between
$80,000 and $100,000 between the clustered system impact study and
facilities studies. See supra section III.A.6.a.
---------------------------------------------------------------------------

    860. We adopt the NOPR proposal that the transitional study
withdrawal penalty should equal nine times the study cost. The
withdrawal penalty plays an important role in deterring speculative
interconnection requests in both the standard cluster study and the
transition process. We disagree with commenters that call for a lower
penalty to apply during the transition process, given that the risk of
withdrawals is heightened during the transition process. With respect
to [Oslash]rsted's contention that offshore wind developers will likely
withdraw interconnection requests solely due to circumstances beyond
their control, we note that, regardless of the cause, a withdrawal may
cause harm to other interconnection customers in the transition
process. Thus, we find it appropriate to impose penalties on

those that choose to withdraw notwithstanding that withdrawal may at
times be due to circumstances beyond the interconnection customer's
control. Interconnection customers will bear the risk of withdrawal
penalties and consider that risk in deciding whether to elect to join a
transition process.
    861. We recognize that some transmission providers have existing
cluster studies in progress and others have Commission-approved
transition plans in progress. We emphasize that the provisions of this
final rule are not intended to interfere with the timely completion of
those in-progress cluster studies and transition processes. With
respect to concerns about duplicative transition processes, we clarify
that transmission providers that have already adopted a cluster study
process or are currently undergoing a transition to a cluster study
process will not be required to implement a new transition process.
    862. We are not persuaded by commenters' requests to permit
transmission providers to establish their own transition plans.
Transmission providers would likely require months-to-years to develop
and execute their own transition plans, given the need for stakeholder
dialogue and internal approval, followed by Commission review and
approval. We find that the benefits of moving forward with an
efficient, standardized transition process outweigh the potential
benefits of relying on tailor-made transition processes developed by
each transmission provider and its stakeholders.
    863. Likewise, we decline to adopt any of the alternatives put
forth by commenters. We are not persuaded by Shell's proposal to allow
transmission providers to ``opt-out'' of the transition process based
on their prior performance. We view the existing serial study process
as inherently more prone to cascading withdrawals and delays, and thus
ill-suited to a transition period intended to set the stage for a
standard cluster study process. We view the Illinois Commission's
proposal for an accelerated process (for interconnection requests
related to states' objectives) in regions that may propose a lengthier
transition process timeline, as more appropriately addressed by
transmission providers in individual compliance filings. And, given the
need for even more stringent requirements in a transition process
discussed earlier, we view CREA and NewSun's proposal to use
progressively increasing deposits, during a transition process, as
inherently ill-suited to address major interconnection queue backlogs.
    864. Finally, we decline calls to modify the NOPR proposal to
require interconnection customers to meet transitional serial study
eligibility requirements in 60 days after the Commission-approved
effective date of a transmission provider's filing in compliance with
this final rule. Given that we do not adopt the proposed commercial
readiness demonstration requirements, we find that the 60-calendar day
deadline provides interconnection customers with sufficient time to
adjust to the new requirements, i.e., to choose a transition option
and, depending on the option chosen, demonstrate site control and
provide a deposit. Furthermore, we concur with NRECA that this period
will be augmented, in practice, by the 90-calendar day period afforded
to transmission providers to submit their compliance filings.\1637\
---------------------------------------------------------------------------

    \1637\ See infra section IV.C.
---------------------------------------------------------------------------

i. Transition Process Eligibility and Exceptions
    865. As stated above, we modify the NOPR proposal regarding the
eligibility for the transitional serial study and transitional cluster
study.\1638\ Any interconnection customer that has been tendered a
facilities study agreement as of 30 calendar days after the filing date
of the transmission provider's initial filing to comply with this final
rule (even if it has not yet executed that agreement) may opt to
proceed with a transitional serial study or withdraw its
interconnection request without penalty. Transmission providers are
required to tender an LGIA, pursuant to the requirements of section 11
of the pro forma LGIP, to any interconnection customer that has
received a final facilities study report before the transmission
provider commences transitional serial studies. Any interconnection
customer that has an assigned queue position as of 30 calendar days
after the filing date of the transmission provider's initial filing to
comply with this final rule may opt to proceed with a transitional
cluster study or withdraw its interconnection request without penalty.
---------------------------------------------------------------------------

    \1638\ See supra section III.A.7.c.
---------------------------------------------------------------------------

    866. We find that an earlier eligibility cut-off for the
transitional studies will allow the transitional studies to begin
sooner, which in turn, will allow transmission providers and
interconnection customers to benefit from the Commission's new cluster
study process sooner. Further, we consider this modification
appropriate because interconnection customers will have 120 calendar
days after the publication of this final rule in the Federal Register
to achieve eligibility for the transition process (90 calendar days for
transmission providers to submit compliance filings, plus the 30-
calendar day eligibility cut-off).
    867. Additionally, we modify the NOPR proposal to require the
transmission provider to tender the appropriate transitional study
agreements (serial and/or cluster as applicable) to eligible
interconnection customers no later than the Commission-approved
effective date of the transmission provider's compliance filing with
this final rule. We find that this requirement will help ensure that
interconnection customers are informed about their eligibility for the
transitional studies (including the associated requirements and
deadlines) in a timely manner.
    868. Transmission providers are not required to tender transitional
study agreements to interconnection customers that submit an
interconnection request after the 30-calendar day eligibility cut-off
described above. Interconnection customers that submit an
interconnection request after the 30-calendar day eligibility cut-off
will be required to pay for any studies conducted by the transmission
provider under its existing tariff (as required by pro forma LGIP
section 13.3), and their interconnection requests will not be allowed
to enter the transition process, although they may enter their
interconnection requests in the transmission provider's first standard
cluster study, provided that they meet the new requirements for
interconnection requests by the close of the first cluster request
window.
    869. We are persuaded by commenters' suggestion to require
transmission providers to offer the transitional serial study option to
interconnection customers that have been tendered a facilities study
agreement, even if they have not yet executed that agreement, as of 30
calendar days after the filing date of the transmission provider's
initial filing to comply with this final rule, and we modify the NOPR
proposal accordingly. We find that interconnection requests at this
point in the interconnection process are at an equivalent point as
those interconnection requests for which interconnection customers have
executed a facilities study agreement, as in both cases, the
transmission provider has completed the system impact study but has not
yet commenced the facilities study. We are not persuaded by commenters
to extend the option for

transitional serial study to interconnection requests at earlier stages
in the interconnection process, as such modifications may undermine the
ability of the proposed reforms to accelerate interconnection queue
processing and could delay the transition to the new, more efficient
cluster study process. We disagree with the proposal to exempt from the
transition process interconnection requests that appear, based on a
feasibility study, to require limited or no network upgrades. The
results of this feasibility study may no longer be accurate depending
on which higher-queued interconnection customers remain in the
interconnection queue after the transition date.
ii. Commercial Readiness and Site Control
    870. We decline to adopt the proposed commercial readiness
demonstration options for transitional studies for the same reasons
that we are not adopting those options for cluster studies going
forward, as discussed above. We adopt with modification the NOPR's
proposed site control requirements. Specifically, we require
interconnection customers electing a transitional study, regardless of
whether they select the transitional serial study or the transitional
cluster study, to demonstrate 100% site control for their proposed
generating facilities. We find that such a requirement will provide
further assurance that such interconnection customers are ready to
proceed to construction. We modify the NOPR proposal by declining to
require that interconnection customers that choose to proceed with a
transitional serial interconnection facilities study must also
demonstrate 100% site control for any interconnection customer's
interconnection facilities because such a requirement would be overly
burdensome for interconnection customers, in addition to the other
requirements we are adopting elsewhere in this final rule. Further, we
find that this requirement is not needed to ensure that such
interconnection customers are ready to proceed to construction.
iii. Tariff Language
    871. We agree with Southern's recommendation to align timelines for
truing up construction costs in the proposed pro forma LGIP section
<IP_ADDRESS>(2) and current, unmodified by this final rule, pro forma LGIA
article 12.2 (Final Invoice) by making these provisions consistent at
six months, and we modify the NOPR proposal accordingly. We agree with
Southern that consistent timelines for truing up construction costs
will provide clarity and certainty for interconnection customers.

B. Reforms To Increase the Speed of Interconnection Queue Processing

1. Elimination of the Reasonable Efforts Standard
a. Need for Reform and NOPR Proposal
    872. As the Commission explained in the NOPR, the pro forma LGIP
does not require transmission providers to meet deadlines for
conducting interconnection studies.\1639\ Rather, transmission
providers are only required to use ``reasonable efforts'' to complete
interconnection studies on time.\1640\ ``Reasonable efforts'' are
defined as ``actions that are timely and consistent with Good Utility
Practice and are substantially equivalent to those a Party would use to
protect its own interests.'' \1641\ There are no explicit consequences
in the pro forma LGIP for transmission providers that fail to meet
their study deadlines.
---------------------------------------------------------------------------

    \1639\ NOPR, 179 FERC ] 61,194 at P 28.
    \1640\ See pro forma LGIP sections 2.2, 6.3, 7.4, 8.3.
    \1641\ Order No. 2003, 104 FERC ] 61,103 at P 67; pro forma LGIP
section 1.
---------------------------------------------------------------------------

    873. In the NOPR, the Commission preliminarily found that the use
of the reasonable efforts standard for transmission providers to
complete interconnection studies resulted in Commission-jurisdictional
rates that were unjust and unreasonable because: (1) the timely
provision of interconnection service was critical to maintaining just
and reasonable rates; (2) the data collected pursuant to Order No. 845
demonstrated that the failure to timely complete interconnection
studies was a significant nationwide problem, even for transmission
providers that had implemented other interconnection reforms; and (3)
the reasonable efforts standard did not provide a meaningful incentive
for transmission providers to complete their interconnection studies
within the deadlines established in their tariffs.\1642\
---------------------------------------------------------------------------

    \1642\ NOPR, 179 FERC ] 61,194 at PP 165-167 (citing May Joint
Task Force Tr. 89:6-25 (Thad LeVar) (encouraging the Commission to
examine ``appropriate consequences to the transmission providers
when they [do not] comply with the tariffs,'' including by missing
study deadlines)).
---------------------------------------------------------------------------

    874. The Commission proposed to revise the pro forma LGIP to
eliminate the reasonable efforts standard for transmission providers
completing interconnection studies and instead impose firm study
deadlines and establish penalties that would apply when transmission
providers fail to meet study deadlines.\1643\ Specifically, the
Commission proposed to require transmission providers that do not
complete a cluster study, cluster restudy, facilities study, or
affected system study by the deadline specified in the pro forma LGIP
to pay a penalty of $500 per each business day that the study is late,
except in situations where force majeure applies. The Commission
proposed that those penalties would be distributed to the delayed
interconnection customers on a pro rata basis to offset their study
costs. Consistent with other penalties, the Commission proposed that
such penalties would not be recoverable in transmission rates.\1644\
---------------------------------------------------------------------------

    \1643\ Id. P 168.
    \1644\ Id. P 169.
---------------------------------------------------------------------------

    875. The Commission also proposed to cap penalties at 100% of the
total study deposit received for the late study to provide a safeguard
against overly large penalties that may be considered punitive.\1645\
The Commission further proposed that no financial penalties on
transmission providers that fail to meet study deadlines would be
assessed until one cluster study cycle (that is not a transitional
study cycle) after the Commission-approved effective date for
implementing the reforms proposed in the NOPR. Additionally, the
Commission proposed a 10-business day grace period such that no
penalties would be assessed for a study that is delayed by 10 business
days or less; for studies that are delayed by more than 10 business
days, the penalty would be calculated based on the first business day
the study was late. Further, the Commission proposed to permit the
transmission provider to extend the deadline for a particular study by
30 business days by mutual agreement of the transmission provider and
all interconnection customers in the relevant study. Finally, the
Commission proposed to require transmission providers to post to their
OASIS or a public website on a quarterly basis the total amount of such
penalties from the previous quarter and the highest amount of such
penalties paid to a single interconnection request from the previous
quarter.
---------------------------------------------------------------------------

    \1645\ Id. P 170.
---------------------------------------------------------------------------

    876. The Commission acknowledged that the application of penalties
for late interconnection studies in the context of RTOs/ISOs may raise
several unique issues.\1646\ However, consistent with the Commission's
findings in Order No. 890,\1647\ the Commission explained that

penalties are appropriate in certain circumstances to incentivize
compliance with tariff deadlines, notwithstanding the RTO's/ISO's
status as a not-for-profit entity. To ensure that RTOs/ISOs would be
able to pay any such penalties, the Commission proposed to require
RTOs/ISOs to propose tariff provisions that would require the RTO/ISO
to submit requests to recover the costs of specific interconnection
study penalties under FPA section 205. The Commission explained that,
similar to the ability of RTOs/ISOs to seek to directly assign monetary
penalties for violations of reliability standards to other responsible
entities, RTOs/ISOs could include a provision that the RTO/ISO may make
an FPA section 205 filing seeking to allocate such penalties to the
appropriate transmission owner that is responsible for, or contributed
to, the delay.\1648\ However, the Commission sought comment on whether
there was a more appropriate method for assigning such penalties in
RTOs/ISOs. More generally, the Commission sought comment on whether
penalties would effectively incentivize more timely completion of
interconnection studies in RTOs/ISOs, and/or whether monetary penalties
could have adverse consequences (e.g., compromising accuracy or
increasing waiver requests as transmission providers strive to meet
deadlines).
---------------------------------------------------------------------------

    \1646\ Id. P 171.
    \1647\ Preventing Undue Discrimination & Preference in
Transmission Serv., Order No. 890, 118 FERC ] 61,119, 72 FR 12226,
order on reh'g, Order No. 890-A, 121 FERC ] 61,297 (2007), order on
reh'g, Order No. 890-B, 123 FERC ] 61,299 (2008), order on reh'g,
Order No. 890-C, 126 FERC ] 61,228, order on clarification, Order
No. 890-D, 129 FERC ] 61,126 (2009).
    \1648\ NOPR, 179 FERC ] 61,194 at P 172.
---------------------------------------------------------------------------

    877. Additionally, the Commission sought comment on: (1) the
proposed penalty structure, including whether the penalty amount for a
cluster study should be $500 per business day or whether an approach
that accounts for the number of interconnection customers affected,
such as $100 per business day per customer in the delayed study, would
be more appropriate; (2) how and when the Commission should require
transmission providers to communicate to interconnection customers the
status of studies that may be delayed; (3) whether to include
exceptions to the penalty other than force majeure, and if so, what
those exceptions should be; and (4) whether Commission staff should
issue periodic reports summarizing the status of transmission
providers' interconnection queues and timeliness of interconnection
studies based on information collected through existing reporting
requirements, and whether this periodic report should be in addition to
or a substitute for the proposed monetary penalties discussed
above.\1649\
---------------------------------------------------------------------------

    \1649\ Id. P 173.
---------------------------------------------------------------------------

b. Comments
i. Comments in Support
    878. Many commenters support the NOPR proposal to eliminate the
reasonable efforts standard and establish firm interconnection study
deadlines by imposing financial penalties when transmission providers
fail to meet study deadlines.\1650\ Multiple commenters explain that
interconnection studies are often substantially delayed, which creates
uncertainty and risk in the process of bringing new generating
facilities online,\1651\ and ultimately results in an unreasonable
market barrier for new generating facilities.\1652\ NARUC contends that
the timely provision of interconnection service is critical to
maintaining just and reasonable rates.\1653\
---------------------------------------------------------------------------

    \1650\ ACE-NY Initial Comments at 11-12; ACE-NY Reply Comments
at 2; ACORE Initial Comments at 4; Affected Interconnection
Customers Initial Comments at 23-25; CESA Initial Comments at 11;
Clean Energy Associations Initial Comments at 43; Clean Energy
States Initial Comments at 9; Consumers Energy Initial Comments at
5; CREA and NewSun Initial Comments at 83; CREA and NewSun Reply
Comments at 56; Cypress Creek Initial Comments at 23; ELCON Initial
Comments at 7; EPSA Initial Comments at 10-11; Evergreen Action
Initial Comments at 2; Fervo Energy Initial Comments at 5; Fervo
Energy Reply Comments at 7; Google Initial Comments at 5; Google
Reply Comments at 3, 5; Illinois Commission Initial Comments at 9;
Individual Signatories Initial Comments at 1; Interwest Initial
Comments at 8; Invenergy Initial Comments at 29-30; Iowa Commission
Initial Comments at 5; Navajo Utility Initial Comments at 12; New
Jersey Commission Initial Comments at 13-14; New Jersey Commission
Reply Comments at 1; Northwest and Intermountain Initial Comments at
14; [Oslash]rsted Initial Comments at 14; Pine Gate Initial Comments
at 38; Public Interest Organizations Initial Comments at 33; SEIA
Initial Comments at 30; TAPS Initial Comments at 3; UMPA Initial
Comments at 6-7.
    \1651\ ELCON Initial Comments at 7; EPSA Initial Comments at 11;
Fervo Energy Initial Comments at 5; NARUC Initial Comments at 13-14;
Navajo Utility Initial Comments at 12; SEIA Initial Comments at 33.
    \1652\ Pennsylvania Commission Initial Comments at 4; see also
AEE Reply Comments at 21, 30; Fervo Energy Reply Comments at 7;
Public Interest Organizations Initial Comments at 33 (explaining
that the slow pace of interconnection has discouraged incorporation
of new generation and stunted the transition of the transmission
system).
    \1653\ NARUC Initial Comments at 13-14.
---------------------------------------------------------------------------

    879. Some commenters argue that the interconnection queue backlogs
indicate that the reasonable efforts standard has not been effective in
ensuring timely access to the transmission system for new generating
facilities \1654\ nor in imposing consequences when transmission
providers fail to meet study deadlines.\1655\ Some commenters argue
that the Order No. 845 reporting data supports the conclusion that the
reasonable efforts standard has failed to ensure transmission providers
complete interconnection studies on time.\1656\ AEE argues that the
broad definition of ``reasonable efforts'' presents a high bar to prove
that interconnection study delays were unreasonable.\1657\
---------------------------------------------------------------------------

    \1654\ AEE Reply Comments at 20-21; Clean Energy Associations
Initial Comments at 43; CREA and NewSun Initial Comments at 84; Iowa
Commission Initial Comments at 5; New Jersey Commission Reply
Comments at 3; Public Interest Organizations Initial Comments at 34.
    \1655\ ACE-NY Reply Comments at 3; Affected Interconnection
Customers Initial Comments at 23; CREA and Newsun Initial Comments
at 83; EPSA Initial Comments at 10; Fervo Energy Initial Comments at
5; Pennsylvania Commission Initial Comments at 2.
    \1656\ ACE-NY Initial Comments at 11-12; AEE Reply Comments at
18; Affected Interconnection Customers Initial Comments at 23-24;
Pennsylvania Commission Initial Comments at 2-3; UMPA Initial
Comments at 6-7.
    \1657\ AEE Initial Comments at 28.
---------------------------------------------------------------------------

    880. Some commenters assert that the reasonable efforts standard
results in an insufficient allocation of transmission provider
resources to process the interconnection queue \1658\ and that the risk
of penalties will provide a needed incentive for transmission providers
to complete interconnection studies on time.\1659\ Some commenters
argue that penalizing transmission providers is appropriate because
they control the staffing and study process and are in the best
position to ensure that studies are timely and accurate.\1660\ CREA and
NewSun assert that the volume of interconnection requests is unlikely
to decrease, so transmission providers need to ensure that they hire
adequate staff to meet this need.\1661\ Google cautions against taking
``implicit threats of reduced cooperation or assertions that
transmission providers cannot do any better'' seriously, noting that
any major reform to interconnection processes will entail growing
pains.\1662\

AEE argues that some transmission providers have improved their
generator interconnection process, which underscores that it is
feasible to hold all transmission providers to higher standards.\1663\
---------------------------------------------------------------------------

    \1658\ ELCON Initial Comments at 7; Fervo Energy Initial
Comments at 5; Invenergy Initial Comments at 29-30; Northwest and
Intermountain Initial Comments at 14; see also Clean Energy
Associations Initial Comments at 43-44; NARUC Initial Comments at
14; SEIA Initial Comments at 33.
    \1659\ ACE-NY Initial Comments at 12; ACE-NY Reply Comments at
3; ELCON Initial Comments at 7; EPSA Initial Comments at 11;
Evergreen Action Initial Comments at 2-3; Fervo Energy Initial
Comments at 5; Google Initial Comments at 16; Individual Signatories
Initial Comments at 1; New Jersey Commission Reply Comments at 2;
Northwest and Intermountain Initial Comments at 14; Pine Gate
Initial Comments at 38; Public Interest Organizations Initial
Comments at 34; SEIA Initial Comments at 33; TAPS Initial Comments
at 3.
    \1660\ Invenergy Initial Comments at 30; SEIA Initial Comments
at 32; see also Iowa Commission Initial Comments at 5-6 (``RTOs/ISOs
need to prioritize interconnection studies and need to hold their
employees and/or outside entities responsible for delays'').
    \1661\ CREA and NewSun Reply Comments at 56.
    \1662\ Google Reply Comments at 4.
    \1663\ AEE Reply Comments at 26.
---------------------------------------------------------------------------

    881. Some commenters point out that the NOPR proposal resolves an
imbalance between interconnection customers, which are held to strict
deadlines, and transmission providers, which are currently not required
to meet study deadlines.\1664\ Some commenters assert that the proposed
penalties complement the stricter financial and readiness requirements
that the NOPR proposed to apply to interconnection customers \1665\ or
that the firm study deadlines and penalty structure are necessary to
ensure that the other NOPR proposals are successful.\1666\
---------------------------------------------------------------------------

    \1664\ ACE-NY Initial Comments at 12; CREA and NewSun Initial
Comments at 83-84; ELCON Initial Comments at 8; Fervo Energy Reply
Comments at 7-8; Pennsylvania Commission Initial Comments at 2-3;
Public Interest Organizations Reply Comments at 10; SEIA Reply
Comments at 13.
    \1665\ AEE Reply Comments at 19-21; APPA-LPPC Initial Comments
at 21; Clean Energy Associations Initial Comments at 43.
    \1666\ ACE-NY Initial Comments at 12; EPSA Initial Comments at
11; Evergreen Action Initial Comments at 2-3; Fervo Energy Initial
Comments at 5; Individual Signatories Initial Comments at 1; New
Jersey Commission Reply Comments at 2; Pine Gate Initial Comments at
38; SEIA Initial Comments at 33.
---------------------------------------------------------------------------

    882. Multiple commenters note that long interconnection delays have
economic costs for consumers, so transmission providers should also
face economic costs for failing to meet deadlines.\1667\ Navajo Utility
asserts that interconnection delays prevent it from using 100 MW of
transmission rights that it was granted through settlement, which
leaves it with an obligation to pay for transmission rights without the
ability to use them.\1668\
---------------------------------------------------------------------------

    \1667\ AEE Reply Comments at 18, 30; Consumers Energy Initial
Comments at 7 (explaining that interconnection delays could create
additional costs to end-use customers because LSEs may invest in
continued operation of existing assets set to retire while new
generating facilities are delayed); Evergreen Action Initial
Comments at 2; Interwest Initial Comments at 8; Iowa Commission
Initial Comments at 5-6 (asserting that ``[d]elayed studies result
in denial of likely low-cost generation to consumers''); Navajo
Utility Initial Comments at 12 (explaining that study delays
postpone important generation, tax revenue, and construction jobs
for Navajo Nation); Northwest and Intermountain Initial Comments at
14; Public Interest Organizations Reply Comments at 10; SEIA Initial
Comments at 32; SEIA Reply Comments at 13.
    \1668\ Navajo Utility Initial Comments at 12.
---------------------------------------------------------------------------

ii. Comments in Opposition
    883. Many commenters, particularly transmission providers, oppose
the NOPR proposal to eliminate the reasonable efforts standard and
impose financial penalties on transmission providers for late
studies.\1669\ Further, some commenters assert that the Commission
cannot support a statutory finding under FPA section 206 to justify the
NOPR proposal \1670\ or that the NOPR proposal is not based on
substantial evidence and fails to consider important aspects of the
problem.\1671\
---------------------------------------------------------------------------

    \1669\ AECI Initial Comments at 6; AEP Initial Comments at 25-
29; Alliant Energy Initial Comments at 6; Ameren Initial Comments at
20-21; Avangrid Initial Comments at 9; Bonneville Initial Comments
at 15; Dominion Initial Comments at 34; EEI Initial Comments at 14-
15; Indicated PJM TOs Initial Comments at 5, 36; Longroad Energy
Reply Comments at 14; MISO Initial Comments at 13, 71; MISO TOs
Initial Comments at 14; NextEra Initial Comments at 6, 29-30; North
Dakota Commission Initial Comments at 5; NYISO Initial Comments at
25-26; NYTOs Reply Comments at 2; Omaha Public Power Initial
Comments at 11; OMS Initial Comments at 15; Pacific Northwest
Utilities Initial Comments at 9; PacifiCorp Initial Comments at 32-
34; PG&E Initial Comments at 3-5; PJM Initial Comments at 7, 55; PPL
Initial Comments at 19; Puget Sound Initial Comments at 9; SDG&E
Reply Comments at 1; Southern Initial Comments at 5; SPP Initial
Comments at 11; Tri-State Initial Comments at 17-18; U.S. Chamber of
Commerce Initial Comments at 9; Vermont Electric and Vermont Transco
Initial Comments at 2; WAPA Initial Comments at 10; WIRES Initial
Comments at 9-10; Xcel Initial Comments at 38.
    \1670\ Indicated PJM TOs Initial Comments at 38.
    \1671\ Dominion Reply Comments at 20; MISO TOs Initial Comments
at 23; NYISO Reply Comments at 4-5; PG&E Reply Comments at 2-3.
---------------------------------------------------------------------------

    884. Many commenters argue that it is inequitable to penalize
transmission providers for study delays because those delays are
largely due to factors outside the transmission provider's control,
including high volumes of speculative interconnection requests, a
shortage of qualified engineers, delayed data from interconnection
customers, affected system coordination, cascading restudies caused by
withdrawals, and the increasing complexity of studies due to new types
of generating facilities.\1672\ Some commenters contend that the record
supports retaining the reasonable efforts standard because third-party
forces are common to most study delays.\1673\
---------------------------------------------------------------------------

    \1672\ AEP Initial Comments at 25-26; Ameren Initial Comments at
20; Avangrid Initial Comments at 9-10, 29; Dominion Reply Comments
at 19; Indicated PJM TOs Reply Comments at 22-24; ISO-NE Initial
Comments at 35-36; ISO/RTO Council Initial Comments at 3-4; MISO
Initial Comments at 73-74; MISO TOs Initial Comments at 15-16, 23-
24; National Grid Initial Comments at 30; NESCOE Reply Comments at
11-12; NRECA Initial Comments at 9, 33-34; NYISO Initial Comments at
26-27; OMS Initial Comments at 15; Pacific Northwest Utilities
Initial Comments at 9-10; PacifiCorp Initial Comments at 32-35; PG&E
Initial Comments at 7; PG&E Reply Comments at 3-4; Puget Sound
Initial Comments at 9; SDG&E Reply Comments at 1; Southern Initial
Comments at 5, 30; State Agencies Initial Comments at 12-14; Tri-
State Initial Comments at 17-18; U.S. Chamber of Commerce Initial
Comments at 10; WIRES Initial Comments at 9; Xcel Initial Comments
at 38.
    \1673\ Eversource Initial Comments at 28; MISO TOs Reply
Comments at 13; PacifiCorp Initial Comments at 33; Southern Initial
Comments at 30; U.S. Chamber of Commerce Initial Comments at 10.
---------------------------------------------------------------------------

    885. Some commenters argue that data from reports required by Order
No. 845 does not support the NOPR proposal.\1674\ AEP notes that the
data referenced in the NOPR represents only one year and does not
support the conclusion that transmission providers are intentionally
slow in interconnection queue processing.\1675\ MISO notes that its
Order No. 845 reports show that the majority of delays are caused by
the need to wait for affected systems studies.\1676\ NYISO states that
its August 2022 Order No. 845 report, and other recent RTO/ISO reports,
detail the various drivers of delays, which are typically outside their
control.\1677\ NYISO argues that it would not be reasoned decision-
making for the Commission to ignore these reports and draw an overly
simplistic conclusion that the reasonable efforts standard is to blame
for study delays. PG&E and Southern note that their Order No. 845 data
indicates that they have no delayed studies.\1678\
---------------------------------------------------------------------------

    \1674\ AEP Initial Comments at 25; MISO Initial Comments at 72.
    \1675\ AEP Initial Comments at 25-27.
    \1676\ MISO Initial Comments at 14, 72.
    \1677\ NYISO Initial Comments at 27-29.
    \1678\ PG&E Initial Comments at 4-6; Southern Initial Comments
at 30-31.
---------------------------------------------------------------------------

    886. Conversely, AEE and Public Interest Organizations respond that
commenters that claim that study delays are caused by factors beyond
transmission providers' control fail to acknowledge the availability of
potential solutions, such as increasing expenditures to attract and
retain staff and policy and process improvements.\1679\ ACE-NY asserts
that, while other parties can cause delays, transmission providers are
also responsible for delays.\1680\ SEIA argues that interconnection
request withdrawals are often similarly outside interconnection
customers' control.\1681\ AEE contends that accepting high
interconnection queue volumes as a legitimate cause for delays would
amount to providing a permanent free pass to transmission providers to
exceed study deadlines.\1682\
---------------------------------------------------------------------------

    \1679\ AEE Reply Comments at 34-35; MISO TOs Initial Comments at
18; Public Interest Organizations Reply Comments at 2-4.
    \1680\ ACE-NY Reply Comments at 3.
    \1681\ SEIA Reply Comments at 16.
    \1682\ AEE Reply Comments at 27.
---------------------------------------------------------------------------

    887. Several commenters who oppose the NOPR proposal assert that
transmission providers engage in good

faith efforts to process the interconnection queue in a timely manner
\1683\ and that there is no evidence to the contrary.\1684\ Commenters
argue that transmission providers already have sufficient motivation to
process the interconnection queue in a timely manner because: (1) their
own interconnection requests are processed in the exact same manner as
third parties; (2) they need to ensure an adequate amount of generation
to meet load and reserve margin requirements; and (3) they have to file
reports with the Commission and can face complaints or enforcement
action for poor performance.\1685\ Commenters assert that penalties
will be ineffective in speeding interconnection queue processing time
because the main causes of study delays will remain.\1686\ MISO TOs
contend that the Commission proposes to compound the problem of study
delays by requiring transmission owners and providers to manage delays
that are out of their control, while simultaneously proposing to
require transmission providers to offer additional studies.\1687\
---------------------------------------------------------------------------

    \1683\ AEP Initial Comments at 26; Avangrid Initial Comments at
29; Dominion Initial Comments at 34; EEI Initial Comments at 15;
Eversource Initial Comments at 21-22; Indicated PJM TOs Initial
Comments at 5-6, 38; MISO TOs Initial Comments at 15-17; NextEra
Initial Comments at 29; NYISO Initial Comments at 26-27; OMS Initial
Comments at 15; Puget Sound Initial Comments at 9-10; State Agencies
Initial Comments at 12; Vermont Electric and Vermont Transco Initial
Comments at 2.
    \1684\ AEP Initial Comments at 26; Avangrid Initial Comments at
29; Dominion Initial Comments at 34; EEI Initial Comments at 15;
Eversource Initial Comments at 21-22; Indicated PJM TOs Initial
Comments at 5-6, 38; MISO TOs Initial Comments at 15-17; NextEra
Initial Comments at 29; NYISO Initial Comments at 26-27; Puget Sound
Initial Comments at 9-10; State Agencies Initial Comments at 12.
    \1685\ AEP Initial Comments at 26; Dominion Initial Comments at
36; Indicated PJM TOs Initial Comments at 37-38; MISO TOs Initial
Comments at 16; PJM Initial Comments at 56; Puget Sound Initial
Comments at 10.
    \1686\ Ameren Initial Comments at 20; Bonneville Initial
Comments at 15; Dominion Initial Comments at 34-35; Eversource
Initial Comments at 20-21; Indicated PJM TOs Initial Comments at 39-
40; MISO Initial Comments at 13, 71; NextEra Initial Comments at 30;
NextEra Reply Comments at 11; North Dakota Commission Initial
Comments at 5; PacifiCorp Initial Comments at 34; PG&E Reply
Comments at 3; PJM Initial Comments at 7-8, 56; R Street Initial
Comments at 14; Southern Initial Comments at 30; State Agencies
Initial Comments at 12.
    \1687\ MISO TOs Reply Comments at 12.
---------------------------------------------------------------------------

    888. NextEra argues that penalties will be counterproductive if not
paired with constructive guidance to transmission providers on how to
perform interconnection studies in a timelier manner because penalties
could either divert resources away from interconnection studies and
lead to conflict about allocating penalties in RTOs/ISOs or be accepted
as a cost of doing business.\1688\
---------------------------------------------------------------------------

    \1688\ NextEra Initial Comments at 29-30.
---------------------------------------------------------------------------

    889. Indicated PJM TOs contest the NOPR's citation to testimony
provided by Utah Public Service Commission Chairman Thad LeVar, noting
that Chairman LeVar also acknowledged that best practices vary between
RTO/ISO and non-RTO/ISO regions and that penalties do not always result
in the best consequences.\1689\
---------------------------------------------------------------------------

    \1689\ Indicated PJM TOs Initial Comments at 38 (citing May
Joint Task Force Tr. 46:11-13, 89:17-18 (Thad LeVar)).
---------------------------------------------------------------------------

    890. Some commenters argue that the NOPR proposal is an unsupported
shift from recent precedent.\1690\ Commenters note that the Commission
expressly declined to impose penalties for study delays in Order No.
845 and argue that there is no change in circumstance or concrete
evidence to justify reversal of that prior finding.\1691\
---------------------------------------------------------------------------

    \1690\ EEI Initial Comments at 14; MISO Reply Comments at 21.
    \1691\ MISO TOs Initial Comments at 21-22; NYISO Initial
Comments at 26; PG&E Initial Comments at 6; PG&E Reply Comments at
3.
---------------------------------------------------------------------------

    891. Commenters also note that, although the Commission based its
penalty proposal on Order No. 890, there are significant
differences.\1692\ First, commenters explain that the Order No. 890
penalties only apply when a transmission provider fails to meet
multiple study deadlines, whereas the NOPR proposes to impose penalties
each time a study deadline is missed.\1693\ Second, commenters point
out that the Order No. 890 penalty structure protects due process
through an opportunity to present evidence that delays were outside the
transmission provider's control or due to extenuating circumstances,
whereas the NOPR proposal does not.\1694\ Third, PacifiCorp explains
that interconnection studies are more complex, numerous, and
susceptible to delays than the transmission service studies at issue in
Order No. 890.\1695\ Affected Interconnection Customers argue that the
Commission's comparison to Order No. 890's penalty structure for
transmission service requests is misplaced because the size and scale
of the current interconnection queue backlog is significantly different
than transmission queues when Order No. 890 was issued.\1696\
Similarly, Invenergy notes that the reference to transmission service
requests is inapplicable because the interconnection process uses a
cluster study.\1697\
---------------------------------------------------------------------------

    \1692\ MISO TOs Initial Comments at 19; PacifiCorp Initial
Comments at 33-34.
    \1693\ MISO TOs Initial Comments at 19; MISO Reply Comments at
21; Tri-State Initial Comments at 18.
    \1694\ Eversource Initial Comments at 30; MISO Reply Comments at
21; MISO TOs Initial Comments at 19-21.
    \1695\ PacifiCorp Initial Comments at 33-34.
    \1696\ Affected Interconnection Customers Initial Comments at
25.
    \1697\ Invenergy Initial Comments at 30.
---------------------------------------------------------------------------

    892. EEI and Eversource state that the NOPR proposal represents a
departure from the good utility practice standard, which the Commission
uses in many other contexts and is part of the definition of reasonable
efforts.\1698\ EEI and Eversource assert that the Commission has not
adequately explained why reliance on good utility practice remains
sufficient in other situations, but not for interconnection studies.
---------------------------------------------------------------------------

    \1698\ EEI Initial Comments at 15; Eversource Initial Comments
at 22-24.
---------------------------------------------------------------------------

    893. Commenters contend that firm study deadlines are not
reasonable or feasible because interconnection studies are complex and
each study is different in scope, size, and needed coordination.\1699\
Some commenters also note that the current deadlines were established
almost 20 years ago, when the transmission providers had significantly
fewer interconnection requests to study.\1700\ SPP contends that
cluster studies are more prone to study delays given the
interdependencies between interconnection requests and number of
parties that need to cooperate.\1701\ Commenters also assert that the
other NOPR proposals, including the optional resource solicitation
study, informational studies, and evaluation of advanced transmission
technologies, add significant burdens to the study process that will
make it even more challenging to comply with strict deadlines.\1702\
---------------------------------------------------------------------------

    \1699\ AECI Initial Comments at 6; Avangrid Initial Comments at
28-29; Bonneville Initial Comments at 15; Clean Energy States
Initial Comments at 10-11; Eversource Initial Comments at 27; Idaho
Power Initial Comments at 10; ISO-NE Initial Comments at 35-36; ISO/
RTO Council Reply Comments at 2; MISO TOs Initial Comments at 15;
National Grid Initial Comments at 30; PJM Initial Comments at 58;
Puget Sound Initial Comments at 10; SPP Initial Comments at 13; U.S.
Chamber of Commerce Initial Comments at 10; WIRES Initial Comments
at 10.
    \1700\ Eversource Initial Comments at 27; Indicated PJM TOs
Initial Comments at 37-38.
    \1701\ SPP Initial Comments at 11-12.
    \1702\ Id. at 13; Indicated PJM TOs Initial Comments at 36; MISO
Reply Comments at 7; PPL Initial Comments at 24.
---------------------------------------------------------------------------

    894. Some commenters express concern that the penalties could
reduce coordination between transmission providers, interconnection
customers, and affected systems.\1703\ Commenters

note that the enforcement of deadlines could be expensive, involve
contentious disputes, and disrupt ongoing studies.\1704\ Commenters
state that transmission providers will also likely provide less
flexibility to interconnection customers to remedy deficiencies or
modify interconnection requests.\1705\ MISO TOs assert that this could
threaten reliability.\1706\ NESCOE points out that firm penalties may
impede the interconnection of emerging technologies by limiting
flexibility to work on modeling and data requirements.\1707\
---------------------------------------------------------------------------

    \1703\ Alliant Energy Initial Comments at 6; EEI Initial
Comments at 15; Eversource Initial Comments at 25-26; MISO Reply
Comments at 21; North Dakota Commission Initial Comments at 6.
    \1704\ Clean Energy Associations Initial Comments at 45; EEI
Initial Comments at 15; MISO Initial Comments at 13, 71; MISO TOs
Initial Comments at 24; MISO TOs Reply Comments at 10; National Grid
Initial Comments at 30; NextEra Initial Comments at 30; OMS Initial
Comments at 15; PacifiCorp Initial Comments at 35; R Street Initial
Comments at 14; SPP Initial Comments at 14.
    \1705\ Dominion Reply Comments at 21; EEI Initial Comments at
15; Eversource Initial Comments at 25-26; NYISO Initial Comments at
38-39; WIRES Initial Comments at 10.
    \1706\ MISO TOs Reply Comments at 18-19.
    \1707\ Id.; NESCOE Initial Comments at 17.
---------------------------------------------------------------------------

    895. PJM argues that using penalties to offset study costs for
interconnection customers introduces perverse incentives for the
interconnection customer to dispute and thereby delay its study reports
to receive the penalty money.\1708\ In response, however, AEE notes
that interconnection customers bear greater costs due to delays, which
creates an incentive to move forward as quickly as possible.\1709\
---------------------------------------------------------------------------

    \1708\ PJM Initial Comments at 57.
    \1709\ AEE Reply Comments at 35-36.
---------------------------------------------------------------------------

    896. Commenters note that the same engineers that conduct
interconnection studies also have other responsibilities such as
transmission planning \1710\ and responding to extreme weather
events.\1711\ Ameren states that penalties could motivate transmission
providers to redirect resources towards interconnection studies to the
detriment of other necessary functions.\1712\ Some commenters argue
that penalties will deprive transmission providers of financial
resources or harm work environments and employee morale, making it more
difficult to recruit and retain personnel qualified to perform the
studies.\1713\
---------------------------------------------------------------------------

    \1710\ Indicated PJM TOs Initial Comments at 6.
    \1711\ National Grid Initial Comments at 30.
    \1712\ Ameren Initial Comments at 21.
    \1713\ Eversource Initial Comments at 25-26; Indicated PJM TOs
Initial Comments at 24, 40; MISO TOs Initial Comments at 24; Pacific
Northwest Utilities Initial Comments at 12; PJM Initial Comments at
57.
---------------------------------------------------------------------------

    897. A number of commenters express concern that the NOPR proposal
may result in less accurate studies because transmission providers may
prioritize meeting deadlines over accuracy and identification of the
most efficient solutions.\1714\ Some commenters further assert that
penalties may impair system reliability because the study timelines are
too short to carry out sufficient analysis.\1715\ Some commenters argue
that the penalties could force transmission providers to complete
studies without necessary data, which could also lead to inaccurate
results and cause restudy.\1716\ Some commenters state that less
accurate studies would harm interconnection customers because
interconnection customers cannot rely on them to make sound business
decisions.\1717\ Avangrid states that transmission providers could use
more conservative assumptions and ``stock solutions'' to streamline
studies, which could increase interconnection costs.\1718\ However, in
response to these comments, AEE states that the implementation of
timelines and penalties does not inherently determine the evaluation
process for clusters.\1719\ AEE notes that inaccurate study results
occur today without firm deadlines and that accuracy can be improved
even with deadlines.\1720\ New Jersey Commission disagrees that there
is an inherent tradeoff between system reliability and holding
transmission providers accountable, arguing that failing to bring
sufficient new generating facilities online can create considerable
reliability and economic risks.\1721\
---------------------------------------------------------------------------

    \1714\ AECI Initial Comments at 6; Alliant Energy Initial
Comments at 6; Avangrid Initial Comments at 9-10, 30; Bonneville
Initial Comments at 15-16; CESA Reply Comments at 8; Clean Energy
Buyers Initial Comments at 10-11; Enel Initial Comments at 48;
Indicated PJM TOs Reply Comments at 26; ISO/RTO Council Initial
Comments at 8; Longroad Energy Reply Comments at 14; MISO Initial
Comments at 13, 71, 77-78; MISO TOs Initial Comments at 14, 24;
National Grid Initial Comments at 30; NESCOE Reply Comments at 13;
NextEra Reply Comments at 11; North Dakota Commission Initial
Comments at 6; NRECA Initial Comments at 34; NYISO Initial Comments
at 38-39; NYTOs Initial Comments at 24-28; Omaha Public Power
Initial Comments at 12; OMS Initial Comments at 15; [Oslash]rsted
Initial Comments at 15; PacifiCorp Reply Comments at 6; PJM Initial
Comments at 8, 56-57; PPL Initial Comments at 19; SPP Initial
Comments at 11-12; Tri-State Initial Comments at 18; Xcel Initial
Comments at 38.
    \1715\ AEP Initial Comments at 28; Dominion Reply Comments at
21; NYISO Initial Comments at 39; PJM Initial Comments at 8, 56-57.
    \1716\ Ameren Initial Comments at 21; MISO Initial Comments at
78; SPP Initial Comments at 12-13.
    \1717\ Enel Initial Comments at 48-49; MISO Initial Comments at
78; OMS Initial Comments at 15; SPP Initial Comments at 12.
    \1718\ Avangrid Initial Comments at 30.
    \1719\ AEE Reply Comments at 33.
    \1720\ Id. at 31-32.
    \1721\ New Jersey Commission Reply Comments at 3.
---------------------------------------------------------------------------

    898. Commenters express concern that the cost of penalties and
compliance mechanisms may be passed down to customers and increase
transmission costs.\1722\ Clean Energy Buyers argue that the penalties,
if they flow through to interconnection customers, could outweigh the
benefits gained from other reforms and lead to disputes over the
allocation of penalty amounts.\1723\ R Street points out that the
Commission will have to ensure that transmission providers cannot
translate penalties into cost recovery at either the Federal or retail
level.\1724\
---------------------------------------------------------------------------

    \1722\ Alliant Energy Initial Comments at 6-7; NARUC Initial
Comments at 19; NYISO Reply Comments at 6-7, 9; R Street Initial
Comments at 14; SEIA Reply Comments at 17; State Agencies Initial
Comments at 12; Tri-State Initial Comments at 18; Vermont Electric
and Vermont Transco Initial Comments at 2.
    \1723\ Clean Energy Buyers Initial Comments at 10.
    \1724\ R Street Initial Comments at 15; see also SEIA Reply
Comments at 17.
---------------------------------------------------------------------------

    899. Some commenters characterize the NOPR proposal as a strict
liability approach to penalties and argue that it is unjust and
unreasonable, arbitrary and capricious, and a violation of due process
rights and the Administrative Procedures Act to impose penalties
without a fact-based finding of fault.\1725\ Some commenters emphasize
that the NOPR proposal provides no possibility for the transmission
provider to explain the circumstances for the delay, even though the
delay is often outside of the transmission provider's control.\1726\
Dominion argues that there are three practical concerns with the NOPR
proposal: (1) how disputes about who is at fault will be resolved; (2)
who decides fault; and (3) whether the interconnection study should be
delayed while the dispute is resolved.\1727\
---------------------------------------------------------------------------

    \1725\ MISO Initial Comments at 13, 71; MISO Reply Comments at
19-20; MISO TOs Initial Comments at 18; SPP Initial Comments at 14;
NYISO Initial Comments at 40 (citing Motor Vehicle Mfrs. Ass'n of
U.S., Inc. v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43
(1983); Enforcement of Statutes, Reguls. & Orders, 123 FERC ]
61,156, at PP 50-71 (2008)); WIRES Initial Comments at 10.
    \1726\ ISO-NE Initial Comments at 35; ISO/RTO Council Initial
Comments at 2; MISO Initial Comments at 7.
    \1727\ Dominion Reply Comments at 24.
---------------------------------------------------------------------------

    900. Some commenters argue that the reasonable efforts standard is
the right approach considering the complex dynamics of the
interconnection study process and constantly changing
circumstances.\1728\ EEI asserts that the reasonable efforts standard
is the best approach to govern the interconnection process, which is
flexible to allow for the optimum exercise of engineering judgement
while ensuring

accountability for egregious delays or what is not consistent with good
utility practice.\1729\ MISO TOs note that, in Order No. 2003, the
Commission explained that the reasonable efforts standard was a high
standard because parties use it when protecting their own interests and
applying this standard to all parties would ``ensure comparable
treatment.'' \1730\
---------------------------------------------------------------------------

    \1728\ Avangrid Initial Comments at 10, 30-31; Bonneville
Initial Comments at 16; Indicated PJM TOs Initial Comments at 36;
NYISO Initial Comments at 30-31; PG&E Reply Comments at 3-4; WIRES
Initial Comments at 10.
    \1729\ EEI Reply Comments at 16.
    \1730\ MISO TOs Reply Comments at 6-7 (citing Order No. 2003,
104 FERC ] 61,103 at P 69).
---------------------------------------------------------------------------

    901. NYISO contends that the reasonable efforts standard and Order
No. 845 reporting requirements provide the Commission and stakeholders
with information to evaluate the length of time taken by RTOs/ISOs to
finish studies, compare their performance, and identify and investigate
when a particular entity is systematically delaying studies, which will
allow the Commission and stakeholders to take appropriate action.\1731\
SPP proposes that the Commission retain the reasonable efforts standard
and make improvements to it or enforce it more strictly.\1732\
---------------------------------------------------------------------------

    \1731\ NYISO Initial Comments at 31.
    \1732\ SPP Initial Comments at 15.
---------------------------------------------------------------------------

    902. WAPA notes that, as a Federal power marketing administration,
it has statutory duties that take precedence over deliverables
established by the Commission and cannot be subject to monetary
penalties without a waiver of sovereign immunity.\1733\ Avangrid notes
that many transmission providers and transmission owners do not earn
rates of return for interconnection facilities or network upgrades and
do not profit from interconnection studies, so penalties would reduce
shareholder return on equity.\1734\
---------------------------------------------------------------------------

    \1733\ WAPA Initial Comments at 10.
    \1734\ Avangrid Initial Comments at 30.
---------------------------------------------------------------------------

iii. Comments on Specific Proposal
    903. Some commenters support eliminating the reasonable efforts
standard but do not support the proposed financial penalties.\1735\
CAISO argues that the Commission should simply prohibit late studies
and mandate firm study deadlines because the proposed penalties will
enable transmission providers to continue completing studies late if
they are willing to pay the price.\1736\ CAISO explains that, if a
transmission provider cannot meet its study deadlines, it should be
required to amend its tariff.\1737\ Other commenters, as described
below, have various comments on the specific penalty proposal.
---------------------------------------------------------------------------

    \1735\ CAISO Initial Comments at 25-26; Clean Energy Buyers
Initial Comment at 9-10; MISO Initial Comments at 13, 71, 79; Shell
Initial Comments at 10.
    \1736\ CAISO Initial Comments at 25-26; PG&E Reply Comments at
4.
    \1737\ CAISO Initial Comments at 25-26.
---------------------------------------------------------------------------

(a) Penalty Amount
    904. Some commenters advocate for larger penalties than the NOPR
proposal.\1738\ Some commenters contend that the proposed penalty
amount is de minimis \1739\ or that a $500 per business day penalty is
likely too small to prompt a change in behavior.\1740\ Cypress Creek
argues that penalties should be commensurate with the magnitude of
liquidated damages that interconnection customers face if they do not
meet their contractual deadlines.\1741\ ACE-NY proposes a penalty of
$5,000 to $25,000 per day, depending on cluster size, if the Commission
chooses a per-cluster-per-day penalty structure.\1742\ Affected
Interconnection Customers propose that the Commission adopt a penalty
of $2,500 per day capped at $2 million.\1743\ Public Interest
Organizations state that there is not sufficient consensus in the
record to move forward with the $500 per day penalty amount and suggest
that the Commission hold a technical conference to determine the final
amount.\1744\
---------------------------------------------------------------------------

    \1738\ ACE-NY Initial Comments at 12; Affected Interconnection
Customers Initial Comments at 25-26; CESA Initial Comments at 11;
CESA Reply Comments at 9; Consumers Energy Initial Comments at 6;
CREA and NewSun Reply Comments at 56; Cypress Creek Initial Comments
at 24; EPSA Initial Comments at 11; Fervo Energy Initial Comments at
6; Invenergy Initial Comments at 29; Pine Gate Initial Comments at
39.
    \1739\ CESA Reply Comments at 8; Invenergy Initial Comments at
29; NARUC Initial Comments at 14.
    \1740\ ACE-NY Initial Comments at 12; Affected Interconnection
Customers Initial Comments at 24-26; CESA Initial Comments at 11;
Clean Energy Associations Initial Comments at 44; Consumers Energy
Initial Comments at 6; ELCON Initial Comments at 7-8; Pine Gate
Initial Comments at 39.
    \1741\ Cypress Creek Initial Comments at 24.
    \1742\ ACE-NY Initial Comments at 12.
    \1743\ Affected Interconnection Customers Initial Comments at 5,
26; CESA Reply Comments at 9.
    \1744\ Public Interest Organizations Reply Comments at 5-6.
---------------------------------------------------------------------------

    905. Some commenters argue that the penalties should increase
through the study process because later-stage study delays have greater
impacts on interconnection customers, which are required to make
increasing commitments throughout the study process.\1745\ Invenergy
recommends penalty amounts of $5,000 per day for cluster studies,
$6,000 per day for cluster restudies, and $7,000 per day for facilities
studies.\1746\
---------------------------------------------------------------------------

    \1745\ CESA Initial Comments at 11; Clean Energy Associations
Initial Comments at 44; CREA and NewSun Reply Comments at 57;
Invenergy Initial Comments at 30.
    \1746\ Invenergy Initial Comments at 30.
---------------------------------------------------------------------------

    906. Pine Gate expresses concern that the proposed penalty amounts
do not correspond to the costs imposed on interconnection customers as
a result of the late study results, explaining that the penalty amount
is dwarfed by the overall cluster study cost and that the low daily
rate would require an interconnection study to be delayed years before
the amounts would approach the study deposit amounts.\1747\ As an
example, Pine Gate refers to the most recent MISO interconnection queue
submissions: MISO received 956 interconnection requests, totaling 170.8
GW of new generation, and collected $687,980,000 in study deposits.
Pine Gate notes that, under a late study fee of $500 per day, a study
would have to be delayed 1,375,960 days--or 3,770 years--before
equaling the cost of study deposits. Further, Pine Gate explains that
the daily carrying cost on the study deposit cost at the prevailing
development loan interest rate of 10% is approximately $188,487.67.
Thus, Pine Gate states that, before the proposed 10-day grace period
has elapsed, interconnection customers will have spent $1,884,876 in
additional interest costs.
---------------------------------------------------------------------------

    \1747\ Pine Gate Initial Comments at 39-40.
---------------------------------------------------------------------------

    907. In response to requests for higher penalties, some commenters
argue that there is no legal or policy justification for making the
proposed penalty scheme harsher and more inequitable.\1748\ MISO argues
that NERC reliability penalties are typically assessed at under $500
per day, if at all, and NERC non-critical infrastructure protection
penalties are also assessed at far lower values. MISO contends that,
because these ``moderate risk'' violations merit such low penalties,
there is no support for $500 per day penalties for delayed
interconnection studies.\1749\
---------------------------------------------------------------------------

    \1748\ MISO TOs Reply Comments at 19; NYISO Reply Comments at 1.
    \1749\ MISO Reply Comments at 23.
---------------------------------------------------------------------------

    908. NARUC supports the proposal to cap the penalty amount at 100%
of the total study deposit received.\1750\ Several commenters argue
that the penalty amount should be capped at an amount greater than 100%
of the total study deposit received.\1751\ Invenergy requests that the
Commission clarify that the cap is not reduced by any withdrawal
penalties.\1752\ Public Interest

Organizations propose that transmission providers that reach the cap
issue a compliance statement explaining in detail the source of the
delay and use penalty amounts above the cap to hire third-party
consultants to conduct interconnection studies.\1753\
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    \1750\ NARUC Initial Comments at 15.
    \1751\ Interwest Initial Comments at 8; Invenergy Initial
Comments at 31; Northwest and Intermountain Initial Comments at 14.
    \1752\ Invenergy Initial Comments at 31.
    \1753\ Public Interest Organizations Initial Comments at 36.
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    909. Several commenters argue that the penalty amount should not be
capped.\1754\ Some commenters note that financial penalties for
interconnection customers are not capped at their study deposits.\1755\
Other commenters argue that the study deposit amount cap is not
commensurate with the harm late studies cause interconnection
customers.\1756\
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    \1754\ Id. at 35-36; ACE-NY Initial Comments at 13; AEE Reply
Comments at 37; Consumers Energy Initial Comments at 6; CREA and
NewSun Initial Comments at 84; Cypress Creek Initial Comments at 23-
24; SEIA Initial Comments at 34.
    \1755\ AEE Initial Comments at 31; Northwest and Intermountain
Initial Comments at 15.
    \1756\ CREA and NewSun Initial Comments at 84; SEIA Initial
Comments at 34.
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(b) Penalty Structure
    910. Some commenters suggest a per-customer per-day penalty
structure, rather than the NOPR proposal for a per-cluster per-day
structure.\1757\ AEE suggests that the Commission assess penalties
based on the higher value of $500 per day or $100 per customer per
day.\1758\ Multiple commenters oppose a penalty structure based on the
number of interconnection customers because transmission providers have
no control over the number of interconnection requests they receive and
higher request volumes lead to more complex studies with more potential
for delay.\1759\
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    \1757\ ACE-NY Initial Comments at 13; SEIA Initial Comments at
34. PG&E seeks clarification on whether the penalties will apply
per-customer per-day or per-cluster per-day. PG&E Initial Comments
at 8.
    \1758\ AEE Initial Comments at 31.
    \1759\ CAISO Initial Comments at 27; MISO Reply Comments at 24;
Xcel Initial Comments at 38.
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    911. Some commenters suggest a penalty structure based on the
cluster's characteristics.\1760\ Public Interest Organizations suggest
a penalty structure set as a percentage of the total study deposit
received per day.\1761\ Google recommends the penalty structure take
into account both the size of the interconnection request and the
magnitude of a study delay's impact on other interconnection requests
in the interconnection queue, which would focus penalties on delays
that have the most impact on overall processing of the interconnection
queue.\1762\ NARUC explains that the penalty should not be targeted at
the number of interconnection customers in a cluster that are delayed
but at the desirable characteristics of the generating facilities being
delayed.\1763\
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    \1760\ Google Initial Comments at 17; NARUC Initial Comments at
20-21; Public Interest Organizations Initial Comments at 34.
    \1761\ Public Interest Organizations Initial Comments at 34.
    \1762\ Google Initial Comments at 17.
    \1763\ NARUC Initial Comments at 20-21.
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    912. Some commenters suggest that the Commission require
transmission providers to discount study costs for delayed studies by
the percentage of time they are delayed in completing such study,
subject to a maximum discount set by the Commission.\1764\ Clean Energy
States propose that, if an interconnection study is late, the
transmission provider could not charge the interconnection customers
for the cost of the study, providing the interconnection customer a
modest amount of compensation for the delay.\1765\ PacifiCorp argues
that neither the host transmission provider nor affected system
operator should be penalized if either party delays the work of the
other, especially if the delays are caused by transmission providers
that are not public utilities.\1766\
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    \1764\ AEE Initial Comments at 28-29; AEE Reply Comments at 36-
37; Clean Energy Associations Initial Comments at 45 (explaining
that, under their preferred approach, if a study took 30 calendar
days past a 150-calendar day deadline, that would result in a 20%
discount on study costs); Longroad Energy Reply Comments at 14; Pine
Gate Initial Comments at 40; SEIA Reply Comments at 17.
    \1765\ Clean Energy States Initial Comments at 10-11.
    \1766\ PacifiCorp Initial Comments at 37.
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    913. NRECA and Tri-State assert that the final rule should allow
transmission providers to stop or reset the clock in the event of
interconnection customer-initiated delays.\1767\ Similarly, APPA-LPPC
state that the clock should not start running on study deadlines until
after the interconnection customer submits all necessary information,
including curing any deficiencies.\1768\ Tri-State asserts that a delay
should not be penalized if it is caused by a higher-queued cluster
going through a restudy.\1769\ Tri-State also suggests that, if the
Commission moves forward with penalties for late studies, additional
language should be added requiring interconnection customers to provide
needed information within a specified time frame in order to complete
the studies. R Street claims that transmission providers can game
requirements that trigger penalties, such as by forcing requesting
parties to resubmit specifications to restart the processing
clock.\1770\
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    \1767\ NRECA Initial Comments at 34; Tri-State Initial Comments
at 19.
    \1768\ APPA-LPPC Initial Comments at 21.
    \1769\ Tri-State Initial Comments at 18.
    \1770\ R Street Initial Comments at 15.
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(c) Penalty Allocation and Distribution
    914. Many commenters agree that transmission providers, including
RTOs/ISOs, must not pass on penalty costs to ratepayers.\1771\ Public
Interest Organizations support enabling transmission providers to
allocate penalty costs to responsible parties but recommend maintaining
presumption of fault with the transmission providers themselves and
disallowing transmission providers from recovering penalty
amounts.\1772\
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    \1771\ Clean Energy Associations Initial Comments at 44;
Consumers Energy Initial Comments at 6; Cypress Creek Initial
Comments at 24; Google Initial Comments at 18; Illinois Commission
Initial Comments at 9; NARUC Initial Comments at 15; New Jersey
Commission Initial Comments at 13-14; OPSI Initial Comments at 8-9;
SEIA Initial Comments at 34; see also Ohio Commission Consumer
Advocate Initial Comments at 13 (``Although FERC states that the
proposed penalties would not be recoverable in transmission rates,
we believe such imposition will inevitably impact ratepayers, and
not rightfully so, unless it can be clearly demonstrated that the
proposed $500/day penalty is not passed along[.]''). But see Iowa
Commission Initial Comments at 5-6 (``[I]t is not correct to assume
that the penalties would result in ultimate costs to the customers/
ratepayers as some of the stakeholders contend[.]'').
    \1772\ Public Interest Organizations Reply Comments at 6, 8-9.
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    915. Several commenters support distributing the penalties
collected from transmission providers to the impacted interconnection
customers.\1773\ PG&E seeks clarification on how the penalty would be
distributed (i.e., equal distribution to each interconnection
customers, equal distribution among interconnection requests, or
distributed based on project size).\1774\ Fervo Energy supports the
proposal to require transmission providers to provide quarterly public
reports on total amounts of penalties and the highest penalty for a
single interconnection request.\1775\ Google argues that transmission
providers should make such a report available annually to state
commissions to ensure penalties are not paid by consumers.\1776\
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    \1773\ ACE-NY Initial Comments at 12; Interwest Initial Comments
at 9; NARUC Initial Comments at 14-15; Northwest and Intermountain
Initial Comments at 15.
    \1774\ PG&E Initial Comments at 8.
    \1775\ Fervo Energy Initial Comments at 6.
    \1776\ Google Initial Comments at 20.
---------------------------------------------------------------------------

    916. National Grid argues that the Commission should allow
transmission providers to recover penalties from an interconnection
customer if the customer is responsible for the delay.\1777\
---------------------------------------------------------------------------

    \1777\ National Grid Initial Comments at 33.

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

(d) Penalty Recovery in RTOs/ISOs
    917. Some commenters support the proposal to allow RTOs/ISOs to
recover the cost of specific interconnection study penalties from
transmission owners responsible for study delays through FPA section
205 filings.\1778\ ACORE recommends that RTOs/ISOs provide explicit
criteria for how they will determine which parties are responsible for
or contributed to study delays.\1779\ AEE suggests that the Commission
assign RTO/ISO penalties to transmission owners by default.\1780\ In
response to AEE's proposal, MISO TOs assert that imposing penalties on
transmission owners that did not have control over the causes of study
delays does not follow cost causation principles.\1781\
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    \1778\ ACE-NY Initial Comments at 12; CESA Reply Comments at 8-
9; Google Initial Comments at 19; NARUC Initial Comments at 17;
Public Interest Organizations Initial Comments at 35; SEIA Initial
Comments at 34.
    \1779\ ACORE Initial Comments at 8.
    \1780\ AEE Initial Comments at 30.
    \1781\ MISO TOs Reply Comments at 20-21 (citing K N Energy, Inc.
v. FERC, 968 F.2d 1295, 1300 (D.C. Cir. 1992)).
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    918. Some commenters express concerns about how RTOs/ISOs will pay
penalties if no member is found responsible.\1782\ OPSI contends that,
because RTOs/ISOs rely on transmission owners to process
interconnection queues, they may be reluctant to seek penalty recovery
from them.\1783\
---------------------------------------------------------------------------

    \1782\ Alliant Energy Initial Comments at 6-7; APPA-LPPC Initial
Comments at 22; NARUC Initial Comments at 18; NESCOE Initial
Comments at 16.
    \1783\ OPSI Initial Comments at 9.
---------------------------------------------------------------------------

    919. Several commenters oppose the proposal to allow RTOs/ISOs to
recover the cost of specific interconnection study penalties from
transmission owners responsible for study delays through FPA section
205 filings.\1784\ Such commenters assert that the proposal does not
provide sufficient detail on how penalties will work in RTO/ISO
regions.\1785\ Some commenters contend that imposing penalties on RTOs/
ISOs will not expedite interconnection studies because the penalties
will not address the actual source of study delays and will disrupt
processing of interconnection queues.\1786\ ISO-NE and MISO note that
delays may not be the fault of the RTO/ISO because transmission owners
often conduct the studies.\1787\
---------------------------------------------------------------------------

    \1784\ AEP Initial Comments at 27-28; CAISO Initial Comments at
26; Dominion Initial Comments at 35-36; EEI Initial Comments at 17;
ISO-NE Initial Comments at 34-36; SPP Initial Comments at 15; TAPS
Initial Comments at 3.
    \1785\ Eversource Initial Comments at 29; PJM Initial Comments
at 57.
    \1786\ ISO/RTO Council Initial Comments at 2; WIRES Initial
Comments at 11.
    \1787\ ISO-NE Initial Comments at 35; MISO Initial Comments at
14, 73-74.
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    920. Commenters argue that the proposed penalty system would impose
administrative and litigative burden on RTOs/ISOs and the
Commission.\1788\ Indicated PJM TOs argue that the process before the
Commission will need to be a complete de novo review.\1789\ SoCal
Edison and New York State Department note that the penalty system would
likely require additional resources to track and allocate penalties,
which could increase the cost of administering interconnection
queues.\1790\ The ISO/RTO Council claims that, under the NOPR proposal,
RTOs/ISOs will need to act as fact-finding tribunals to fairly assign
penalties before making an FPA section 205 filing, which would be a
time- and resource-consuming process at odds with the goal of reducing
interconnection study delays.\1791\ TAPS avers that RTOs/ISOs would
need precise and well-supported cases to successfully assign penalties
to responsible transmission owners.\1792\
---------------------------------------------------------------------------

    \1788\ Avangrid Reply Comments at 8; CAISO Initial Comments at
26; Indicated PJM TOs Reply Comments at 27; ISO-NE Initial Comments
at 35; ISO/RTO Council Initial Comments at 3-4; MISO Initial
Comments at 16, 77; MISO TOs Reply Comments at 21-22; New York State
Department Initial Comments at 10-11; NYISO Initial Comments at 33;
PJM Initial Comments at 57-58; SoCal Edison Initial Comments at 19.
    \1789\ Indicated PJM TOs Initial Comments at 44.
    \1790\ New York State Department Initial Comments at 10-11;
SoCal Edison Initial Comments at 19.
    \1791\ ISO/RTO Council Initial Comments at 5; see also Indicated
PJM TOs Initial Comments at 37 (explaining that it would be
difficult for RTOs to determine who is at fault for study delays).
    \1792\ TAPS Initial Comments at 6-7.
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    921. Commenters contend that having RTOs/ISOs assign penalties to
responsible entities would harm coordination or create tension between
RTOs/ISOs, transmission owners, interconnection customers, and other
parties.\1793\ AEP and TAPS assert that the proposal could discourage
RTO/ISO participation.\1794\
---------------------------------------------------------------------------

    \1793\ AEP Initial Comments at 27; Dominion Initial Comments at
35-36; Indicated PJM TOs Reply Comments at 6-7, 27; NextEra Initial
Comments at 30; NYISO Initial Comments at 39-40; PJM Initial
Comments at 57-58.
    \1794\ AEP Initial Comments at 27-28; TAPS Initial Comments at
6.
---------------------------------------------------------------------------

    922. Commenters express concern around imposing penalties on non-
profit RTOs/ISOs, which have no ability to pay fines without collecting
them from another party.\1795\ MISO contends that, for RTOs/ISOs,
penalties without specified payees are effectively a tax on LSEs.\1796\
---------------------------------------------------------------------------

    \1795\ MISO Initial Comments at 13, 71; MISO TOs Reply Comments
at 20; NYISO Reply Comments at 10.
    \1796\ MISO Initial Comments at 13, 72.
---------------------------------------------------------------------------

    923. NYISO contends that penalties would threaten RTOs'/ISOs'
financial viability.\1797\ NYISO explains that RTO/ISO penalties and
challenges to penalty recovery have been rare. NYISO claims that there
are no examples of Commission denials of penalty cost recovery, so
RTOs/ISOs would be subject to considerable uncertainty about their
ability to recover study penalties.\1798\ NYISO argues that, if the
Commission is likely to accept RTO/ISO penalty recovery proposals, then
the penalties would serve no purpose because they would be passed to
customers and fail to incentivize RTOs/ISOs to complete studies in a
more timely manner.
---------------------------------------------------------------------------

    \1797\ NYISO Initial Comments at 32.
    \1798\ Id. at 37.
---------------------------------------------------------------------------

    924. NYISO argues that it is unjust and unreasonable and unduly
discriminatory to apply the same level of penalties to RTOs/ISOs as
other transmission providers because they are differently situated than
other transmission providers.\1799\ NYISO states that an identical
penalty would be much more punitive on RTOs/ISOs than other
transmission providers, so any financial penalties imposed on RTOs/ISOs