1126. We decline to require the affected system transmission
provider to provide affected system study results before the facilities
study phase, as asserted by Enel and Shell,\2190\ because such a
requirement would necessitate that the affected system transmission
provider would have to begin such studies before any interconnection
customers withdraw from the interconnection queue and would therefore
involve the study of numerous interconnection requests that do not
eventually proceed to commercial operation, resulting in additional
restudies and delays.
---------------------------------------------------------------------------

    \2190\ See Enel Initial Comments at 58; Shell Initial Comments
at 30-31.
---------------------------------------------------------------------------

    1127. In response to Tri-State's argument that proposed pro forma
LGIP section 3.6.1 needs to clarify to whom notice is to be
directed,\2191\ we note the language in pro forma LGIP section 3.6.1
beginning with ``Transmission Provider must notify Affected System
Operator of a potential Affected System impact.'' If Tri-State is
asking to whom the affected system transmission provider should respond
in writing regarding whether it intends to conduct an affected system
study, it should respond to the transmission provider who notified the
affected system operator of a potential affected system impact.
---------------------------------------------------------------------------

    \2191\ Tri-State Initial Comments at 28.
---------------------------------------------------------------------------

    1128. We adopt Pacific Northwest Utilities' requested clarification
and agree with Puget Sound that, provided that transmission providers
properly notify a non-public utility affected system operator within 10
business days under proposed pro forma LGIP section 3.6.1, such steps
are sufficient to demonstrate that the transmission provider has met
its obligations under that section.\2192\
---------------------------------------------------------------------------

    \2192\ Pacific Northwest Utilities Initial Comments at 17; Puget
Sound Initial Comments at 8.
---------------------------------------------------------------------------

    1129. We agree with Interwest and Invenergy that the
interconnection customer should be permitted to delay posting security
and funding for network upgrades under its LGIA until affected system
study results are received in certain situations.\2193\ Specifically,
an interconnection customer is not required to post security for and
fund network upgrades pursuant to an LGIA if the deadline for LGIA
execution, or to request that the LGIA be filed unexecuted, is delayed
under pro forma LGIP section 11.2.1. We agree with Interwest that this
would reduce an affected system interconnection customer's risk of
incurring affected system network upgrade costs after LGIA execution.
However, if the interconnection customer chooses to proceed to execute
an LGIA, or request that the LGIA be filed unexecuted, it will be
responsible for posting security and funding network upgrades as per
the schedule in its LGIA, regardless of whether it has received
affected system study results.
---------------------------------------------------------------------------

    \2193\ Interwest Reply Comments at 18; Invenergy Initial
Comments at 43.
---------------------------------------------------------------------------

    1130. We disagree with commenters that a transmission provider's
obligation to notify a potential affected system operator of an impact
in 10 business days is unrealistic or problematic.\2194\ As we are
eliminating two trigger events, the host transmission provider now has
the obligation to notify the affected system operator of a potential
impact to the affected system following the completion of the cluster
study or restudy, which we find provides a clear timeline contrary to
PacifiCorp's claims. Furthermore, we do not find any convincing
evidence that a host transmission provider will be unable to provide a
notification to an affected system operator of potential impacts within
10 business days and note that this timeline is supported by
commenters.\2195\
---------------------------------------------------------------------------

    \2194\ CAISO Initial Comments at 27; Duke Southeast Utilities
Initial Comments at 12; PacifiCorp Initial Comments at 36; PG&E
Reply Comments at 5.
    \2195\ See AEP Initial Comments at 31; Pine Gate Initial
Comments at 42.
---------------------------------------------------------------------------

    1131. However, regarding comments that the affected system
operator's obligation to respond in 15 business days is
insufficient,\2196\ particularly

when numerous potential affected system impacts are identified in a
single cluster study, as stated above, we extend the affected system
operator's response obligation time period from 15 business days to 20
business days to provide the affected system operator with additional
time to consider whether to study these potential affected system
impacts on its transmission system, consistent with Duke Southeast
Utilities' suggestion.\2197\ We find these timelines necessary to
ensure timely processing of the affected system study process and to
provide certainty to the interconnection customer regarding the
processing of the affected system study.
---------------------------------------------------------------------------

    \2196\ Bonneville Initial Comments at 18; CAISO Initial Comments
at 27; Duke Southeast Utilities Initial Comments at 12; PG&E Reply
Comments at 5; WAPA Initial Comments at 11-12.
    \2197\ See Duke Southeast Utilities Initial Comments at 12.
---------------------------------------------------------------------------

(c) Affected System Scoping Meeting (Pro Forma LGIP Section 3.6.2) and
Affected System Study Procedures (Pro Forma LGIP Section 9.7)
    1132. We decline to adopt the proposed requirement in pro forma
LGIP section 3.6.2 that affected system transmission providers must
hold an affected system scoping meeting within seven business days
after providing written notification that it intends to conduct an
affected system study. We agree with commenters' concerns that the
difficulties associated with holding an affected system scoping meeting
within the proposed time frame outweigh its potential benefits.\2198\
We also agree with WAPA that a meeting after the affected system study
is completed would be more beneficial than an affected system scoping
meeting.
---------------------------------------------------------------------------

    \2198\ Bonneville Initial Comments at 18-19; CAISO Initial
Comments at 28; Dominion Initial Comments at 38; MISO Initial
Comments at 86; WAPA Initial Comments at 12.
---------------------------------------------------------------------------

    1133. We adopt, with modifications, the proposed affected system
study procedures set forth in pro forma LGIP section 9.6, now section
9.7. In particular, we modify the NOPR proposal to explicitly require
clustering of affected system interconnection customers for study
purposes where multiple interconnection requests that are part of a
single cluster in the host system's cluster study process cause the
need for an affected system study. We find that clustered affected
system studies will, consistent with the requirement to use a first-
ready, first-served cluster study process, improve administrative
efficiency in the affected system study process and reduce
administrative burden on the affected system transmission provider,
thereby promoting overall efficiency in the interconnection process. We
agree with commenters that serial affected system studies would place
an additional burden on transmission providers to study affected system
impacts and would further slow the interconnection process.\2199\ We,
therefore, believe that mandating clustering of affected system studies
will not place an additional unnecessary burden on transmission
providers, no matter their size; rather, it should reduce such burdens
as compared to multiple serial studies and restudies.
---------------------------------------------------------------------------

    \2199\ AECI Initial Comments at 6-7; Indicated PJM TOs Initial
Comments at 47; NextEra Reply Comments at 4; North Carolina
Commission and Staff Initial Comments at 24-25 (citing Gajda Aff. ]]
21-22, 27); SPP Initial Comments at 15-16.
---------------------------------------------------------------------------

    1134. We further modify proposed pro forma LGIP section 9.7, to
require the affected system transmission provider to complete the
affected system study and provide the affected system interconnection
customer with affected system study results within 150 calendar days
after receipt of the affected system study agreement, rather than the
proposed 90 calendar days. We agree with commenters that explain that
90 calendar days may not be adequate time to complete an affected
system study,\2200\ aligning with our discussion of the potential for
affected system transmission providers to conduct a facilities study
under proposed pro forma LGIP section 9.6 below. In recognition of
that, we extend the proposed maximum time frame to complete an affected
system study from the NOPR's proposed 90 calendar days to 150 calendar
days. This extension addresses Bonneville's concern that the proposed
schedule to complete an affected system study may have included a due
date in excess of the 90-calendar day timeline.
---------------------------------------------------------------------------

    \2200\ AEP Initial Comments at 31; Enel Initial Comments at 65;
WAPA Initial Comments at 13.
---------------------------------------------------------------------------

    1135. We also modify pro forma LGIP section 9.7, which, as
proposed, required the affected system transmission provider to notify
the affected system interconnection customer that an affected system
study will be late, to add a requirement for the affected system
transmission provider to notify the host transmission provider that the
affected system transmission provider will be unable to timely complete
the affected system study.
    1136. We adopt Tri-State's request to add the phrase ``and
deposit'' to pro forma LGIP section 9.7, such that the affected system
transmission provider must provide the affected system study report to
the affected system interconnection customer within 150 calendar days
after the receipt of the affected system study agreement and deposit.
We find this addition is needed to clarify the affected system
interconnection customer's obligation to provide an affected system
study deposit, especially if an affected system interconnection
customer loses its affected system queue position, discussed below, for
failure to provide the required deposit under pro forma LGIP section
9.5. We also add to pro forma LGIP section 9.7 a requirement for the
affected system transmission provider to provide the affected system
study report to the host transmission provider at the same time it
provides the report to the affected system interconnection customer. We
find that this will enhance transparency in the interconnection study
process.
    1137. In response to MISO's request for clarification that the
affected system study clock commences only after all necessary data has
been provided, we clarify that, because an affected system
interconnection customer has already submitted all required data to the
host transmission provider, and the host transmission provider has
verified that the data submitted is adequate and has conducted at least
one interconnection study, it is highly unlikely that there will be any
instances of requiring clarification or further data from
interconnection customers. Thus, under the modified affected system
study procedures, the data regarding interconnection requests given to
the affected system transmission provider should be complete, requiring
no delay or requests for further data. Nevertheless, we note that the
affected system interconnection customer is required, under pro forma
LGIP section 9.5, to provide all required technical data when it
delivers the affected system study agreement. As discussed below, the
clock for the affected system transmission provider to complete its
affected system study begins after the receipt of the executed affected
system study agreement and study deposit, which would include the
receipt of all required technical data from the affected system
interconnection customer.
(d) Affected System Queue Position (Pro Forma LGIP Section 9.3)
    1138. We adopt, with modification, the NOPR proposal to add section
9.2, now section 9.3, titled ``Affected System Queue Position,'' to the
pro forma LGIP. Specifically, we adopt the first-ready, first-served
concept, as proposed in the NOPR,\2201\ along with the affected

system relative queue priority proposal. Consequently, the
interconnection requests of affected system interconnection customers
that have executed an affected system study agreement will be higher-
queued than the interconnection requests of those host system
interconnection customers that have not yet received their cluster
study results, and lower-queued than those interconnection customers
that have already received their cluster study results. We also add
clarifying language to pro forma LGIP section 9.3 to explain that,
although queue position is determined based on the date of affected
system study agreement execution, all affected system interconnection
requests studied within the same affected system cluster will be
equally queued.
---------------------------------------------------------------------------

    \2201\ We note that several commenters support the proposed
first-ready, first-served concept under proposed pro forma LGIP
section 9.2. See Alliant Energy Initial Comments at 7; MISO Initial
Comments at 11-12; NextEra Initial Comments at 33; OMS Initial
Comments at 17.
---------------------------------------------------------------------------

    1139. The affected system interconnection customer's affected
system queue position is for identification of affected system network
upgrades along with the affected system transmission provider's own
interconnection customers. Specifically, the affected system queue
position determines the order in which the affected system transmission
provider will study the affected system interconnection customers and
its own interconnection customers and thus impacts which network
upgrades may be identified as necessary and assigned to interconnection
customers, whether its own or affected system interconnection
customers.
    1140. As an example, if a transmission provider has two cluster
studies of its own interconnection customers--cluster study 1 for which
the transmission provider is conducting the facilities studies and
cluster study 2 for which the transmission provider is conducting the
cluster study--cluster study 1 would be higher-queued than cluster
study 2. If that transmission provider receives notice from a
neighboring transmission provider of interconnection requests that may
impact its transmission system (i.e., affected system interconnection
customers), the transmission provider may decide to study those
affected system interconnection customers to determine if any network
upgrades are required to mitigate constraints caused by those affected
system interconnection customers. Once those affected system
interconnection customers have executed their affected system study
agreements, the transmission provider must assign them an affected
system queue position, which will be higher than any cluster study of
its own interconnection customers that have not received their cluster
study results. In this example, the cluster study 1 interconnection
customers would be higher-queued than the cluster of affected system
interconnection customers because the cluster study 1 interconnection
customers would have already received their cluster study results and
decided to proceed with their interconnection requests, and cluster
study 2 interconnection customers would be lower-queued than the
cluster of affected system interconnection customers because they would
not have received their cluster study results and thus are more likely
to withdraw.
    1141. We find that establishing the affected system queue position
based on the execution of the affected system study agreement is
appropriate because, at that point, the affected system interconnection
customer has demonstrated its intent to proceed with its
interconnection request by executing the agreement and providing a
study deposit to the affected system transmission provider as well as
receiving its cluster study report on its host system and deciding to
proceed with its interconnection request. Furthermore, allowing these
affected system interconnection customers to be higher-queued than any
of its own interconnection customers that have not received their
cluster study results is appropriate because those interconnection
customers have not yet received any network upgrade estimates. Thus,
its own interconnection customers have not yet demonstrated their
intention to proceed to the facilities study.
    1142. We agree with commenters that establishing queue priority in
an affected system transmission provider's interconnection queue based
on when an interconnection request is received by the host transmission
provider is problematic.\2202\ In part for this reason, we are adopting
the host system's cluster study results and execution of the affected
system study agreement as reference points for queue priority \2203\
because these points occur after the interconnection customer has made
demonstrations to indicate intent to progress through the
interconnection process.
---------------------------------------------------------------------------

    \2202\ EDF Renewables Initial Comments at 11; MISO Initial
Comments at 11, 87.
    \2203\ See NOPR, 179 FERC ] 61,194 at P 189.
---------------------------------------------------------------------------

    1143. We disagree with NextEra that the NOPR proposal's affected
system queue priority construct, which we adopt herein, will lead to a
race among interconnection customers to be first or last to sign an
affected system study agreement. NextEra's concern may occur under a
serial affected system study process, but, as explained above, we
require clustering of affected system studies. Studying affected system
interconnection requests in clusters mitigates the risk of a race to
execute affected system study agreements, as affected system
interconnection customers in the same affected system cluster will be
equally queued regardless of when they execute their affected system
study agreement, if it is within the appropriate window for affected
system study agreement execution. We find this to be a just and
reasonable queue priority construct for affected system studies.
    1144. We decline to adopt EDF Renewables' suggestion that the
affected system transmission provider be required to establish queue
priority between the host and affected systems based on the
interconnection customer having achieved a certain stage in the host
system's study process, rather than the date the interconnection
customer submits an interconnection request. We clarify that we neither
propose to, nor do we adopt a proposal to, base relative affected
system queue priority on the date an interconnection customer submits
its interconnection request.\2204\
---------------------------------------------------------------------------

    \2204\ See NOPR, 179 FERC ] 61,194 at P 189 (providing that the
affected system transmission provider would assign the affected
system interconnection customer a queue position in its queue
according to when the affected system interconnection customer
executes an affected system study agreement rather than when the
affected system interconnection customer entered its host
transmission provider's queue).
---------------------------------------------------------------------------

    1145. We clarify, in response to Idaho Power's request, that the
affected system study process adopted in this final rule is required
for all transmission providers, regardless of preexisting use of the
first-ready, first-served cluster study process.
    1146. We clarify, in response to APPA-LPPC, that establishing the
affected system queue priority is for identifying the affected system
network upgrades needed to mitigate constraints on the affected
system.\2205\ This process will proceed in parallel with the host
transmission provider's study process and should not result in delays
to the interconnection customer. As discussed above, we allow
interconnection customers to delay execution of their LGIAs, or request
that the LGIA be filed unexecuted, if they have not received their
affected system study results; however, based on the reforms we adopt

in this final rule, that should be the exception and not the rule.
Thus, we find that the affected system queue position is merely
intended to ensure that affected system interconnection customers are
assigned the appropriate network upgrade costs according to the
Commission's interconnection pricing policy, and not as an indicator
that interconnection customers become part of two separate
interconnection queues.
---------------------------------------------------------------------------

    \2205\ APPA-LPPC Initial Comments at 26.
---------------------------------------------------------------------------

    1147. With respect to requests for clarification regarding proposed
pro forma LGIP section 9.2 and how the first-ready, first-served queue
priority approach interacts with cluster studies,\2206\ we clarify that
all affected system interconnection customers in the same cluster on
the affected system will have equal queue priority in the affected
system transmission provider's interconnection queue, which is
consistent with how the first-ready, first-served approach interacts
with cluster studies for interconnection customers on the transmission
provider's transmission system when it is acting as a host system. This
means that the affected system interconnection customers within a
cluster have equal queue priority and that queue priority will be
relative to the affected system transmission provider's own
interconnection customers. The affected system transmission provider's
own interconnection customers that already received their cluster study
results when an affected system interconnection customer or cluster of
affected system interconnection customers execute an affected system
study agreement will be higher-queued than that affected system
interconnection customer. Any of the affected system transmission
provider's own interconnection customers that receive their cluster
study results after the affected system interconnection customer or
cluster of affected system interconnection customers execute their
affected system study agreement will be lower-queued than that affected
system interconnection customer or cluster of affected system
interconnection customers. We clarify in response to APPA-LPPC that a
transmission provider will assign the costs of network upgrades
required on its transmission system to interconnection customers in its
host cluster study process and affected system interconnection
customers, also studied in their own cluster, based on their relative
queue priority and in accordance with the proportional impact method as
described in pro forma LGIP section 4.2.3, and as discussed further in
the next section.\2207\
---------------------------------------------------------------------------

    \2206\ Id.; Idaho Power Initial Comments at 11; NextEra Initial
Comments at 33.
    \2207\ APPA-LPPC Initial Comments at 26.
---------------------------------------------------------------------------

    1148. With respect to Bonneville's request for clarification, we
clarify that an affected system interconnection customer will lose its
affected system queue position if the affected system interconnection
customer fails to: (1) execute the affected system study agreement or
request it be filed unexecuted; (2) execute the affected system
facilities construction agreement or request it be filed unexecuted;
(3) provide the affected system study deposit; or (4) pay undisputed
affected system study true-up costs in a timely manner.
(e) Affected System Cost Allocation (Pro Forma LGIP Section 9.9)
    1149. We also adopt the NOPR proposal in pro forma LGIP section
9.8, now pro forma LGIP section 9.9, titled ``Affected System Cost
Allocation,'' to allocate affected system network upgrade costs using a
proportional impact method, in accordance with pro forma LGIP section
4.2.1(1)(b).
    1150. We agree with SEIA that using a proportional impact method
will reduce individual affected system network upgrade costs and reduce
the likelihood of cascading withdrawals, consistent with our discussion
above on the use of the proportional impact method for the allocation
of network upgrade costs in a cluster on the host system.
    1151. We disagree with commenters that argue that the Commission
should provide for penalty-free withdrawal from the host system's
interconnection queue if affected system study results increase an
interconnection customer's costs by more than 25% or some other
threshold compared to costs allocated by the host transmission
provider.\2208\ First, we find that the final rule's requirement that
affected system transmission providers use ERIS modeling standard to
conduct affected system studies should reduce the number and total cost
of affected system network upgrades assigned to affected system
interconnection customers, which will reduce instances of ``sticker
shock'' from affected system network upgrades.\2209\ Second, as
discussed above, any interconnection customers in a cluster that are
not waiting for affected system study results must proceed with the
finalization of their LGIAs, pursuant to pro forma LGIP section 11.1.
Thus, we find that it would create sufficient uncertainty to allow an
interconnection customer to withdraw penalty-free when it receives its
affected system study results if there is a 25% increase in costs,
which may occur after other interconnection customers in the same
cluster have finalized their LGIAs. We note that interconnection
customers inherently assume some risk. Accordingly, we decline to
explicitly extend penalty-free withdrawal to include increases in
affected system network upgrade costs beyond a certain threshold.
---------------------------------------------------------------------------

    \2208\ Invenergy Initial Comments at 43-44; Shell Initial
Comments at 31.
    \2209\ See infra section III.B.2.d.iii.
---------------------------------------------------------------------------

    1152. In response to NV Energy's assertion that use of the
proportional impact method may lead to restudies when a higher-queued
affected system interconnection customer withdraws its interconnection
request, we note that potential outcomes of withdrawal are restudy and
the reallocation of costs, regardless of the cost allocation
methodology used.\2210\ We also note that, as described above,
transmission providers may not need to perform a study if, in their
engineering judgment, the network upgrades assigned to the withdrawing
interconnection customer either are not needed or are easily reassigned
to a remaining interconnection customer. Thus, restudies under the new
interconnection process due to interconnection request withdrawals
should be relatively less frequent than under existing processes.
---------------------------------------------------------------------------

    \2210\ NV Energy Initial Comments at 11-12.
---------------------------------------------------------------------------

(f) Information Sharing Among Transmission Providers (Pro Forma LGIP
Section 3.6.3)
    1153. We decline to adopt proposed section 3.6.3 of the pro forma
LGIP, which would have required a transmission provider to provide data
on a monthly basis, or more frequently as needed, to any affected
system operators regarding the amount and location of proposed
generation in the transmission provider's interconnection queue, as
well as updated information about the transmission provider's
transmission system.\2211\ We agree with commenters' arguments that the
information sharing requirement is duplicative of what is available on
OASIS and recognize that such a requirement may be overly
burdensome.\2212\ The OASIS postings provide transparency regarding the
host transmission provider's interconnection queue information.
Further, transmission providers are required to notify neighboring
transmission

providers of potential impacts on their systems per section 3.6.1 of
the pro forma LGIP, as described above.
---------------------------------------------------------------------------

    \2211\ Accordingly, we do not address comments on this section.
    \2212\ Bonneville Initial Comments at 19; Dominion Initial
Comments at 38.
---------------------------------------------------------------------------

(g) Affected System Study Agreement (Pro Forma LGIP Section 9.4) and
Execution Thereof (Pro Forma LGIP Section 9.5)
    1154. With regard to tendering of the affected system study
agreement to the affected system interconnection customer, we modify
proposed pro forma LGIP section 9.3, now pro forma LGIP section 9.4, to
require that the transmission provider provide the affected system
study agreement within 10 business days of sharing the schedule for the
study with the affected system interconnection customer(s), per pro
forma LGIP section 9.2, rather than within five business days, as
proposed. We agree with commenters that five business days is not
enough time to prepare what could be numerous affected system study
agreements in the event a number of interconnection customers in a
large cluster on a neighboring transmission system impact the affected
system transmission provider's transmission system.
    1155. Consistent with our decision--discussed above--to not adopt
the proposal to require affected system transmission providers to
convene a scoping meeting with affected system interconnection
customers, we remove references to such a meeting in pro forma LGIP
section 9.4. Accordingly, we modify the NOPR proposal requiring the
affected system operator to provide a non-binding good faith estimate
of the cost and time frame for completing an affected system study from
15 business days after the affected system scoping meeting to 20
business days from the date that the affected system operator responded
in writing to the host transmission provider that it intends to conduct
an affected system study, pursuant to section 3.6.1 of the pro forma
LGIP, and we also move this requirement to section 9.2 of the pro forma
LGIP. The time taken to tender an affected system study agreement will
also be measured from that date. We believe these changes will align
the study timeline to the lack of an affected system scoping meeting.
    1156. Accordingly, we modify proposed pro forma LGIP section 9.4 so
that, after the affected system transmission provider responds with its
intent to conduct an affected system study, the affected system
transmission provider has 10 business days to tender an affected system
study agreement from the date of the affected system transmission
provider sharing the schedule for the study. Again, these changes align
the affected system study process timeline with the modification to
remove the affected system scoping meeting.
    1157. We further modify proposed pro forma LGIP section 9.4 to
include a true-up of the affected system study deposit and actual cost
of the affected system study. The difference between these amounts must
be detailed in an invoice and paid by or refunded to the affected
system interconnection customer within 30 calendar days of the receipt
of such invoice. An affected system interconnection customer's failure
to pay the difference between these amounts will result in loss of that
affected system interconnection customer's affected system queue
position. We find these modifications necessary to effectuate actual
payment of affected system study costs and to outline the consequences
for failure to do so.
    1158. With regard to execution of the affected system study
agreement, we adopt, with modification, the NOPR proposal to add
section 9.5 to the pro forma LGIP regarding the timing of the execution
of the affected system study agreement. As adopted, pro forma LGIP
section 9.5 states that the affected system interconnection customer
has 10 business days from the date of receipt of the affected system
study agreement to execute and deliver it to the affected system
transmission provider. Pro forma LGIP section 9.5 also provides that,
if the affected system interconnection customer does not provide all
required technical data when it delivers the affected system study
agreement, the affected system transmission provider shall notify the
affected system interconnection customer of the deficiency within five
business days of the receipt of the affected system study agreement,
and the affected system interconnection customer has 10 business days
to cure the deficiency after receipt of such notice, provided that the
deficiency does not include failure to deliver the executed affected
system study agreement or deposit.
    1159. In the same vein, we modify proposed section 9.4 of the pro
forma LGIP to require the affected system transmission provider to
notify the host transmission provider of the affected system
interconnection customer's breach of its obligations under this
section, should such breach occur. We find that, absent such
notification, the host transmission provider may be unaware of such a
breach.
(h) Scope of Affected System Study (Pro Forma LGIP Section 9.6)
    1160. We adopt, with modification, the NOPR proposal in pro forma
LGIP section 9.5, now pro forma LGIP section 9.6, regarding the scope
of the affected system study. The affected system study will consider
the base case as well as all higher-queued generating facilities on the
affected system transmission provider's transmission system and will
consist of a power flow, stability, and short circuit analysis. The
affected system study will provide a list of affected system network
upgrades that are required because of the affected system
interconnection customer's proposed interconnection, a non-binding good
faith estimate of cost responsibility, and a non-binding good faith
estimated time to construct. We find that these requirements will
ensure that the affected system study will identify affected system
network upgrades that are necessary to mitigate the impacts of the
affected system interconnection customer's proposed generating facility
on the affected system while providing the affected system
interconnection customer with estimated costs and a timeline to
construct necessary network upgrades.
    1161. In response to APPA-LPPC, Duke Southeast Utilities, Enel, and
Pattern Energy, we modify the NOPR proposal and clarify that pro forma
LGIP section 9.6 does not preclude affected system transmission
providers from conducting facilities studies or other relevant studies
when conducting affected system studies. The affected system study may
consist of a system impact study, a facilities study, or a combination
of a system impact and facilities study.
    1162. To address commenters' criticism that the NOPR proposal was
ambiguous with respect to whether a facilities study is specifically
contemplated as part of the affected system study process,\2213\ we
clarify that it is. We agree with commenters that an affected system
facilities study could provide more refined cost estimates and
construction timelines to better apprise the affected system
interconnection customer of expected affected system network upgrade
costs and timing, thereby improving interconnection process
efficiency.\2214\ We note that the study requirements for the affected
system study under pro forma LGIP section 9.6 that we proposed in the

NOPR, and adopt in this final rule, require the affected system
transmission provider to produce the same information that a facilities
study would produce; specifically, the affected system transmission
provider must provide a list of facilities that are required as a
result of an affected system interconnection customer's proposed
interconnection, a non-binding good faith estimate of cost
responsibility, and a non-binding good faith estimated time to
construct. Nevertheless, for further clarity, we modify proposed pro
forma LGIP section 9.6 to indicate that the affected system study may
consist of a system impact study, a facilities study, or some
combination thereof. We note that we have modified the proposal to
provide more time to the transmission provider to conduct such studies
that they deem necessary, as discussed above.
---------------------------------------------------------------------------

    \2213\ APPA-LPPC Initial Comments at 26; Duke Southeast
Utilities Initial Comments at 15.
    \2214\ Enel Initial Comments at 65; LADWP Initial Comments at 4;
NV Energy Initial Comments at 11; Pattern Energy Initial Comments at
24-25.
---------------------------------------------------------------------------

    1163. In response to Duke Southeast Utilities' request for
clarification that affected system transmission providers conduct a
series of two affected system studies, we reiterate that nothing
precludes an affected system transmission provider from conducting an
affected system facilities study following an affected system impact
study, just as nothing precludes affected system transmission providers
from conducting a combined version of such studies, and we believe we
have provided adequate time for transmission providers to do so.
    1164. We find out of scope Shell's request for inclusion of further
information on local transmission planning from neighboring public
utility transmission providers in the affected system study results.
(i) Meeting With Transmission Provider (Pro Forma LGIP Section 9.8) and
Affected System Facilities Construction Agreement (Pro Forma LGIP
Section 9.10)
    1165. We adopt proposed section 9.9, now section 9.10, of the pro
forma LGIP, with modifications. Specifically, we adopt the requirement
for an affected system transmission provider to tender to the affected
system interconnection customer an affected system facilities
construction agreement within 30 calendar days of providing the
affected system study report. We modify this section to require the
affected system transmission provider to provide 10 business days--
rather than five business days, as proposed--after receipt of the
affected system facilities construction agreement for the affected
system interconnection customer to execute the agreement or have the
affected system transmission provider file it unexecuted with the
Commission. While no comments were filed in opposition to the five
business days to notify the affected system transmission provider of
the affected system interconnection customer's intent to execute the
agreement or request it to be filed unexecuted, as proposed in the
NOPR, we believe that 10 business days gives the affected system
interconnection customer a more appropriate length of time to review
the facilities construction agreement and the timelines and costs
contained therein to make a reasoned decision as to whether to execute
the agreement or request that it be filed unexecuted with the
Commission.
    1166. Further, we find that it is appropriate to allow the
interconnection customer to request that the affected system facilities
construction agreement be filed unexecuted at the Commission. Similar
to an interconnection customer's ability pursuant to pro forma LGIP
section 11.3 to request the unexecuted filing of its LGIA, the ability
to request the affected system facilities construction agreement be
filed unexecuted allows an affected system interconnection customer to
dispute provisions of the affected system facilities construction
agreement before the Commission.\2215\ Because (1) the existing pro
forma LGIP section 11.3 permits the interconnection customer to request
the transmission provider to file the LGIA unexecuted, (2) we base the
affected system facilities construction agreement on the pro forma
LGIA, and (3) the affected system facilities construction agreement is
like a service agreement,\2216\ it is appropriate to include a similar
provision. We further find that an affected system interconnection
customer may be in a disadvantageous position to negotiate the terms of
an affected system facilities construction agreement, as this agreement
is between the affected system interconnection customer and a
transmission provider with which it does not directly connect.
Accordingly, to encourage good faith and fair dealings between the
parties and to avoid the addition of potentially discriminatory terms
or conditions to an affected system facilities construction agreement,
we allow an affected system interconnection customer to request that an
affected system facilities construction agreement be filed unexecuted
before the Commission.
---------------------------------------------------------------------------

    \2215\ See Order No. 2003, 104 FERC ] 61,103 at P 233 (stating
that, if agreement negotiations are at an impasse, the
interconnection customer could either request termination of
negotiations and request submission of the unexecuted agreement to
the Commission or initiate dispute resolution procedures).
    \2216\ See Revised Publ. Util. Filing Requirements, Order No.
2001, 99 FERC ] 61,107, at PP 196, 200, reh'g denied, Order No.
2001-A, 100 FERC ] 61,074, reh'g denied, Order No. 2001-B, 100 FERC
] 61,342, order directing filing, Order No. 2001-C, 101 FERC ]
61,314 (2002), order directing filing, Order No. 2001-D, 102 FERC ]
61,334, order refining filing requirements, Order No. 2001-E, 105
FERC ] 61,352 (2003), order on clarification, Order No. 2001-F, 106
FERC ] 61,060 (2004), order revising filing requirements, Order No.
2001-G, 120 FERC ] 61,270, order on reh'g and clarification, Order
No. 2001-H, 121 FERC ] 61,289 (2007), order revising filing
requirements, Order No. 2001-I, 125 FERC ] 61,103 (2008); see also
Order No. 2003, 104 FERC ] 61,103 at PP 913-915.
---------------------------------------------------------------------------

    1167. We disagree with commenters' assertions that 30 calendar days
may be an inadequate length of time to tender an affected system
facilities construction agreement or that considerable time is needed
to draft such an agreement.\2217\ This is the same period of time by
which the transmission provider must tender a draft LGIA to the
interconnection customer, the timeline of which is set forth in the
existing pro forma LGIP.\2218\ We believe these timelines should be
consistent because these agreements include similar provisions and
similar requirements and the record does not persuade us otherwise.
---------------------------------------------------------------------------

    \2217\ See Duke Southeast Utilities Initial Comments at 15-16;
Idaho Power Initial Comments at 11; MISO Initial Comments at 91-92;
WAPA Initial Comments at 13.
    \2218\ Pro forma LGIP section 11.1.
---------------------------------------------------------------------------

    1168. We disagree with Idaho Power's suggestion that the affected
system transmission provider should tender an affected system
facilities construction agreement within 60 calendar days of the
interconnection customer executing a facilities study agreement with
the host transmission provider because, as the host system and affected
system study processes are separate, though overlapping and
interrelated, it is more administratively feasible to tie affected
system study process deadlines to affected system study process events.
In response to Idaho Power's suggestion that the affected system
transmission provider should tender an affected system facilities
construction agreement within 30 calendar days of providing the
affected system study results to the affected system interconnection
customer if the affected system study is performed during the
facilities study on the host transmission provider's system,\2219\ we
note that, as proposed in the NOPR, the affected system facilities
construction agreement tender deadline is within 30 calendar days of
the tendering of the affected system study report without any
additional caveats or conditions. This tender timeline is,

however, not directly linked to the host transmission provider's study
process.
---------------------------------------------------------------------------

    \2219\ Idaho Power Initial Comments at 11.
---------------------------------------------------------------------------

    1169. We also adopt the NOPR proposal to add section 9.7, now
section 9.8, to the pro forma LGIP. Section 9.8 of the pro forma LGIP,
titled ``Meeting with Transmission Provider,'' requires the affected
system transmission provider and the affected system interconnection
customer to meet within 10 business days of the affected system
transmission provider tendering the affected system study report to the
affected system interconnection customer. We find that such a meeting
between the affected system transmission provider and affected system
interconnection customer will facilitate transparency and meaningful
communication in the affected system study process. We note that WAPA
stated that a meeting after the affected system study report is
tendered would be more beneficial than an affected system scoping
meeting. We agree with WAPA and find that no changes to this section
are necessary.
(j) Restudy Period (Pro Forma LGIP Section 9.11)
    1170. We adopt the NOPR proposal in section 9.10, now section 9.11,
of the pro forma LGIP to include a maximum 60-calendar day restudy
period for any affected system restudies. We find that 60 calendar days
are adequate to complete an affected system restudy. We disagree that
affected system restudies are as complex as host system restudies, as
affected system studies will likely involve fewer interconnection
requests than cluster studies on the host system. Additionally, as
discussed further below, we find that standardization of affected
system study assumptions through ERIS modeling criteria will further
simplify both affected system studies and restudies. Thus, we find it
just and reasonable to adopt a 60-calendar day affected system restudy
period.
    1171. In addition to the 60-calendar day restudy period, we adopt a
30-calendar day notification requirement for the affected system
transmission provider to notify the affected system interconnection
customer of the need for affected system restudy upon discovery of such
need in pro forma LGIP section 9.11. We find such a notification
requirement to be consistent with restudy notification on the host
system, and we find such notification necessary to continue a timely
affected system study process. Accordingly, we find such a notification
period to be just and reasonable.
(k) Coordination Between Host Transmission Provider and Affected System
Transmission Provider
    1172. In response to multiple commenters' assertions that, for
efficiency reasons, host transmission providers should be required to
coordinate affected system study activities with affected system
transmission providers rather than individual interconnection
customers,\2220\ or that flexibility should be afforded in terms of the
parties to the affected system study agreement and the affected system
facilities construction agreement,\2221\ the Commission is not
persuaded that any potential efficiencies of such coordination outweigh
the burdens that may be placed on host transmission providers, and we
decline to require it in this final rule. We note that, in many cases,
the affected system operator may be a non-public utility transmission
provider, which would limit the usefulness of such a requirement.
However, we encourage any such voluntary coordination between
transmission providers who share transmission system seams and whose
interconnection customers frequently impact each other's systems. We
also note that, as NextEra suggests, such transmission providers may
file seams agreements under FPA section 205.\2222\
---------------------------------------------------------------------------

    \2220\ Enel Initial Comments at 60-61; Shell Initial Comments at
30.
    \2221\ PPL Initial Comments at 20.
    \2222\ NextEra Reply Comments at 5.
---------------------------------------------------------------------------

    1173. In response to Indicated PJM TOs' argument that affected
system studies should be integrated into the cluster study process, we
do not have a record to support such a requirement in the final rule.
Integrating affected system interconnection customers into a cluster
that is already proceeding through the study process could meaningfully
change network upgrade cost estimates which could, in turn, create new
interconnection request withdrawals, leading to restudies and delays.
Maintaining the clusters as-is and placing the affected system
interconnection customers in a lower queue position than any
interconnection customers that have received cost estimates will ensure
this situation does not happen.
    1174. In response to APS' request for clarification on how the
proposed affected system study process correlates to the host system's
studies and aligns with the host system's requirements,\2223\ we
explain that the affected system study is predicated on the completion
of a cluster study in the host transmission provider's interconnection
queue. Relative queue position for the affected system study is also
determined based on an interconnection customer's completion of the
host system cluster study. While the host transmission provider will
likely complete its facilities study prior to an affected system
transmission provider's completion of an affected system study, we add
a requirement for host transmission providers with interconnection
customers that have not yet received their affected system study
results to delay the LGIA execution (or unexecuted filing) deadline for
those interconnection customers. An interconnection customer's failure
to satisfy its obligations under the pro forma LGIP, including
coordination with the affected system transmission provider, where
applicable, will result in the loss of the interconnection customer's
affected system queue position.
---------------------------------------------------------------------------

    \2223\ APS Initial Comments at 19-20.
---------------------------------------------------------------------------

(l) Non-Public Utility Requests
    1175. We reject requests to impose firm deadlines and requirements
that prevent non-public utility transmission providers from interfering
with jurisdictional interconnection agreements because we do not have
the jurisdiction to do so.\2224\
---------------------------------------------------------------------------

    \2224\ Invenergy Initial Comments at 43; Invenergy Reply
Comments at 9; Interwest Reply Comments at 18.
---------------------------------------------------------------------------

    1176. In response to concerns regarding a transmission provider's
liability for delays or inaction by non-public utility transmission
providers,\2225\ we clarify that transmission providers will not face
consequences for the inaction of a non-public utility transmission
provider, as long as the transmission providers fulfill their
obligations as outlined in their LGIPs. For example, under the pro
forma LGIP affected system process, a transmission provider would
satisfy its obligation to a non-public utility affected system operator
by timely notifying it of an affected system impact per pro forma LGIP
section 3.6.1.
---------------------------------------------------------------------------

    \2225\ EEI Initial Comments at 19; NextEra Initial Comments at
34; Pacific Northwest Utilities Initial Comments at 15-16; Xcel
Initial Comments at 39.
---------------------------------------------------------------------------

(m) Miscellaneous
    1177. We do not address the comments of North Carolina Commission
and Staff and EDF Renewables that interregional transmission planning
is a way to address affected system impacts because these comments are
beyond the scope of this proceeding, which is limited to generator
interconnection.

    1178. In response to Eversource's and NYTOs' requests for
clarification that affected system study process reforms would not
apply to intra-RTO/ISO system upgrades or would not apply to
neighboring transmission owners within a single RTO/ISO,\2226\ we
clarify that, in RTO/ISO regions, the RTO/ISO serves as the
transmission provider for affected system study purposes, and the RTO/
ISO footprint as the affected system, and thus intra-RTO/ISO
considerations do not apply in this context and are beyond the scope of
this final rule.
---------------------------------------------------------------------------

    \2226\ See also AEP Initial Comments at 32-33 (highlighting four
different types of affected system scenarios and contending that the
Commission conflates them).
---------------------------------------------------------------------------

    1179. We disagree with Invenergy's argument that affected system
study process reforms should apply to all pending interconnection
requests and active studies.\2227\ While we adopt a transition approach
for serial and cluster study processes in the final rule, as explained
above, we did not propose a similar transition approach with respect to
affected system studies in the NOPR. Without consistency between
transition processes as they pertain to neighboring transmission
providers and implicate the affected system study process, it would be
practically infeasible to apply the affected system study process
reforms to all pending interconnection requests and active studies as
Invenergy suggests. Accordingly, we decline to apply the affected
system study process reforms adopted in this final rule to any pending
interconnection requests and active studies.
---------------------------------------------------------------------------

    \2227\ Invenergy Initial Comments at 41.
---------------------------------------------------------------------------

    1180. In response to CREA and NewSun's request for clarification
that a QF interconnection customer has the option to opt into use of
the Commission's interconnection procedures in cases where the
interconnection requires studies or network upgrades on affected
systems,\2228\ we decline to implement a jurisdictional toggle option
for an interconnection customer. Longstanding Commission precedent
indicates when a QF's interconnection is subject to state jurisdiction
or Commission jurisdiction.\2229\ Nothing in this final rule is
intended to revise the Commission's approach under PURPA. Requiring
affected system studies does not change the sale of a QF's output,
which is the foundation of the Commission's interconnection analysis
under PURPA.\2230\ To the extent that affected system studies are
required due to a QF interconnection, the Commission will address such
filings upon their receipt.
---------------------------------------------------------------------------

    \2228\ CREA and NewSun Initial Comments at 86-88.
    \2229\ Order No. 2003, 104 FERC ] 61,103 at PP 813-814 (finding
that, when an electric utility purchases a QF's total output, the
state exercises jurisdiction over the interconnection and allocation
of interconnection costs, while the presence of any output sold to a
third party yields Commission jurisdiction); Fla. Power & Light Co.,
133 FERC ] 61,121, at PP 19-23 (2010). See also 18 CFR 202.303,
202.306 (2022); Participation of Distributed Energy Res.
Aggregations in Mkts. Operated by Reg'l Transmission Orgs. & Indep.
Sys. Operators, Order No. 2222, 85 FR 67094 (Oct. 21, 2020), 172
FERC ] 61,247, at P 98 (2020), corrected, 85 FR 68540 (Oct. 29,
2020) (citing Order No. 2003, 104 FERC ] 61,103 at PP 813-815; Order
No. 2006, 111 FERC ] 61,220 at PP 516-518; Order No. 845, 163 FERC ]
61,043) (stating that nothing in the final rule revises the
Commission's jurisdictional approach to interconnections of QFs that
participate in distributed energy resource aggregations).
    \2230\ Order No. 2003, 104 FERC ] 61,103 at PP 813-814.
---------------------------------------------------------------------------

c. Affected System Pro Forma Agreements
i. Need for Reform
(a) NOPR Proposal
    1181. In the NOPR, the Commission expressed concern that the lack
of pro forma agreements for affected system studies and the
construction of network upgrades on affected systems was hindering the
efficiency of the generator interconnection process through increased
litigation over such agreements and allowed for potential unduly
discriminatory behavior against interconnection customers whose
interconnection requests necessitate affected system network
upgrades.\2231\ Noting a recent increase in affected system-related
disputes, the Commission preliminarily found it unjust and unreasonable
to leave affected system agreements wholly up to individual
negotiations and proposed standardized pro forma affected system
agreements that minimize the likelihood for such disputes by (1)
stipulating how to study the impact of interconnecting generating
facilities on an affected system to identify network upgrades needed to
accommodate the interconnection request and (2) standardizing the
affected system facilities construction agreement to set the terms and
conditions for the construction of those network upgrades.\2232\
---------------------------------------------------------------------------

    \2231\ NOPR, 179 FERC ] 61,194 at P 194.
    \2232\ Id. PP 194-195.
---------------------------------------------------------------------------

(b) Comments
    1182. Many commenters generally support the proposal to develop
standardized pro forma affected system agreements.\2233\ Commenters
state that standardization and better synchronization of timelines and
processes for affected system studies between host and affected system
transmission providers will improve the efficiency of the
interconnection process and reduce opportunities for undue
discrimination.\2234\ ELCON suggests that standardization of affected
system study agreements, modeling, and assumptions furthers certainty
and accountability, resulting in a more transparent, efficient, and
cost-effective interconnection process.\2235\
---------------------------------------------------------------------------

    \2233\ Alliant Energy Initial Comments at 7; APPA-LPPC Initial
Comments at 23; Clean Energy Associations Initial Comments at 48;
ELCON Initial Comments at 8; Interwest Reply Comments at 17;
Invenergy Initial Comments at 45; ISO-NE Initial Comments at 37-38;
NARUC Initial Comments at 23-24; NYISO Initial Comments at 44-45;
Pattern Energy Initial Comments at 26; Pine Gate Initial Comments at
42; SEIA Initial Comments at 34.
    \2234\ Consumers Energy Initial Comments at 8; Invenergy Initial
Comments at 45; ISO-NE Initial Comments at 37-38.
    \2235\ ELCON Initial Comments at 8.
---------------------------------------------------------------------------

(c) Commission Determination
    1183. We find that the lack of affected system pro forma study and
facilities construction agreements hinders the efficiency of the
generator interconnection process through increased litigation over
such agreements and allows for potential unduly discriminatory behavior
against interconnection customers whose interconnection requests
necessitate affected system network upgrades. Our establishment of pro
forma affected system agreements is supported by the record.\2236\ We
agree with commenters that this standardization of timelines and
processes will improve the efficiency of the interconnection process
and reduce opportunities for undue discrimination.\2237\ For example,
in establishing such standardized agreements, affected system
transmission providers and affected system interconnection customers
will no longer need to negotiate individual non-standard agreements.
Also, in requiring affected system transmission providers to adhere to
a set of pro forma procedures in their tariffs common to all
jurisdictional transmission providers, we minimize the opportunities
for undue discrimination.\2238\ The

standardization of affected system agreements also furthers certainty
and accountability, resulting in a more transparent, efficient, and
cost-effective interconnection process by ensuring affected system
interconnection customers know the standard scope and terms of
agreements for the affected system interconnection process prior to
entering the interconnection queue.\2239\
---------------------------------------------------------------------------

    \2236\ See id.; Alliant Energy Initial Comments at 7; APPA-LPPC
Initial Comments at 23; Clean Energy Associations Initial Comments
at 48; Invenergy Initial Comments at 45; ISO-NE Initial Comments at
37-38; NARUC Initial Comments at 23-24; NYISO Initial Comments at
44-45; Pattern Energy Initial Comments at 26; Pine Gate Initial
Comments at 42; SEIA Initial Comments at 34.
    \2237\ See Consumers Energy Initial Comments at 8; Invenergy
Initial Comments at 45; ISO-NE Initial Comments at 37-38.
    \2238\ See, e.g., Order No. 2003, 104 FERC ] 61,103 at P 11
(explaining that Commission precedent dating back to Order No. 888
establishes a need for standard procedures and agreements, in part
to minimize opportunities for undue discrimination).
    \2239\ ELCON Initial Comments at 8.
---------------------------------------------------------------------------

ii. Pro Forma Affected System Study Agreement
(a) NOPR Proposal
    1184. In the NOPR, the Commission proposed to establish a pro forma
affected system study agreement to improve the efficiency and
transparency of the interconnection customer's interaction with the
affected system transmission provider.\2240\ The Commission proposed to
model the pro forma affected system study agreement on the form of the
existing pro forma system impact study agreement, with necessary minor
revisions to the party names.\2241\ Specifically, the affected system
interconnection customer and affected system transmission provider
would be parties to the agreement.
---------------------------------------------------------------------------

    \2240\ NOPR, 179 FERC ] 61,194 at P 197.
    \2241\ Id. P 198.
---------------------------------------------------------------------------

    1185. In articles 1, 2, 3, and 4, respectively, of the proposed pro
forma affected system study agreement, the agreement specifies (1) the
capitalization of defined terms in the pro forma LGIP, (2) that
coordination with the host transmission provider shall occur pursuant
to pro forma LGIP section 9, (3) that study assumptions shall be set
forth in attachment A to the agreement, and (4) that studies shall be
based on technical information provided by the affected system
interconnection customer. In article 5, with regard to the information
the affected system transmission provider will provide to the affected
system interconnection customer in a study report upon completion of
the affected system study, the Commission proposed to require the
following: identification of any circuit breaker short circuit
capability limits exceeded as a result of the interconnection;
identification of any thermal overload or voltage limit violations
resulting from the interconnection; identification of any instability
or inadequately damped response to system disturbances resulting from
the interconnection; a non-binding, good faith estimate of the cost of
facilities on the affected system required to accommodate the
interconnection of the affected system interconnection customer's
project to the host transmission system; and a description of how such
facilities will address the identified short circuit, instability, and
power flow issues identified in the affected system study.\2242\ The
Commission sought comment on whether the information required for the
study report would provide adequate information to the affected system
interconnection customer to understand the results of the affected
system study. Finally, in articles 6 and 7, the Commission specified
the provision of an affected system study deposit and that standard
miscellaneous terms would be used consistent with industry best
practice and with the pro forma LGIP and pro forma LGIA.
---------------------------------------------------------------------------

    \2242\ Id. P 199.
---------------------------------------------------------------------------

(b) Comments
    1186. Some commenters generally support the NOPR proposal to
develop a pro forma affected system study agreement.\2243\ Others
generally support the establishment of a pro forma affected system
study agreement but suggest general changes to the approach proposed in
the NOPR. For example, MISO states that the requirement to execute an
agreement with each affected system interconnection customer would
create a significant amount of work for transmission providers that is
likely to divert resources from performing studies and coordinating
with other transmission providers without any greater benefit than
provided by existing joint operating agreements and other seams
agreements with neighboring systems.\2244\ SPP adds that requiring
individualized invoicing for all affected system study requests from
another transmission provider's cluster study would present a
significant administrative burden for both transmission providers and
interconnection customers, which would be required to deal with
multiple transmission providers, instead of just the host transmission
provider.\2245\ SPP notes that, in its joint operating agreement with
MISO, the transmission providers coordinate affected system studies
following each transmission provider's system impact studies on their
own systems, and rather than invoicing each interconnection customer
individually, the transmission providers invoice each other for study
costs, which allows the host transmission provider to use existing
study deposits when available, and otherwise collect from its
interconnection customers as needed.\2246\
---------------------------------------------------------------------------

    \2243\ Ameren Initial Comments at 23; Duke Southeast Utilities
Initial Comments at 18; North Carolina Commission and Staff Initial
Comments at 24; U.S. Chamber of Commerce Initial Comments at 10-11.
    \2244\ MISO Initial Comments at 96.
    \2245\ SPP Initial Comments at 19.
    \2246\ Id. at 18-19.
---------------------------------------------------------------------------

    1187. Other commenters suggest specific changes to the language
proposed in the NOPR. For instance, Tri-State proposes adding language
to article 9.4 of the pro forma LGIP specifying a protocol if
deficiencies are not cured, such as, ``shall be deemed withdrawn
pursuant to Section 3.7 of this LGIP.'' \2247\ PPL argues that the pro
forma affected system study agreement should: (1) have article 7
replaced entirely with actual contractual terms; (2) contain a clear
requirement for affected system interconnection customers to provide
data in a timely manner; (3) include data ownership and confidentiality
provisions; and (4) address restudies.\2248\
---------------------------------------------------------------------------

    \2247\ Tri-State Initial Comments at 31-32.
    \2248\ PPL Initial Comments at 20.
---------------------------------------------------------------------------

    1188. Additionally, Tri-State includes an appendix containing a
redline version of the pro forma affected system study agreement that
specifies its requested revisions to the agreement. Of note, Tri-State
proposes changes to article 6, which would require the affected system
transmission provider to specify the affected system study deposit
value.\2249\
---------------------------------------------------------------------------

    \2249\ Tri-State Initial Comments, app. B, at 122-124.
---------------------------------------------------------------------------

    1189. In response to whether the information required in the
affected system study report would provide adequate information to the
affected system interconnection customer to understand the results of
the affected system study, Xcel states that the proposed information is
adequate.\2250\ Duke Southeast Utilities support the information
required by article 5 of the proposed agreement but suggest that any
other identified impacts outside of the prescribed information should
also be included.\2251\ LADWP believes that the study report should
also include whether modifications to remedial action schemes or other
special protection systems may be required.\2252\
---------------------------------------------------------------------------

    \2250\ Xcel Initial Comments at 39.
    \2251\ Duke Southeast Utilities Initial Comments at 18.
    \2252\ LADWP Initial Comments at 5.
---------------------------------------------------------------------------

    1190. Enel seeks clarification on whether the affected system study
scope must include all of ``a short circuit analysis, thermal overload
or voltage limit identification, and stability analysis, and a power
flow analysis,'' as proposed in pro forma LGIP section 9.5,

and requests that transmission providers be allowed to waive portions
of the study scope if deemed unnecessary.\2253\
---------------------------------------------------------------------------

    \2253\ Enel Initial Comments at 65.
---------------------------------------------------------------------------

    1191. Several entities ask the Commission to allow regional
variations to avoid conflict with existing affected system coordination
processes.\2254\
---------------------------------------------------------------------------

    \2254\ Ameren Initial Comments at 23; MISO Initial Comments at
95; SPP Initial Comments at 18-19.
---------------------------------------------------------------------------

(c) Commission Determination
    1192. We adopt, with modifications, the proposed pro forma affected
system study agreement set forth in Appendix 9 of the pro forma
LGIP.\2255\ As discussed below, we make two modifications. First,
consistent with comments,\2256\ we establish a multiparty pro forma
affected system study agreement set forth in Appendix 10 of the pro
forma LGIP. Second, we modify article 6 of the proposed pro forma
affected system study agreement to make the language therein consistent
with similar language elsewhere in the pro forma LGIP.\2257\
---------------------------------------------------------------------------

    \2255\ NOPR, 179 FERC ] 61,194 at P 197.
    \2256\ MISO Initial Comments at 96; SPP Initial Comments at 18-
19.
    \2257\ We also make minor consistency edits to article 5 of the
proposed pro forma affected system study agreement, to conform the
pro forma affected system study agreement with pro forma LGIP
section 9.6.
---------------------------------------------------------------------------

    1193. Starting with the multiparty pro forma affected system study
agreement, as described above, we require affected system transmission
providers to study affected system interconnection requests in
clusters. To facilitate this change, we modify the NOPR proposal and
establish a pro forma multiparty affected system study agreement that
closely tracks the proposed two-party agreement. Such a pro forma
multiparty agreement will allow affected system transmission providers
to enter into the same affected system study agreement with each of the
affected system interconnection customers that it must study in a
cluster. We find that a pro forma multiparty affected system study
agreement will facilitate interactions with the affected system
transmission provider, making them more efficient and transparent. We
agree with SPP and MISO that a requirement for an affected system
transmission provider to sign affected system study agreements with
each affected system interconnection customer would be
burdensome.\2258\ In creating a pro forma multiparty affected system
study agreement, we reduce the administrative burden on transmission
providers that no longer need to manage several individual affected
system study agreements.
---------------------------------------------------------------------------

    \2258\ MISO Initial Comments at 96; SPP Initial Comments at 18-
19.
---------------------------------------------------------------------------

    1194. In response to SPP and MISO's suggestion to make the parties
to the pro forma affected system study agreement the affected system
transmission provider and the host transmission provider, we decline
this request. We believe that the interconnection customer, as the one
responsible for providing necessary information about the proposed
generating facility as well as funding the affected system study, is
the appropriate counterparty to the affected system study agreement. We
note, however, that any transmission providers may propose alternative
arrangements through joint operating agreements or otherwise pursuant
to FPA section 205.
    1195. In response to comments from Tri-State and PPL's request
regarding affected system interconnection customers that fail to
provide required information,\2259\ we find that sufficient
requirements for data sharing exist in both the current and newly
adopted pro forma LGIP requirements. Specifically, as discussed above
and consistent with comments from Tri-State, we modify pro forma LGIP
section 9.5 to explicitly state that any affected system
interconnection customer failing to submit required information and
failing to cure that deficiency shall lose its affected system queue
position. We also add to pro forma LGIP section 9.5 a requirement that
the affected system transmission provider notify the host transmission
provider in a timely manner of such failure by the affected system
interconnection customer.
---------------------------------------------------------------------------

    \2259\ PPL Initial Comments at 20; Tri-State Initial Comments at
18-19.
---------------------------------------------------------------------------

    1196. In response to Tri-State's requested revisions to article 6
of the pro forma affected system study agreement, we modify the pro
forma affected system study agreement to add additional language to
explicitly require affected system interconnection customers to provide
a study deposit. The deposit will provide for the cost of the affected
system interconnection study. Moreover, we find that such revisions
will align the pro forma affected system study agreement with Appendix
2 (cluster study agreement), Appendix 3 (interconnection facilities
study agreement), and Appendix 4 (optional interconnection study
agreement) of the pro forma LGIP.
    1197. In response to PPL's request that article 7, regarding
standard miscellaneous terms, should be replaced with actual
contractual terms, we decline to adopt PPL's proposed revisions. We
adopt article 7 of the pro forma affected system study agreement, with
modification to eliminate the reference to the LGIA. We note that this
article 7 is consistent with the existing pro forma interconnection
system impact study agreement (which the Commission is replacing with
new cluster study-based agreements adopted in this final rule),
interconnection facilities study agreement, and optional
interconnection study agreement, which also provide for standard
miscellaneous terms. In response to PPL's requests that the pro forma
affected system study agreement should address data ownership and
confidentiality requirements as well as restudies, we find such
revisions to the proposed pro forma affected system study agreement
unnecessary, as they would be duplicative of existing pro forma LGIP
provisions regarding confidentiality (section 13.1) and restudies
(former section 6.4, now contained in sections 7.5, 8.5, and 9.10).
Regarding the removal of the reference to the LGIA, we find that the
removal is appropriate as the parties to an interconnection customer's
LGIA would not be the same parties to an affected system study
agreement.
    1198. In response to comments on the scope of the pro forma
affected system study, we agree with Xcel that the scope of the
affected system study is adequate.\2260\ Consequently, we decline to
modify the scope of the affected system study contained in article 5 of
the proposed pro forma affected system study agreement. We note that
the scope of the affected system studies identified in article 5 is
consistent with the scope of host system interconnection studies.\2261\
In response to comments from Duke Southeast Utilities that entities
should be able to include other, identified impacts in the affected
system study report, we clarify that the scope of affected system
studies must be consistent with the scope listed in article 5 of the
pro forma affected system study agreement. Affording affected system
transmission providers flexibility to expand the scope of affected
system studies on an ad hoc or individual basis creates the potential
for undue discrimination and a barrier to entry. With respect to
LADWP's request to include impacts to remedial action schemes and other
special protection systems within the scope of the affected system
studies,\2262\ we clarify that such impacts are already contemplated in

article 5 of the pro forma affected system study agreement.
---------------------------------------------------------------------------

    \2260\ Xcel Initial Comments at 39.
    \2261\ Pro forma LGIP, app. 2, art. 5; app. 3, art. 4.
    \2262\ LADWP Initial Comments at 5.
---------------------------------------------------------------------------

iii. Pro Forma Affected System Facilities Construction Agreement
(a) NOPR Proposal
    1199. In the NOPR, the Commission proposed to revise the pro forma
LGIP to add a pro forma affected system facilities construction
agreement.\2263\ The proposed pro forma affected system facilities
construction agreement includes provisions on the following: terms of
the agreement; construction of network upgrades; taxes; force majeure;
information reporting; security, billing, and payments; assignment;
indemnity; breach, cure, and default; termination; contractors;
confidentiality; information access and audit rights; dispute
resolution; and notices.\2264\ Proposed Appendix A to the agreement
provides for details on identified network upgrades, cost estimates and
responsibility, the construction schedule for network upgrades, and a
payment schedule; proposed Appendix B addresses notification of
completed construction; and proposed Appendix C provides for a
transmission provider site map, a site plan, a plan and profile for
network upgrades, and the estimated cost of the network upgrades.
---------------------------------------------------------------------------

    \2263\ NOPR, 179 FERC ] 61,194 at P 200.
    \2264\ Id. P 201.
---------------------------------------------------------------------------

    1200. The Commission proposed that the pro forma affected system
facilities construction agreement would be entered into by the affected
system transmission provider and the affected system interconnection
customer.\2265\ Under the NOPR proposal, the affected system
transmission provider would be responsible for the design, procurement,
construction, and installation of all network upgrades identified in
Appendix A using reasonable efforts to complete construction consistent
with the schedule identified in Appendix A. The affected system
interconnection customer would initially fund the cost of any assigned
network upgrades and be reimbursed by the affected system transmission
provider.\2266\ Rather, the Commission proposed to require that,
consistent with Order No. 2003, the affected system interconnection
customer must enter into an agreement with the affected system
transmission provider that must specify the terms governing payments to
be made by the affected system interconnection customer as well as
payment of refunds by the affected system transmission provider for the
full cost of network upgrades, plus interest.\2267\
---------------------------------------------------------------------------

    \2265\ Id. P 202.
    \2266\ Order No. 2003, 104 FERC ] 61,103 at P 738.
    \2267\ Id. P 739.
---------------------------------------------------------------------------

    1201. The Commission clarified that the term to be mutually agreed
upon for payment of refunds to affected system interconnection customer
funded network upgrades is not to exceed 20 years.\2268\ This term
mirrors the repayment term in the pro forma LGIA but allows for
flexibility for the parties to come to another arrangement if they
prefer. Under the NOPR proposal, within six months of completion of
construction of any required network upgrades, the affected system
transmission provider would invoice the affected system interconnection
customer for the final construction costs, including a true-up of
estimated and actual costs. The pro forma affected system facilities
construction agreement would terminate upon the affected system
transmission provider's final repayment to the affected system
interconnection customer. Alternatively, the affected system
interconnection customer could also terminate the affected system
facilities construction agreement with 60 calendar days' written notice
to the affected system transmission provider.
---------------------------------------------------------------------------

    \2268\ Id.; see also Order No. 2003-B, 109 FERC ] 61,287 at PP
32-36 (extending the required repayment period from five years to 20
years).
---------------------------------------------------------------------------

    1202. The Commission sought comment on the network upgrade funding
and repayment provisions in the proposed pro forma affected system
facilities construction agreement, specifically whether the repayment
time frame and the similarity of the proposal to the repayment terms in
the pro forma LGIA were appropriate.\2269\ The Commission also sought
comment on whether any articles or provisions should be added to the
proposed pro forma affected system facilities construction agreement or
whether the proposed provisions were sufficient.\2270\
---------------------------------------------------------------------------

    \2269\ NOPR, 179 FERC ] 61,194 at P 203.
    \2270\ Id. P 204.
---------------------------------------------------------------------------

(b) Comments
    1203. Some commenters generally support the proposed pro forma
affected system facilities construction agreement because it will offer
uniformity across the country and increase administrative
efficiency.\2271\ Others argue that the agreement should be structured
as either an individual network upgrade agreement or a multiparty
network upgrade agreement.\2272\
---------------------------------------------------------------------------

    \2271\ Ameren Initial Comments at 23; Duke Southeast Utilities
Initial Comments at 18; SPP Initial Comments at 19-20.
    \2272\ PPL Initial Comments at 20; SPP Initial Comments at 20.
---------------------------------------------------------------------------

    1204. Some commenters request that the Commission allow for
regional variations to avoid conflict with existing pro forma
facilities construction agreements.\2273\
---------------------------------------------------------------------------

    \2273\ Ameren Initial Comments at 23; MISO Initial Comments at
97; NYISO Initial Comments at 45; PPL Initial Comments at 22.
---------------------------------------------------------------------------

(1) Comments on Specific Provisions and Related Proposals
    1205. As a global change, Xcel recommends that the defined term
``affected system operator'' be used instead of ``transmission
provider'' when referencing the affected system transmission provider,
arguing that the use of the terms ``transmission provider'' and
``transmission provider acting as affected system'' are confusing and
may conflict with usage of those terms in the LGIP.\2274\
---------------------------------------------------------------------------

    \2274\ Xcel Initial Comments at 40.
---------------------------------------------------------------------------

    1206. With regard to article 2 (Term of Agreement), Tri-State
proposes the following addition: ``No Transmission Delivery Service.
The execution of this LGIA does not constitute a request for, nor the
provision of, any transmission delivery service under Transmission
Provider's Tariff, and does not convey any right to deliver electricity
to any specific customer or Point of Delivery.'' \2275\ Additionally,
Tri-State opposes the option in proposed article 2.2.1 that would allow
the affected system interconnection customer to terminate the affected
system facilities construction agreement with 60 calendar days' written
notice. Tri-State contends that allowing such termination could trigger
restudies for the affected system transmission provider.\2276\
---------------------------------------------------------------------------

    \2275\ Tri-State Initial Comments at 32.
    \2276\ Id. at 21.
---------------------------------------------------------------------------

    1207. Southern states that the Commission should either reconsider
or clarify proposed article 2.2.2 (Termination Upon Default) and
proposed article 5.2 (Notice of Breach, Cure, and Default), which it
states appears to provide that if a default does not pose a threat to
the reliability of the affected system transmission provider's
transmission system, the affected system transmission provider may not
terminate the agreement if the affected system interconnection customer
has begun to cure and compensate the transmission provider for any
damage.\2277\ Southern argues that such provisions should be consistent
with pro forma LGIA provisions and that, if an affected system
interconnection customer defaults under the LGIA, the affected system
operator should not be required to build affected system network
upgrades. Southern argues that,

if the provisions are not consistent with the pro forma LGIA, affected
system transmission providers will build affected system network
upgrades that are not needed, and there will be different default and
termination rights applicable to these improvements. Similarly, Tri-
State submits suggested edits to proposed article 2.2.2, which remove
the provisions Southern comments on, explaining that a default should
only occur after a breach and failure to cure.\2278\
---------------------------------------------------------------------------

    \2277\ Southern Initial Comments at 18.
    \2278\ Tri-State Initial Comments at 33.
---------------------------------------------------------------------------

    1208. Invenergy opposes proposed article 2.2.3, which provides
that, upon termination of the affected system facilities construction
agreement, the affected system interconnection customer would be
responsible for costs incurred by another affected system
interconnection customer due to the termination of: (1) its affected
system facilities construction agreement; (2) that interconnection
customer's LGIA; or (3) any of that interconnection customer's other
affected system facilities construction agreements.\2279\ Some
commenters argue that this requirement is unreasonable and must be
revised.\2280\ They claim that there is no basis for imposing on the
affected system interconnection customer broad and potentially
exorbitant liability for any potential impacts on any other
interconnection customer within the affected system, which they argue
exceeds potential liability imposed under the pro forma LGIA for the
host transmission provider's transmission system.\2281\ Invenergy
states that the provision appears to be based on a provision in MISO's
pro forma facilities construction agreement, which it argues does not
make sense for a generically applicable pro forma agreement.
---------------------------------------------------------------------------

    \2279\ Invenergy Initial Comments at 45.
    \2280\ Id. at 46; Interwest Reply Comments at 18-19; Tri-State
Initial Comments at 20.
    \2281\ Interwest Reply Comments at 18-19; Invenergy Initial
Comments at 46; Tri-State Initial Comments at 20.
---------------------------------------------------------------------------

    1209. As for proposed article 3 (Construction of Network Upgrades),
some commenters object to limiting the right to suspend for force
majeure events, contained in proposed article <IP_ADDRESS>.\2282\ Southern
states that proposed article <IP_ADDRESS> appears to provide that the
affected system interconnection customer may only suspend its
interconnection request if there is a force majeure event and that no
such limitation on suspension rights exists under the pro forma LGIA,
meaning that an affected system interconnection customer could suspend
its interconnection request under the pro forma LGIA but still be
required to move forward with construction of affected system network
upgrades, if the reason for suspension under the pro forma LGIA is not
a force majeure event.\2283\ Enel asserts that the Commission has not
provided justification for limiting the affected system interconnection
customer's suspension rights to just force majeure events.\2284\ Enel,
Invenergy, and Southern argue that suspension rights under the pro
forma affected system facilities construction agreement should be
consistent with the suspension rights under the pro forma LGIA, with
Invenergy highlighting that the pro forma LGIA permits suspension for
up to three years.\2285\ Conversely, Tri-State argues that the same
force majeure language used in proposed article <IP_ADDRESS> should be added
to both the pro forma LGIA and pro forma LGIP.\2286\
---------------------------------------------------------------------------

    \2282\ Enel Initial Comments at 83-84; Invenergy Initial
Comments at 47; Southern Initial Comments at 18; Tri-State Initial
Comments at 20.
    \2283\ Southern Initial Comments at 18-19.
    \2284\ Enel Initial Comments at 83-84.
    \2285\ Id. at 83; Invenergy Initial Comments at 47; Southern
Initial Comments at 18-19.
    \2286\ Tri-State Initial Comments at 33.
---------------------------------------------------------------------------

    1210. MISO suggests that there should be a provision in the pro
forma affected system facilities construction agreement on cross-
defaults between the affected system facilities construction agreement
and the interconnection customer's LGIA.\2287\ MISO asserts that, as
proposed, if the affected system interconnection customer refuses to
make payments under an affected system facilities construction
agreement, it is unclear how it would affect the affected system
interconnection customer's LGIA.
---------------------------------------------------------------------------

    \2287\ MISO Initial Comments at 97.
---------------------------------------------------------------------------

    1211. In response to proposed article <IP_ADDRESS>, which would require
affected system transmission providers to reimburse affected system
interconnection customers for their affected system network upgrade
costs, many commenters support the proposal,\2288\ while many others
oppose it.\2289\ In support, commenters contend that the reimbursement
policy is consistent with long-established Commission precedent and
cost causation, as it ensures that affected system network upgrade cost
reimbursement is rate-based, such that the transmission customers that
ultimately benefit from the network upgrades pay for those
upgrades.\2290\ In contrast, according to these commenters, allowing
transmission customers of the affected system to receive the benefits
of an affected system network upgrade, without paying for it, would
create a ``free-rider'' problem that is inconsistent with the
``beneficiary pays'' principle.\2291\
---------------------------------------------------------------------------

    \2288\ ACE-NY Initial Comments 9; AES Initial Comments at 22;
Ameren Initial Comments at 23; APPA-LPPC Initial Comments at 23;
Enel Initial Comments at 66-67; Shell Initial Comments at 33-34.
    \2289\ AECI Initial Comments at 9; Duke Southeast Utilities
Initial Comments at 19; EEI Initial Comments at 18-19; North
Carolina Commission and Staff Initial Comments at 6; PG&E Reply
Comments at 5-6; PPL Initial Comments at 20; Southern Reply Comments
at 7-8; Tri-State Initial Comments at 21-22; U.S. Chamber Commerce
Initial Comments at 11; WAPA Initial Comments at 13-14; Xcel Initial
Comments at 40.
    \2290\ Enel Initial Comments at 66; Shell Initial Comments at
35.
    \2291\ ACE-NY Initial Comments 9; Shell Initial Comments at 35-
36.
---------------------------------------------------------------------------

    1212. Other commenters do not fully oppose the proposal but suggest
changes to proposed article <IP_ADDRESS>. For instance, MISO and Southern
contend that the repayment provisions for affected system
interconnection customers should be consistent with how the
transmission provider repays its internal interconnection
customers.\2292\ MISO asserts that this will ensure comparability and
non-discriminatory treatment between affected system interconnection
customers and ``native'' interconnection customers interconnected to
the affected system.\2293\ APPA-LPPC argue that the NOPR proposal is
missing an express, contractual commitment ensuring that an
interconnection customer will fund network upgrades identified by the
affected system as a condition of interconnection.\2294\ APPA-LPPC
state that they believe this to be implicit in the proposal and that
the provision should specify that the identified affected system
transmission provider is an intended third-party beneficiary of the
LGIA. APPA-LPPC contend that the absence of such a contractual
obligation on the part of the interconnection customer is a particular
concern for non-public utilities, which have no standing under the FPA
to seek funding for network upgrades under Commission-jurisdictional
tariffs. However, according to Southern, in Order No. 2003, the
Commission declined to make a generic finding on the possibility of
network upgrade costs being passed onto native load and transmission
customers and instead allowed transmission providers to make a filing
if such entities were not being held harmless.\2295\ Southern states
that

the Commission should clarify that a transmission provider can make
such a filing, if warranted, in which it could propose that affected
system interconnection customers bear the cost responsibility of
identified affected system network upgrades.\2296\
---------------------------------------------------------------------------

    \2292\ MISO Initial Comments at 97; Southern Initial Comments at
4.
    \2293\ MISO Initial Comments at 97.
    \2294\ APPA-LPPC Initial Comments at 24-25.
    \2295\ Southern Initial Comments at 17-18; Southern Reply
Comments at 8 (citing Order No. 2003-A, 106 FERC ] 61,220 at P 586;
Order No. 2003-B, 109 FERC ] 61,287 at P 56).
    \2296\ Southern Initial Comments at 17-18; Southern Reply
Comments at 9-10.
---------------------------------------------------------------------------

    1213. Among issues raised by commenters that oppose the proposal,
one common concern is that the proposal would force affected system
transmission providers to subsidize interconnection to neighboring
transmission systems, despite potentially not receiving any energy from
such interconnection customers, causing increased costs to the affected
system due to the requirement to mitigate negative thermal, voltage,
and stability impacts without a corresponding increase in
benefits.\2297\ North Carolina Commission and Staff also contend that
the Commission has not provided evidence on this matter that would
allow the Commission to meet its burden under FPA section 206.\2298\
Some commenters assert that the affected system interconnection
customer should be responsible for the costs of affected system network
upgrades in exchange for use of the affected system (i.e., via
transmission service).\2299\ Xcel notes that, for loop flow impacts,
the affected system interconnection customer may not formally take
transmission service but may be granted the right to the transmission
capacity associated with the loop flows they cause, and some
transmission providers have charged unreserved use for such impacts or
otherwise required neighbors to pay for the transmission use.\2300\
---------------------------------------------------------------------------

    \2297\ AECI Initial Comments at 9; Duke Southeast Utilities
Initial Comments at 21-22, 26; EEI Initial Comments at 18-19; North
Carolina Commission and Staff Initial Comments at 6; PPL Initial
Comments at 21; Tri-State Initial Comments at 21-22; U.S. Chamber of
Commerce Initial Comments at 11-12; Xcel Initial Comments at 40.
    \2298\ North Carolina Commission and Staff Initial Comments at
16.
    \2299\ Tri-State Initial Comments at 20; Xcel Initial Comments
at 40.
    \2300\ Xcel Initial Comments at 40.
---------------------------------------------------------------------------

    1214. North Carolina Commission and Staff observe that, if the
Commission were to implement the NOPR proposal and allow RTOs/ISOs to
obtain independent entity variations from the proposed affected system
pricing scheme implementing a participant funding model, then North
Carolina retail and wholesale customers of Duke Energy Carolinas and
Duke Energy Progress would be paying for affected system network
upgrade costs when a generating facility interconnects with the PJM-
controlled transmission system in addition to paying for network
upgrade costs for native interconnection customers when generating
facilities interconnect with Duke Energy Progress or Duke Energy
Carolinas-owned transmission facilities, which they argue would be
patently unjust, unfair, and unduly preferential.\2301\
---------------------------------------------------------------------------

    \2301\ North Carolina Commission and Staff Initial Comments at
23.
---------------------------------------------------------------------------

    1215. Several commenters argue that the NOPR proposal is contrary
to important objectives articulated in Order No. 2003.\2302\ For
instance, Duke Southeast Utilities contend that, if transmission
providers are required to reimburse affected system interconnection
customers for costs advanced for affected system network upgrades, such
transmission providers will seek to obtain rate recovery of their
reimbursement cost from existing wholesale and retail transmission
customers, meaning those classes of customers will not be protected
from adverse rate implications because they will have to absorb all
affected system network upgrade costs.\2303\ According to Duke
Southeast Utilities, this is contrary to an important objective
articulated in Order No. 2003-B of the interconnection pricing policy
protecting existing transmission customers from adverse rate
implications associated with interconnection facilities and network
upgrades required to interconnect a new generating facility.\2304\
---------------------------------------------------------------------------

    \2302\ Duke Southeast Utilities Initial Comments at 23; PPL
Initial Comments at 20-21.
    \2303\ Duke Southeast Utilities Initial Comments at 23.
    \2304\ Id. (citing Order No. 2003-B, 109 FERC ] 61,287 at P 56).
---------------------------------------------------------------------------

    1216. According to PPL, the pricing policy established in Order No.
2003 was meant to promote competition in markets ``still dominated by
non-independent transmission providers.'' \2305\ PPL argues that non-
RTO/ISO transmission providers no longer dominate, and therefore this
policy is no longer necessary.\2306\ PPL asserts that, contrary to the
time of Order No. 2003's issuance, and as a result of the size and
nature of generating facilities being developed in RTO/ISO regions,
non-RTOs/ISOs might be required to build costly affected system network
upgrades to accommodate the interconnection of generating facilities in
adjacent markets. PPL contends that affected system network upgrade
costs can overwhelm the total network upgrade costs identified for
reliability or other planning purposes. PPL claims, however, that the
affected system network upgrade reimbursement proposal in the NOPR is
directly contrary to the Commission's interconnection pricing policy
meant to protect existing customers from the rate impacts of
interconnection-related network upgrades,\2307\ and allows affected
system interconnection customers to benefit from network upgrades
without paying for them.\2308\ Thus, PPL asserts that the Commission
should allow affected system transmission providers the flexibility to
directly assign affected system network upgrade costs. Duke Southeast
Utilities concur, asserting that there is ample precedent of the
Commission accepting, without modification, an affected system
operating agreement between affected system transmission providers and
affected system interconnection customers that directly assign network
upgrade costs to such interconnection customers without
reimbursement.\2309\
---------------------------------------------------------------------------

    \2305\ PPL Initial Comments at 20 (citing Order 2003-A, 106 FERC
] 61,220 at P 636).
    \2306\ Id. at 20-21.
    \2307\ Id. at 21 (citing Order 2003-A, 106 FERC ] 61,220 at P
586; Order 2003-B, 109 FERC ] 61,287 at P 56).
    \2308\ Id. at 21-22.
    \2309\ Duke Southeast Utilities Initial Comments at 24 (citing,
e.g., Docket No. ER21-1701-000 (involving acceptance of an affected
system upgrade agreement between Southern and Cooperative Energy)).
---------------------------------------------------------------------------

    1217. Invenergy asserts that the Commission should reject arguments
challenging the Commission's interconnection pricing policy established
in Order No. 2003.\2310\ Invenergy contends that this interconnection
pricing policy was fully litigated in the Order No. 2003 rulemaking
proceeding and that issues relating to cost causation were fully and
carefully considered at that time.\2311\ Invenergy also argues that
Duke Southeast Utilities' reference to Order No. 2003-B is misplaced,
as the Commission, in Order No. 2003-B, found that the interconnection
pricing policy fully protected native load customers and that
transmission providers could make and justify alternative proposals on
compliance.\2312\
---------------------------------------------------------------------------

    \2310\ Invenergy Reply Comments at 10 (citing Order No. 2003,
104 FERC ] 61,103 at PP 693-696).
    \2311\ Id. at 11-12 (citing Order No. 2003, 104 FERC ] 61,103 at
PP 684, 693-696).
    \2312\ Id. at 10-11.
---------------------------------------------------------------------------

    1218. Duke Southeast Utilities and North Carolina Commission and
Staff assert that the affected system network upgrade reimbursement
proposal will stifle renewable generating facility

development.\2313\ For instance, Duke Southeast Utilities argue that
mandatory reimbursement has the likelihood of chilling development of
new, mainly renewable, generating facilities in states that consider
such costs as part of overall development costs when considering
whether to issue a certificate of public convenience and necessity to
permit these generating facilities.\2314\
---------------------------------------------------------------------------

    \2313\ Duke Southeast Utilities Initial Comments at 24-25; North
Carolina Commission and Staff Initial Comments at 21.
    \2314\ Duke Southeast Utilities Initial Comments at 24-25.
---------------------------------------------------------------------------

    1219. Moreover, Duke Southeast Utilities argue that the mandatory
reimbursement by affected system transmission providers of affected
system network upgrade costs fails to encourage efficient siting
decisions by affected system interconnection customers.\2315\ Duke
Southeast Utilities assert that, if affected system interconnection
customers are reimbursed for 100% of the costs of network upgrades on
the affected system plus interest at the Commission-prescribed rate,
they actually profit financially from such reimbursement.\2316\
---------------------------------------------------------------------------

    \2315\ Id. at 25; Duke Southeast Utilities Reply Comments at 23.
    \2316\ Duke Southeast Utilities Initial Comments at 25.
---------------------------------------------------------------------------

    1220. Invenergy argues that the possibility of certain states
considering affected system network upgrade costs in permitting
proceedings does not call the Commission's existing pricing policy into
question.\2317\ In response to arguments that the NOPR proposal could
foster inefficient siting, Invenergy asserts that this argument was
considered and settled in the Order No. 2003 rulemaking
proceeding.\2318\ Invenergy contends that such comments are speculative
and ignore other facts, such as that identification of affected system
network upgrades typically occurs after most siting decisions are made.
---------------------------------------------------------------------------

    \2317\ Invenergy Reply Comments at 12.
    \2318\ Id. (citing Order No. 2003, 104 FERC ] 61,103 at PP 695-
696).
---------------------------------------------------------------------------

    1221. North Carolina Commission and Staff argue that affected
system costs are no longer incidental or rare and have been escalating
over time.\2319\ North Carolina Commission and Staff allege that the
proposed crediting policy will force North Carolina wholesale and
retail ratepayers to subsidize the policy choices of other states and
the corporate goals of businesses located in other states.
---------------------------------------------------------------------------

    \2319\ North Carolina Commission and Staff Initial Comments at
21-22.
---------------------------------------------------------------------------

    1222. Public Interest Organizations urge the Commission to
disregard North Carolina Commission and Staff's assertions on this
matter, arguing that the NOPR proposal is unrelated to state and
corporate policies.\2320\ Public Interest Organizations assert that the
proposal is meant to address existing gaps in the pro forma LGIP that
apply to all interconnection customers regardless of fuel type and
motivation for generating facility development.
---------------------------------------------------------------------------

    \2320\ Public Interest Organizations Reply Comments at 18-19.
---------------------------------------------------------------------------

    1223. WAPA expresses significant concerns with the NOPR proposal,
emphasizing that it requires the affected system transmission provider
to reimburse the affected system interconnection customer cash plus
interest over 20 years for the cost of affected system network
upgrades.\2321\ WAPA states that, as a Federal agency, it cannot
provide a cash payment with interest to an interconnection customer
that does not take transmission service from WAPA.\2322\ According to
WAPA, per its tariff, it only provides network credits, not cash
payments, for such customers, and it would need to work with the host
transmission provider to ensure a mechanism is developed to properly
credit the affected system interconnection customer.\2323\
---------------------------------------------------------------------------

    \2321\ WAPA Initial Comments at 13.
    \2322\ Id. Specifically, WAPA states that it must deposit all
revenues received into a reclamation fund and that it would need an
appropriation from Congress to use the money in the reclamation fund
to pay interconnection customers. Id. at 13 n.17 (citing 43
U.S.C.392a). WAPA also notes that its current tariff specifically
provides that WAPA cannot pay interest on any funds advanced by
interconnection customers. Id. (citing WAPA, WAPA Open Access
Transmission Tariff, section 17.3 (1.0.0)).
    \2323\ Id. at 13-14.
---------------------------------------------------------------------------

    1224. Also on proposed article 3 of the pro forma affected system
facilities construction agreement, Tri-State notes that proposed
article <IP_ADDRESS> (Repayment) does not contain a reference to determine
if affected system network upgrades are unnecessary.\2324\ Separately,
Tri-State also suggests revisions to state that the repayment period
should end no later than 20 years from the completion of the
construction of the affected system interconnection customer's
generating facility, rather than completion of the construction of the
affected system network upgrades.\2325\
---------------------------------------------------------------------------

    \2324\ Tri-State Initial Comments at 33.
    \2325\ Id., app. B at 133.
---------------------------------------------------------------------------

    1225. With regard to proposed article 4 (Security, Billing, and
Payments), PacifiCorp offers suggested revisions to proposed article
4.1, which PacifiCorp asserts are intended to, among other things,
clarify that additional security will be required from the affected
system interconnection customer if the affected system transmission
provider determines that the costs of facilities may exceed the initial
estimate provided to the affected system interconnection
customer.\2326\ PPL also states that affected system interconnection
customers should be required to meet credit and security
requirements.\2327\
---------------------------------------------------------------------------

    \2326\ PacifiCorp Initial Comments at 37.
    \2327\ PPL Initial Comments at 20.
---------------------------------------------------------------------------

    1226. As for proposed article 6 (Termination of Agreement), Tri-
State suggests consolidating proposed article 6.3.3 (Pre-construction
of Installation) with proposed article 2.2.3 and proposes removing some
language in proposed article 6.4 (Survival Rights) that it argues is
duplicative of proposed article 2.4.\2328\
---------------------------------------------------------------------------

    \2328\ Tri-State Initial Comments at 33-34.
---------------------------------------------------------------------------

    1227. Commenters also respond to the proposed confidentiality
provisions. Southern asserts that proposed article 8.1 in the pro forma
affected system facilities construction agreement, section 13.1 in the
pro forma LGIP, and article 22 in the pro forma LGIA should be revised
to reflect the use of backup servers and the obligations of
transmission providers to share information under NERC Reliability
Standards.\2329\ Southern asserts that it is administratively difficult
to meet the requirements in these provisions that specify that
confidential information be destroyed or returned, arguing that this
provision should allow information to be stored on backup servers.
Southern also notes that, under NERC Reliability Standards, which were
developed after the effective date of Order No. 2003, transmission
providers must disclose confidential information to neighboring
transmission providers, and therefore, this language should be updated
to reflect that the transmission provider must share this confidential
information.
---------------------------------------------------------------------------

    \2329\ Southern Initial Comments at 19.
---------------------------------------------------------------------------

    1228. Moving to proposed Appendix A, MISO contends that there is no
need for a commercial operation date to be listed for affected system
network upgrades in proposed Appendix A.\2330\ MISO argues that
commercial operation is something that occurs in the LGIA context,
where the affected system interconnection customer's injection of
energy onto the host transmission provider is memorialized.
---------------------------------------------------------------------------

    \2330\ MISO Initial Comments at 97.

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

(2) Requests for Clarification
    1229. Southern explains that the pro forma LGIA and Commission
policy require that interconnection customers pay for the cost of
system protection facilities, and Southern requests that the Commission
clarify that it is not changing this policy.\2331\
---------------------------------------------------------------------------

    \2331\ Southern Initial Comments at 17; Southern Reply Comments
at 8 (citing pro forma LGIA art. <IP_ADDRESS>; Order No. 845, 163 FERC ]
61,043 at P 371).
---------------------------------------------------------------------------

(3) Miscellaneous
    1230. Eversource states that the concerns of interconnection
customers and transmission providers with regard to ISO-NE's related
facilities agreement (RFA) \2332\ are not addressed by the NOPR
proposal, which address coordination between different tariffs and
system operators, and requests that the Commission clarify this
difference.\2333\
---------------------------------------------------------------------------

    \2332\ ISO-NE's RFA is an intra-RTO/ISO agreement with a
specific transmission owner.
    \2333\ Eversource Initial Comments at 32.
---------------------------------------------------------------------------

(c) Commission Determination
    1231. We adopt, with modifications, the NOPR proposal to establish
a pro forma affected system facilities construction agreement in
Appendix 11 of the pro forma LGIP.\2334\ The pro forma affected system
facilities construction agreement, as adopted herein, closely tracks
the NOPR proposal: the affected system transmission provider and the
affected system interconnection customer(s) will enter into the
agreement; and the agreement will set forth the terms and conditions by
which the affected system transmission provider will be responsible for
the design, procurement, construction, and installation of all network
upgrades and terms and conditions by which the affected system
interconnection customer will initially fund, and be reimbursed for,
the cost of any assigned affected system network upgrades. As described
below, we modify the following proposed articles in the pro forma
affected system facilities construction agreement: (1) article 2.2.2
(Termination Upon Default); (2) article 2.2.3 (Consequences of
Termination); (3) article 3.1.1 (Transmission Provider Obligations);
(4) article <IP_ADDRESS> (Right to Suspend); (5) article <IP_ADDRESS> (Right to
Suspend Due to Default); (6) article 5.1 (Events of Breach); (7)
article 5.2 (Notice of Breach, Cure and Default); (8) article 5.2.1;
and (9) article 5.2.2.\2335\ Additionally, we establish a pro forma
multiparty affected system facilities construction agreement set forth
in Appendix 12 of the pro forma LGIP.
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    \2334\ NOPR, 179 FERC ] 61,194 at P 197.
    \2335\ We further note that we streamline article 6.2
(Termination and Removal) of the pro forma affected system
facilities construction agreement with ministerial revisions, as
well as add article 5.2 to provide a definition of ``breaching
party,'' which changes the numbering for proposed article 5.2
(Notice of Breach, Cure, and Default) to article 5.3 and proposed
article 5.3 (Rights in the Event of Default) to article 5.4.
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    1232. We find that a pro forma affected system facilities
construction agreement will improve the efficiency of the
interconnection process by reducing delays through improved
coordination among relevant parties, consistent with the Commission's
preliminary findings in the NOPR and with record support.\2336\ As Duke
Southeast Utilities explains, the adoption of a pro forma affected
system facilities construction agreement will offer uniformity of these
types of agreements to be tendered by affected system transmission
providers across the country.\2337\ Such uniformity will help reduce
the potential for undue discrimination. As the Commission found in
Order No. 2003, a standard set of procedures as part of the tariff for
all jurisdictional transmission facilities will minimize opportunities
for undue discrimination.\2338\
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    \2336\ NOPR, 179 FERC ] 61,194 at P 200; see also Ameren Initial
Comments at 23; Duke Southeast Utilities Initial Comments at 18;
Pine Gate Initial Comments at 42; SPP Initial Comments at 19-20.
    \2337\ Duke Southeast Utilities Initial Comments at 18.
    \2338\ Order No. 2003, 104 FERC ] 61,103 at P 11.
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    1233. We also adopt a pro forma multiparty affected system
facilities construction agreement.\2339\ Similar to adopting the pro
forma multiparty affected system study agreement, as discussed earlier,
we find that the adoption of the pro forma multiparty affected system
facilities construction agreement will further improve coordination and
further minimize opportunities for undue discrimination, even relative
to a two-party agreement. Also, similar to the adoption of the pro
forma affected system study agreement, the establishment of the pro
forma multiparty affected system facilities construction agreement
aligns with the requirement to study affected system interconnection
requests in clusters. Specifically, such a multiparty agreement will
allow for a common agreement for the affected system transmission
provider to enter into with all affected system interconnection
customers for the construction of affected system network upgrades
identified by the cluster study that are assigned to more than one
affected system interconnection customer. Below, in discussing relevant
article-specific comments, we discuss noteworthy, additional changes
needed to convert the pro forma affected system facilities construction
agreement from a two-party agreement to a multiparty agreement.
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    \2339\ PPL Initial Comments at 20; SPP Initial Comments at 19-
20.
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    1234. As with the pro forma multiparty affected system study
agreement, discussed above, the pro forma multiparty affected system
facilities construction agreement that we adopt in this final rule
closely follows the two-party agreement, with changes needed to convert
to a multiparty agreement. In article 2.2.2 (Termination Upon Default),
we establish that the default by one affected system interconnection
customer does not allow the non-defaulting affected system
interconnection customer(s) the right to terminate the agreement and
that, instead, the defaulting party may be removed from the agreement
by the affected system transmission provider. In article <IP_ADDRESS> (Right
to Suspend), we maintain the affected system interconnection customer's
right to suspend but only upon the mutual agreement of all affected
system interconnection customers that are party to the multiparty
agreement. In article 5.3 (Notice of Breach, Cure, and Default), we
establish multiparty cure procedures whereby the non-breaching parties
may cure the other affected system interconnection customer's breach.
    1235. We decline to make changes to the proposed pro forma affected
system facilities construction agreement and conforming changes to the
pro forma LGIP, aligning with Xcel's suggestion that the ``affected
system transmission provider'' should be renamed an ``affected system
operator.'' Instead, we clarify that the pro forma LGIP is written for
a specific transmission provider. When a transmission provider is
fulfilling its obligations as a host transmission provider, the pro
forma LGIP refers to the host transmission provider's interaction with
the ``affected system operator.'' However, when the pro forma LGIP
references a transmission provider and its obligations as the operator
of an affected system, we use the term ``transmission provider,'' as
the pro forma LGIP is setting the requirements of the transmission
provider, whether acting as the host or affected system transmission
provider, and that is a different perspective from a host transmission
provider's interaction with a separate ``affected system operator.''
    1236. In response to Tri-State's suggestion to revise proposed
article 2 of the pro forma affected system facilities construction
agreement to

clarify that the execution of an LGIA does not convey transmission
service, we decline to adopt this request, as it is unnecessary.\2340\
However, we accept Tri-State's suggested revisions to article 3.1.1 of
the pro forma affected system facilities construction agreement to
clarify that the affected system transmission provider shall not
undertake any actions inconsistent with its safety practices, material
and equipment specifications, design criteria and construction
procedures, labor agreements, or any applicable laws and regulations.
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    \2340\ See Order No. 2003, 104 FERC ] 61,103 at P 118 (stating
that ``[t]he Commission continues to treat interconnection and
delivery as separate aspects of transmission service, and an
Interconnection Customer may request Interconnection Service
separately from transmission service (delivery of the Generating
Facility's power output)''); Order No. 2003-A, 106 FERC ] 61,220 at
P 113 (``reiterat[ing] that Interconnection Service is separate from
the delivery component of Transmission Service and that the mere
interconnection of the Generating Facility is unlikely to harm
reliability on Affected Systems'').
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    1237. We modify proposed articles 2.2.2 and 5.2 (now articles 2.2.2
and 5.3) of the pro forma affected system facilities construction
agreement in response to comments from Southern and Tri-State regarding
termination and cure. Proposed article 2.2.2 establishes that a non-
breaching party has the right to terminate the pro forma affected
system facilities construction agreement, provided that termination
does not pose a reliability threat and that the breaching party has not
undertaken efforts to cure the breach, pursuant to article 5.3 (Notice
of Breach, Cure and Default). However, consistent with comments from
Southern,\2341\ we agree that termination and default rights in the pro
forma affected system facilities construction agreement should be
consistent with the pro forma LGIA. Accordingly, as adopted, we modify
articles 2.2.2 and 5.2 (now articles 2.2.2 and 5.3) of the pro forma
affected system facilities construction agreement to make them
consistent with the existing default provisions in article 17 of the
pro forma LGIA (Default), which also establishes default and cure
provisions in the event of a breach.
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    \2341\ Southern Initial Comments at 18.
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    1238. We also modify proposed article 2.2.3 (Consequences of
Termination) of the pro forma affected system facilities construction
agreement in response to comments from Tri-State and Invenergy
suggesting that it would require affected system interconnection
customers to be responsible for the costs of additional facilities that
are caused by another interconnection customer terminating its affected
system facilities construction agreement or that interconnection
customer's LGIA.\2342\ Specifically, we remove the final sentence from
proposed article 2.2.3 that an ``affected system interconnection
customer is responsible for the cost of additional facilities that is
caused to another interconnection customer due to the termination of
this Agreement, affected system interconnection customer's LGIA, or any
affected system interconnection customer's other Affected System
Facilities Construction Agreement(s).'' We find that deletion of this
sentence is needed because the affected system interconnection customer
should not be responsible for any additional facilities that are
assigned to another interconnection customer under these circumstances.
As written, the provision implies that an affected system
interconnection customer could be responsible for any network upgrade
identified as a result of the agreement's termination, even if the
newly assigned network upgrade is on a different transmission
provider's transmission system than the transmission provider that is a
signatory to the terminated agreement. Additionally, we note that the