[Federal Register Volume 83, Number 90 (Wednesday, May 9, 2018)]
[Rules and Regulations]
[Pages 21342-21414]
[FR Doc No: 2018-08659]

Vol. 83

Wednesday,

No. 90

May 9, 2018

Part II

Department of Energy

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Federal Energy Regulatory Commission

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18 CFR Part 37

Reform of Generator Interconnection Procedures and Agreements; Final
Rule

Federal Register / Vol. 83 , No. 90 / Wednesday, May 9, 2018 / Rules
and Regulations

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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

18 CFR Part 37

[Docket No. RM17-8-000; Order No. 845]

Reform of Generator Interconnection Procedures and Agreements

AGENCY: Federal Energy Regulatory Commission, DOE.

ACTION: Final action.

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SUMMARY: In this final action, the Federal Energy Regulatory Commission
(Commission) is amending the pro forma Large Generator Interconnection
Procedures and the pro forma Large Generator Interconnection Agreement
to improve certainty, promote more informed interconnection, and
enhance interconnection processes. The reforms are intended to ensure
that the generator interconnection process is just and reasonable and
not unduly discriminatory or preferential.

DATES: This action is effective July 23, 2018.

FOR FURTHER INFORMATION CONTACT:

Tony Dobbins (Technical Information), Office of Energy Policy and
Innovation, Federal Energy Regulatory Commission, 888 First Street NE,
Washington, DC 20426,<PHONE_NUMBER>, [email protected].
Kathleen Ratcliff (Technical Information), Office of Energy Market
Regulation, Federal Energy Regulatory Commission, 888 First Street NE,
Washington, DC 20426,<PHONE_NUMBER>, [email protected].
Adam Pan (Legal Information), Office of the General Counsel, Federal
Energy Regulatory Commission, 888 First Street NE, Washington, DC
20426,<PHONE_NUMBER>, [email protected].

SUPPLEMENTARY INFORMATION:
Before Commissioners: Kevin J. McIntyre, Chairman; Cheryl A. LaFleur,
Neil Chatterjee, Robert F. Powelson, and Richard Glick.

Table of Contents

                                                               Paragraph
                                                                 Nos.

I. Introduction.............................................           1
II. Background..............................................           9
    A. Order No. 2003.......................................           9
    B. 2008 Order on Interconnection Queuing Practices......          12
    C. 2015 American Wind Energy Association Petition and             15
     2016 Technical Conference..............................
    D. Notice of Proposed Rulemaking........................          18
III. Overview and Need for Reform...........................          23
    A. Comments on Overall Approach.........................          26
    B. Commission Determination.............................          36
IV. Proposed Reforms........................................          45
    A. Improving Certainty for Interconnection Customers....          45
        1. Scheduled Periodic Restudies.....................          46
        2. The Interconnection Customer's Option To Build...          73
        3. Self-Funding by the Transmission Owner...........         114
        4. Dispute Resolution...............................         123
        5. Capping Costs for Network Upgrades...............         172
    B. Promoting More Informed Interconnection..............         191
        1. Identification and Definition of Contingent               192
         Facilities.........................................
        2. Transparency Regarding Study Models and                   221
         Assumptions........................................
        3. Congestion and Curtailment Information...........         247
        4. Definition of Generating Facility in the Pro              273
         Forma LGIP and Pro Forma LGIA......................
        5. Interconnection Study Deadlines..................         290
        6. Improving Coordination With Affected Systems.....         335
    C. Enhancing Interconnection Processes..................         342
        1. Requesting Interconnection Service Below                  343
         Generating Facility Capacity.......................
        2. Provisional Interconnection Service..............         424
        3. Utilization of Surplus Interconnection Service...         453
        4. Material Modification and Incorporation of                510
         Advanced Technologies..............................
        5. Modeling of Electric Storage Resources for                537
         Interconnection Studies............................
    D. Other Issues.........................................         545
        1. Whether Proposed Reforms Should Be Applied to             545
         Small Generation...................................
        2. Issues Not Raised in the NOPR....................         550
        3. Process Considerations...........................         552
        4. Compliance and Implementation....................         554
V. Information Collection Statement.........................         557
VI. Environmental Analysis..................................         563
VII. Regulatory Flexibility Act.............................         564
VIII. Document Availability.................................         566
IX. Effective Date and Congressional Notification...........         569

I. Introduction

    1. In this final action, the Commission revises its pro forma Large
Generator Interconnection Procedures (LGIP) and the pro forma Large
Generator Interconnection Agreement (LGIA) to implement ten specific
reforms.
    2. This final action adopts reforms that are designed to improve
certainty for interconnection customers, promote more informed
interconnection decisions, and enhance the interconnection process. We
believe the reforms adopted in this final action will benefit both
interconnection customers and transmission providers.\1\ Specifically,
we expect these reforms to provide interconnection customers with
better information and more options for obtaining interconnection
service such that there are fewer interconnection requests overall and
fewer interconnection requests that are unlikely to reach commercial
operation. As a result, we expect transmission providers will be able
to focus on those requests that are most likely to reach commercial
operation.
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    \1\ Transmission provider:
    Shall mean the public utility (or its designated agent) that
owns, controls, or operates transmission or distribution facilities
used for the transmission of electricity in interstate commerce and
provides transmission service under the Tariff. The term
Transmission Provider should be read to include the Transmission
Owner when the Transmission Owner is separate from the Transmission
Provider.
    Pro forma LGIP Section 1 (Definitions); pro forma LGIA Art. 1
(Definitions).
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    3. First, in order to improve certainty for interconnection
customers, this final action: (1) Removes the limitation that
interconnection customers may only exercise the option to build a
transmission provider's interconnection facilities and stand alone
network upgrades in instances when the transmission provider cannot
meet the dates proposed by the interconnection customer; and (2)
requires that transmission providers establish interconnection dispute
resolution procedures that allow a disputing party to unilaterally seek
non-binding dispute resolution.
    4. Second, to promote more informed interconnection decisions, this
final action: (1) Requires transmission providers to outline and make
public a method for determining contingent facilities; (2) requires
transmission providers to list the specific study processes and
assumptions for forming the network models used for interconnection
studies; (3) revises the definition of ``Generating Facility'' to
explicitly include electric storage resources; and (4) establishes
reporting requirements for aggregate interconnection study performance.
    5. The third area of reforms aims to enhance the interconnection
process. To effectuate this goal, this final action: (1) Allows
interconnection customers to request a level of interconnection service
that is lower than their generating facility capacity; (2) requires
transmission providers to allow for provisional interconnection
agreements that provide for limited operation of a generating facility
prior to completion of the full interconnection process; (3) requires
transmission providers to create a process for interconnection
customers to use surplus interconnection service at existing points of
interconnection; and (4) requires transmission providers to set forth a
procedure to allow transmission providers to assess and, if necessary,
study an interconnection customer's technology changes without
affecting the interconnection customer's queued position.
    6. The pro forma LGIP and pro forma LGIA establish the terms and
conditions under which public utilities that own, control, or operate
facilities for transmitting electric energy in interstate commerce \2\
must provide interconnection service to large generating facilities.\3\
Based on the record in this proceeding, we find it necessary under
section 206 of the Federal Power Act (FPA) \4\ to revise the pro forma
LGIP and the pro forma LGIA to ensure that the rates, terms, and
conditions pursuant to which public utilities provide interconnection
service to large generating facilities are just and reasonable and not
unduly discriminatory or preferential.
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    \2\ A public utility is a utility that owns, controls, or
operates facilities used for transmitting electric energy in
interstate commerce, as defined by the Federal Power Act (FPA). See
16 U.S.C. 824(e) (2012). A non-public utility that seeks voluntary
compliance with the reciprocity condition of an Open Access
Transmission Tariff (OATT) may satisfy that condition by filing an
OATT, which includes the pro forma LGIP and the pro forma LGIA. See
Standardization of Generator Interconnection Agreements and
Procedures, Order No. 2003, FERC Stats. & Regs. ] 31,146 (2003)
(Order No. 2003), order on reh'g, Order No. 2003-A, FERC Stats. &
Regs. ] 31,160, at P 774 (Order No. 2003-A), order on reh'g, Order
No. 2003-B, FERC Stats. & Regs. ] 31,171 (2004) (Order No. 2003-B),
order on reh'g, Order No. 2003-C, FERC Stats. & Regs. ] 31,190
(2005) (Order No. 2003-C), aff'd sub nom. Nat'l Ass'n of Regulatory
Util. Comm'rs v. FERC, 475 F.3d 1277 (DC Cir. 2007), cert. denied,
552 U.S. 1230 (2008).
    \3\ A large generating facility is ``a Generating Facility
having a Generating Facility Capacity of more than 20 [megawatts].''
Pro forma LGIA Art. 1.
    \4\ 16 U.S.C. 824e (2012).
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    7. Although the implementation of Order No. 2003 reduced undue
discrimination in the generator interconnection process, some
interconnection customers argue that they have continued to observe
systemic inefficiencies and discriminatory practices.\5\ In addition,
there have been a number of developments that affect generator
interconnection, including a changing resource mix driven by market
forces and state and federal policies, and by the emergence of new
technologies. At the same time, transmission providers have expressed
concern that the interconnection study process can be difficult to
manage because some interconnection customers submit requests for
interconnection service associated with new generating facilities that
the transmission providers maintain have little chance of reaching
commercial operation. Consequently, we conclude that it is appropriate
to adopt the revisions to the pro forma LGIP and the pro forma LGIA
described in this final action to mitigate existing concerns and to
ensure that the pro forma LGIP and pro forma LGIA are just and
reasonable and not unduly discriminatory or preferential.
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    \5\ See, e.g., AWEA June 19, 2015 Petition at 2 (Petition).
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    8. The reforms we adopt track many of the proposals set forth in
the Notice of Proposed Rulemaking (NOPR) issued in this proceeding on
December 15, 2016,\6\ with certain modifications. Among other things,
we have revised aspects of the reforms pertaining to dispute
resolution, contingent facilities, model and assumption transparency,
study deadline metrics, provisional interconnection service,
utilization of surplus interconnection service, and material
modification.\7\ Additionally, in this final action, as discussed more
fully below, we withdraw or decline to move forward with the NOPR
proposals pertaining to scheduled periodic restudies, self-funding by
the transmission owner, congestion and curtailment information, and
modeling electric storage resources. The Commission also held a
technical conference on April 3 and 4, 2018 to gather additional
information regarding transmission providers' and interconnection
customers' coordination with affected systems.\8\ We conclude

that the reforms adopted in this final action will help improve the
efficiency of processing interconnection requests for both transmission
providers and interconnection customers, maintain reliability, balance
the needs of interconnection customers and transmission owners, and
remove barriers to resource development.
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    \6\ Reform of Generator Interconnection Procedures and
Agreements, 82 FR 4464 (Jan. 13, 2017), FERC Stats. & Regs. ] 32,719
(2017) (NOPR).
    \7\ The pro forma LGIP defines Material Modification as ``those
modifications that have a material impact on the cost or timing of
any Interconnection Request with a later queue priority date.'' See
pro forma LGIP Section 1.
    \8\ Reform of Affected System Coordination in the Generator
Interconnection Process, Docket No. AD18-8-000 and EDF Renewable
Energy, Inc. v. Midcontinent Independent System Operator, Inc.,
Southwest Power Pool, Inc., and PJM Interconnection, L.L.C., Docket
No. EL18-26-000, Notice of Technical Conference (Feb. 2, 2018).
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II. Background

A. Order No. 2003

    9. In Order No. 2003, the Commission recognized a ``pressing need
for a single set of procedures for jurisdictional Transmission
Providers and a single, uniformly applicable interconnection agreement
for Large Generators.'' \9\ Prior to the issuance of Order No. 2003,
the Commission addressed interconnection issues on a case-by-case basis
through, for example, filings under section 205 of the FPA.\10\
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    \9\ Order No. 2003, FERC Stats. & Regs. ] 31,146 at P 11.
    \10\ See Id. P 10.
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    10. In Order No. 2003, the Commission noted that it had previously
found that interconnection is a ``critical component of open access
transmission service and thus is subject to the requirement that
utilities offer comparable service under the OATT.'' \11\ The
Commission found that a standard set of procedures ``will minimize
opportunities for undue discrimination and expedite the development of
new generation, while protecting reliability and ensuring that rates
are just and reasonable.'' \12\
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    \11\ Id. P 9 (citing Tennessee Power Co., 90 FERC ] 61,238
(2000)).
    \12\ Id. P 11.
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    11. Consequently, in Order No. 2003, the Commission required public
utilities that own, control, or operate transmission facilities to file
standard generator interconnection procedures and a standard agreement
to provide interconnection service to generating facilities with a
capacity greater than 20 megawatts (MW). To this end, the Commission
adopted the pro forma LGIP and pro forma LGIA and required all public
utilities subject to Order No. 2003 to modify their OATTs to
incorporate the pro forma LGIP and pro forma LGIA.

B. 2008 Order on Interconnection Queuing Practices

    12. Although the issuance of Order No. 2003 was a significant step
in minimizing undue discrimination in the generator interconnection
process, some concerns with the process persisted, while some new
concerns came to light. In response to concerns voiced to the
Commission about interconnection queue management by regional
transmission organizations and independent system operators (RTOs/ISOs)
as well as other entities, the Commission held a technical conference
on December 17, 2007, and issued a notice inviting further comments in
response to such concerns.\13\
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    \13\ Interconnection Queuing Practices, Docket No. AD08-2-000,
Notice of Technical Conference (Nov. 2, 2007).
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    13. The Commission issued an order on March 20, 2008 addressing
interconnection queue issues based on the December 2007 technical
conference and subsequent comments.\14\ The Commission acknowledged
that delays in processing interconnection queues were more pronounced
in RTOs/ISOs that were attracting significant new entry.
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    \14\ Interconnection Queuing Practices, 122 FERC ] 61,252, at PP
16-18 (2008) (2008 Order).
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    14. The Commission declined to impose generally applicable
solutions, given the regional nature of some interconnection queue
issues. However, the Commission provided guidance to assist RTOs/ISOs
and their stakeholders in their efforts to improve the processing of
interconnection queues.\15\ The Commission further stated that,
although it ``may need to [impose solutions] if the RTOs and ISOs do
not act themselves,'' each region would have an opportunity to work
with stakeholders to develop its own solutions through ``consensus
proposals.'' \16\ Following the 2008 Order, RTOs/ISOs submitted
multiple queue reform proposals to the Commission, some of which were
intended to move away from a ``first-come, first-served'' approach to a
``first-ready, first-served'' approach.
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    \15\ 2008 Order, 122 FERC ] 61,252 at PP 16-18.
    \16\ Id. P 8.
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C. 2015 American Wind Energy Association Petition and 2016 Technical
Conference

    15. On June 19, 2015, AWEA filed a petition in Docket No. RM15-21-
000 requesting that the Commission revise the pro forma LGIP and pro
forma LGIA. On July 7, 2015, the Commission issued a Notice of Petition
for Rulemaking in that docket to seek public comment on the petition.
The Commission received thirty-five comments and three answers and
reply comments.
    16. On May 13, 2016, Commission staff convened a technical
conference (2016 Technical Conference). The 2016 Technical Conference
featured five panels on ``The Current State of Generator
Interconnection Queues,'' ``Transparency and Timing in the
Interconnection Study Process,'' ``Certainty in Cost Estimates and
Construction Time,'' ``Other Queue Coordination and Management
Issues,'' and ``Interconnection of Electric Storage Resources.'' The
panels featured representatives from RTOs/ISOs, transmission owners
from both RTO/ISO and non-RTO/ISO regions, renewable generation
developers, electric storage resource developers, and other
stakeholders.
    17. On June 3, 2016, the Commission issued a Notice Inviting Post-
Technical Conference Comments. The Commission received twenty-four
post-technical conference comments.

D. Notice of Proposed Rulemaking

    18. On December 15, 2016, the Commission issued the NOPR, proposing
fourteen reforms focused on improving aspects of the pro forma LGIP and
pro forma LGIA, the pro forma OATT, and the Commission's regulations.
The Commission also sought comment on, but did not propose, tariff or
regulatory revisions on other issues.
    19. First, the Commission proposed four reforms to improve
certainty by affording interconnection customers more predictability in
the interconnection process. To accomplish this goal, the Commission
proposed to: (1) Revise the pro forma LGIP to require transmission
providers that conduct cluster studies to move toward a scheduled,
periodic restudy process; (2) remove from the pro forma LGIA the
limitation that interconnection customers may only exercise the option
to build transmission provider's interconnection facilities and stand
alone network upgrades if the transmission provider cannot meet the
dates proposed by the interconnection customer; (3) modify the pro
forma LGIA to require mutual agreement between the transmission owner
and interconnection customer for the transmission owner to opt to
initially self-fund the costs of the construction of network upgrades;
and (4) require that RTOs/ISOs establish dispute resolution procedures
for interconnection disputes. The Commission also sought comment on the
extent to which a cap on the network upgrade costs for which
interconnection customers are responsible can mitigate the potential
for serial restudies without inappropriately shifting cost
responsibility.
    20. Second, the Commission proposed five reforms to improve
transparency by

providing more detailed information for the benefit of all participants
in the interconnection process. The Commission proposed to: (1) Require
transmission providers to outline and make public a method for
determining contingent facilities in their LGIPs and LGIAs based upon
guiding principles in the NOPR; (2) require transmission providers to
list in their LGIPs and on their Open Access Same-Time Information
System (OASIS) sites the specific study processes and assumptions for
forming the networking models used for interconnection studies; (3)
require congestion and curtailment information to be posted in one
location on each transmission provider's OASIS site; (4) revise the
definition of ``Generating Facility'' in the pro forma LGIP and pro
forma LGIA to explicitly include electric storage resources; and (5)
create a system of reporting requirements for aggregate interconnection
study performance. The Commission also sought comment on proposals or
additional steps that the Commission could take to improve the
resolution of issues that arise when a proposed interconnection impacts
affected systems.\17\
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    \17\ Affected system ``shall mean an electric system other than
the Transmission Provider's Transmission System that may be affected
by the proposed interconnect.'' Pro forma LGIP Section 1
(Definitions); pro forma LGIA Art. 1 (Definitions).
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    21. Third, the Commission proposed five reforms to enhance
interconnection processes by making use of underutilized existing
interconnections, providing interconnection service earlier, or
accommodating changes in the development process. In this area, the
Commission proposed to: (1) Allow interconnection customers to limit
their requested level of interconnection service below their generating
facility capacity; (2) require transmission providers to allow for
provisional agreements so that interconnection customers can operate on
a limited basis prior to completion of the full interconnection
process; (3) require transmission providers to create a process for
interconnection customers to utilize surplus interconnection service at
existing interconnection points; (4) require transmission providers to
set forth a separate procedure to allow transmission providers to
assess and, if necessary, study an interconnection customer's
technology changes (e.g., incorporation of a newer turbine model)
without a change to the interconnection customer's queue position; and
(5) require transmission providers to evaluate their methods for
modeling electric storage resources for interconnection studies and
report to the Commission why and how their existing practices are or
are not sufficient.
    22. In response to the NOPR, sixty-three comments were filed.\18\
These comments have informed our determinations in this final action.
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    \18\ Appendix A to Order No. 845 lists the entities that
submitted comments on the NOPR and the shortened names used through
this final action to describe those entities. Order No. 845 is
available on the Commission's eLibrary and website.
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III. Overview and Need for Reform

    23. In the NOPR, the Commission noted that the electric power
industry has undergone numerous changes since Order No. 2003's
issuance. These changes are due to a variety of factors, such as the
economics of new power generation being driven by sustained low natural
gas prices, technological advances, and federal and state policies. In
the NOPR, the Commission found that such changes have implications for
the interconnection process, for both interconnection customers and
transmission providers.\19\
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    \19\ NOPR, FERC Stats. & Regs. ] 32,719 at PP 24-25.
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    24. As a result of such changes and despite Commission efforts to
improve the interconnection process, aspects of the generator
interconnection process still provide cause for concern.\20\ For
example, the Commission noted that many interconnection customers
experience delays, and some interconnection queues have significant
backlogs and long timelines.\21\ The Commission also recognized the
recurring problem of late-stage interconnection request withdrawals
that lead to interconnection restudies and consequent delays for lower-
queued interconnection customers.\22\ The Commission further recognized
that interconnection request withdrawals can lead to increased network
upgrade cost responsibility for lower-queued interconnection customers,
which, in turn, could result in cascading withdrawals. Moreover, the
Commission stated that the lack of cost and timing certainty can hinder
interconnection customers from obtaining financing, and that cost
uncertainty is a significant obstacle, as some interconnection
customers are less able to absorb unexpected and potentially higher
costs.
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    \20\ Id. P 26.
    \21\ Id. (citing, e.g., 2016 Technical Conference Tr. 210: 1-10
(discussion of delays up to a year)).
    \22\ Id. (citing, e.g., 2016 Technical Conference Tr. 20:15-23
(discussion regarding MISO experiencing 50 percent withdrawal rates
in many parts of the queue)).
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    25. In light of the changing industry and the aforementioned
concerns, the Commission preliminarily found that the current
interconnection process may hinder the timely development of new
generation and, thereby, stifle competition in the wholesale markets,
resulting in rates, terms, and conditions that are not just and
reasonable or are unduly discriminatory or preferential. Additionally,
the Commission preliminarily found that the interconnection study
process may result in uncertainty and inaccurate information. Finally,
the Commission preliminarily found that the potential for
discriminatory interconnection processes exists as new technologies
enter the power generation sphere.

A. Comments on Overall Approach

    26. A number of parties express support for the proposals in the
NOPR.\23\ For example, TAPS ``generally support[s] the proposed
reforms'' and states that the NOPR proposals ``reasonably balance the
needs of interconnection customers with the needs of load and
transmission providers.'' \24\ Generation Developers agree with the
Commission's preliminary findings and argue that the NOPR ``addresses
critical items that directly impact: (i) The development of new
generation; (ii) the rates; terms and conditions of interconnection
service; and (iii) the rates to customers for wholesale electric
products.'' \25\ Joint Renewable Parties and ESA ask the Commission to
quickly proceed with a final rulemaking.\26\ ESA states that Order No.
2003's issuances predate the deployment of electric storage resources
on the transmission system and that existing interconnection agreements
and processes do not consider electric storage resources'
attributes.\27\ ESA also states that the resulting undue uncertainty
limits grid access for electric storage resources and prevents them
from providing low cost reliability services.\28\ ESA asserts, however,
that the Commission's NOPR proposals strike an effective balance
between transmission provider flexibility and interconnection customer
certainty.\29\
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    \23\ See e.g., Community Renewable Energy Association 2017
Comments at 1-2; Joint Renewable Commenters 2017 Comments at 1;
Generation Developers 2017 Comments at 2; Renewable Energy Coalition
2017 Comments at 2; Renewable and Storage Associations 2017 Comments
at 1-2; TAPS 2017 Comments at 1; TDU Systems 2017 Comments at 3-13,
16-30.
    \24\ TAPS 2017 Comments at 1.
    \25\ Generation Developers 2017 Comments at 2.
    \26\ Joint Renewable Commenters 2017 Comments at 1; ESA 2017
Comments at 19.
    \27\ Id. at 5-6.
    \28\ Id. at 6.
    \29\ Id. at 19.

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    27. IECA supports the majority of the Commission's proposed
reforms.\30\ Invenergy supports many of the Commission's proposed
reforms but states that the NOPR ``leaves fundamental causes of these
[interconnection] delays unaddressed.'' \31\ NEPOOL states that the
proposed reforms could: (1) Address the time ISO-NE takes to evaluate,
study, and approve new interconnections; and (2) facilitate market
entry through more transparent and useful information regarding
capacity and energy deliverability of potential new ISO-NE
resources.\32\ Joint Renewable Parties contend that, despite existing
rules, abusive interconnection practices impede the development of
competitively supplied generation from renewable resources--
particularly where the transmission provider is a vertically integrated
utility.\33\ CAISO recognizes the need to nationalize many of the
practices proposed in the NOPR.\34\
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    \30\ IECA 2017 Comments at 2.
    \31\ Invenergy 2017 Comments at 1.
    \32\ NEPOOL 2017 Comments at 5.
    \33\ Joint Renewable Parties 2017 Comments at 1-2.
    \34\ CAISO 2017 Comments at 37.
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    28. Other parties express some support for the NOPR proposals but
object to specific reforms. For example, the Non-Public Utility Trade
Associations ``believe that certain of the NOPR's proposed changes . .
. hold the potential for improving transparency and process in a manner
that may enhance cost certainty and predictability.'' \35\ They object,
however, to any changes that would impose cost caps for network
upgrades and certain of the NOPR's proposed reforms.\36\ Additionally,
California Energy Storage Alliance commends CAISO for the reforms
already implemented in that region and suggests that other RTOs/ISOs
should adopt these reforms.\37\ However, California Energy Storage
Alliance also suggests that each RTO/ISO should decide upon the
proposed solutions for themselves rather than through the establishment
of new national policy.\38\
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    \35\ Non-Profit Utility Trade Associations 2017 Comments at 4.
    \36\ Non-Profit Utility Trade Associations 2017 Comments at 4.
These include the proposal for transparency regarding study models
and assumptions, the proposal to allow interconnection customers to
request interconnection service below generating facility capacity,
and the proposal regarding the utilization of surplus
interconnection service.
    \37\ California Energy Storage Alliance 2017 Comments at 1-2.
    \38\ Id. at 13.
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    29. Other parties oppose some or all aspects of the NOPR. EEI
argues that improving certainty is a responsibility shared by
interconnection customers and transmission providers.\39\ It states
that the volume of interconnection requests and the inherently
speculative nature of generation development lead to queue delays,
suspensions, and withdrawals.\40\ Imperial states that the NOPR could
alter transmission owners' rights and raises concerns regarding the
feasibility of processing interconnection requests.\41\ ISO-NE states
that several of the proposed reforms may be overly prescriptive and may
have unintended negative consequences.\42\ Southern argues that the
NOPR fails to address problems or delays caused or exacerbated by
interconnection customers.\43\
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    \39\ EEI 2017 Comments at 9. AEP and Duke support the comments
being filed by EEI in this proceeding. AEP 2017 Comments at 1; Duke
2017 Comments at 2.
    \40\ EEI 2017 Comments at 9.
    \41\ Imperial 2017 Comments at 1.
    \42\ ISO-NE 2017 Comments at 2.
    \43\ Southern 2017 Comments at 4-5.
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    30. A number of parties object to proposals that they contend could
compromise system reliability or shift risk and costs to transmission
providers for factors beyond the transmission providers' control.\44\
EEI requests that the Commission not deviate from its longstanding
policy ``that risks and costs associated with an interconnection
request be borne by the interconnection customer.'' \45\ Similarly,
Salt River states that the NOPR could undermine the Commission's non-
discrimination policy as well as the cost causation principle.\46\
Southern asks the Commission to reconsider those proposals that ``lack
balance and would shift risks and add bureaucratic responsibilities
to'' transmission providers.\47\
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    \44\ Non-Profit Utility Trade Associations 2017 Comments at 3;
EEI 2017 Comments at 9-10; Salt River 2017 Comments at 1-2; Southern
2017 Comments at 4; Xcel 2017 Comments at 3-4; APS 2017 Comments at
5.
    \45\ EEI 2017 Comments at 9.
    \46\ Salt River 2017 Comments at 1-2.
    \47\ Southern 2017 Comments at 4.
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    31. APS states that it reviewed the NOPR against its current LGIP
and LGIA and identified various revisions, in addition to those
proposed in the NOPR, that would need to be made to comply with the
proposals in the NOPR.\48\ APS suggests that the Commission re-evaluate
its revisions and additions to ensure that there are not potentially
conflicting or otherwise limiting provisions elsewhere in the pro forma
LGIP and pro forma LGIA.\49\
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    \48\ APS 2017 Comments at 5-6.
    \49\ Id. at 7.
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    32. Duke, ISO-NE, and Southern support the NOPR to the extent that
it allows procedures to vary according to differing regional needs.\50\
Similarly, MISO TOs state that each RTO/ISO's LGIP or LGIA is not
simply a set of procedures tied to a pro forma agreement that is
amenable to generic modifications but is instead a complex series of
arrangements, accepted by the Commission, developed in consultation
with stakeholders, and designed to meet the RTO/ISO's particular needs
and circumstances.\51\
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    \50\ Duke 2017 Comments at 29; ISO-NE 2017 Comments at 3;
Southern 2017 Comments at 3.
    \51\ MISO TOs 2017 Comments at 4.
---------------------------------------------------------------------------

    33. NEPOOL states that a final action should allow for significant
regional flexibility, especially for regions such as ISO-NE that have
continued to improve their interconnection processes and incorporated
region-specific features into interconnection rules, such as ISO-NE's
Forward Capacity Market (FCM) and Elective Transmission Upgrade
provisions. NEPOOL notes that, especially where interconnection
provisions intersect with the FCM qualification process, the Commission
should allow maximum flexibility to deviate from pro forma rules to
avoid unintended disruptions to market participants. NEPOOL states
that, to the extent that the proposals would disrupt the integrated
interconnection and FCM process in New England, they would not support
the adoption of the NOPR in New England.\52\ Similarly, because of the
unique interconnection issues in each region and significant regional
variations, NYISO asks the Commission to allow parties to tailor
appropriate tariff revisions and demonstrate how they are addressing,
or plan to address, the Commission's concerns in a manner consistent
with or superior to the NOPR's proposed revisions.\53\
---------------------------------------------------------------------------

    \52\ NEPOOL 2017 Comments at 6.
    \53\ NYISO 2017 Comments at 1.
---------------------------------------------------------------------------

    34. Southern recommends that the Commission issue a revised notice
of proposed rulemaking to allow for another round of notice and
comment.\54\ EEI asks the Commission to convene technical conferences
to seek feedback on the portions of the LGIA and LGIP that require
review and revision to ensure consistency, completeness, and
applicability.\55\
---------------------------------------------------------------------------

    \54\ Southern 2017 Comments a 6.
    \55\ EEI 2017 Comments at 76.
---------------------------------------------------------------------------

    35. Duke states that, to fulfill their obligations to ensure
reliability service, ``transmission providers must be afforded the time
needed to: (i) Carefully evaluate the potential reliability impact on
[their] system[s] of

proposed interconnections; and (ii) provide generators with reasonable
estimates within the time needed to effectuate interconnection and
necessary supporting upgrades.'' \56\
---------------------------------------------------------------------------

    \56\ Duke 2017 Comments at 3.
---------------------------------------------------------------------------

B. Commission Determination

    36. After consideration of the NOPR comments, we conclude that
certain revisions to interconnection processes are necessary and that
the record supports the need for reform. Therefore, with the exception
of the withdrawal of some reforms proposed in the NOPR and the
modification of others, which are discussed in further detail below, we
adopt the majority of the proposed revisions to the pro forma LGIP and
the pro forma LGIA.\57\
---------------------------------------------------------------------------

    \57\ The final action revises the pro forma LGIP and pro forma
LGIA in accordance with Sec.  35.28(f)(1) of the Commission's
regulations, which provides that every public utility that is
required to have on file a non-discriminatory open access
transmission tariff under the section must amend such tariff by
adding the standard interconnection procedures and agreement and the
standard small generator interconnection procedures and agreement
required by Commission rulemaking proceedings promulgating and
amending such interconnection procedures and agreements, or such
other interconnection procedures and agreements as may be required
by Commission rulemaking proceedings promulgating and amending the
standard interconnection procedures and agreement and the standard
small generator interconnection procedures and agreement. 18 CFR
35.28(f)(1) (2017). See Reactive Power Requirements for Non-
Synchronous Generation, Order No. 827, FERC Stats. & Regs. ] 31,385
(cross-referenced at 155 FERC ] 61,277), order on clarification and
reh'g, 157 FERC ] 61,003 (2016) (Order No. 827).
---------------------------------------------------------------------------

    37. Based on our analysis of the record, we adopt the NOPR's
preliminary findings.\58\ We find that the record in this proceeding
provides support for our findings that, without the reforms adopted
here, the current interconnection process may hinder timely development
of new generation,\59\ stifle competition,\60\ result in uncertainty
\61\ and inaccurate information,\62\ or potentially unduly discriminate
against new technologies.\63\ Further, we find that, absent the reforms
adopted in this final action, the existing defects and inefficiencies
in generator interconnection processes that we have described could
become exacerbated, resulting in longer delays in generation
development, higher costs to customers, more uncertainty in the
process, and less competition in the market. For these reasons, we
conclude that these reforms are necessary to ensure that rates, terms,
and conditions of service are just and reasonable and are not unduly
discriminatory or preferential.
---------------------------------------------------------------------------

    \58\ See supra P 26.
    \59\ See, e.g., Invenergy 2017 Comments at 1 (stating that
``many of the Commission's proposed reforms. . . . are small steps
in the right direction toward reducing the current chronic queue
delays); FTC 2017 Comments at 2 (stating that it supports the
Commission's proposals ``to facilitate generation interconnections
to the grid).
    \60\ See, e.g., FTC 2017 Comments at 2, 5 (stating that the NOPR
``is a logical next step in [a] procompetitive process'' and citing
existing concerns about ``anticompetitive behavior'' in the
interconnection process);
    \61\ See, e.g., AFPA 2017 Comments at 6 (stating that the option
to build proposal ``should increase cost certainty'').
    \62\ See, e.g., id. at 4 (stating that the provisional
interconnection service, utilization of surplus interconnection
service, and material modification reforms ``have the potential to .
. . improve the accuracy and reliability of interconnection
studies'').
    \63\ See, e.g. AWEA 2017 Comments at 4 (stating that ``the
current process . . . creates the potential for discriminatory
interconnection processes as new technologies enter the generation
sphere''); Public Interest Organizations 2017 Comments at 17
(stating that they agree that ``[i]nterconnection customers
involving `new technologies may be affected more by process and
information uncertainty than incumbents' '').
---------------------------------------------------------------------------

    38. We disagree with commenters that take issue with the proposals
to impose new requirements and responsibilities on transmission
providers. For example, although EEI is correct that interconnection
customers and transmission providers share responsibility to improve
certainty and that generator interconnection, by its nature, involves
some uncertainty, we find that current interconnection processes and
agreements can create unnecessary levels of uncertainty as discussed in
more detail below.
    39. Additionally, in response to Imperial's concerns that the NOPR
could alter transmission owners' rights, we note that, although the
final action creates new obligations and responsibilities for
transmission providers and transmission owners, these changes are
likely to improve the generator interconnection process for all
involved parties. Also, we emphasize that the final action does not
relieve interconnection customers of their existing responsibilities.
Nor does it alter the ownership structure established in Order No. 2003
for interconnection facilities or network upgrades. Although some
commenters argue that the NOPR's proposed reforms do not increase the
responsibilities of, or directly address delays created by,
interconnection customers, we believe that the reforms adopted in this
final action should help improve the efficiency of processing
interconnection requests for both transmission providers and
interconnection customers.
    40. We also disagree with arguments that the NOPR will compromise
system reliability. We find that, for those reforms for which
commenters have expressed reliability concerns, the Commission has
either maintained existing safeguards or provided transmission
providers with sufficient discretion to ensure that the reforms will
not interfere with system reliability. For example, as discussed more
fully below, the option to build, as modified by this final action,
does not relax any of the safeguards that the Commission first
established in Order No. 2003. Additionally with regard to the reforms
that allow interconnection customers to request interconnection service
below generating facility capacity and to utilize surplus
interconnection service, transmission providers have the ability to
require control technologies or to establish conditions necessary for
interconnection customers to exercise these options without
compromising reliability.
    41. In response to comments by EEI and Salt River, among others,
that the NOPR will shift costs traditionally borne by the
interconnection customer, we note that this final action makes no
changes with regard to interconnection customers' cost responsibilities
for network upgrades and that the Commission is taking no further
action on the issue of cost caps. Additionally, in response to
Southern's concerns that the NOPR proposals lack balance, it is our
belief that improved generator interconnection processes will benefit
both transmission providers and interconnection customers.
    42. Although APS argues that the NOPR necessitates additional pro
forma LGIP and pro forma LGIA revisions, it neglects to further
describe or explain the particulars of such revisions. The revisions to
the pro forma LGIP and the pro forma LGIA adopted here are intended to
effectuate the reforms discussed in this final action and to integrate
the adopted reforms so that they do not unintentionally conflict with
other portions of the pro forma LGIP and the pro forma LGIA.
Nonetheless, to the extent that a particular transmission provider
believes that additional revisions to its LGIP or LGIA are necessary,
it may propose such revisions in a filing pursuant to section 205 of
the FPA.
    43. Finally, we note that a number of commenters seek regional
flexibility in complying with the rule to accommodate regional needs.
In Order No. 2003, the Commission stated that if, on compliance, a non-
RTO/ISO transmission provider ``offers a variation from the Final Rule
LGIP and Final Rule LGIA and the variation is in response to
established . . . reliability requirements, then it may seek to justify
its variation using the regional

difference rationale.'' \64\ However, if a non-RTO/ISO seeks a
variation ``for any other reason,'' it must present its justification
for the variation as ``consistent with or superior to'' the pro forma
LGIA or pro forma LGIP.\65\ The Commission went on to say that, for
RTOs/ISOs, it would allow independent entity variations for pricing and
non-pricing provisions, and that RTOs/ISOs ``shall have greater
flexibility to customize [their] interconnection procedures and
agreements to fit regional needs.'' \66\ In this final action, we make
no changes to the variations allowed by Order No. 2003. Therefore, on
compliance, transmission providers may argue that they qualify for the
above-mentioned variations from the requirements of this final action.
---------------------------------------------------------------------------

    \64\ Order No. 2003, FERC Stats. & Regs. ] 31,146 at P 826.
    \65\ Id.
    \66\ Id.
---------------------------------------------------------------------------

    44. We decline to adopt Southern's recommendation that we issue a
revised notice of proposed rulemaking, as well as EEI's proposal to
convene general generator interconnection technical conferences, apart
from the technical conference concerning affected systems discussed
further below. We note that the process used in this proceeding has
included a number of opportunities to narrow the issues for discussion
and to provide comments. As stated, the Commission noticed AWEA's
original 2015 petition for comment, held a technical conference in May
2016, and issued subsequent questions for which it requested comment,
and sought comments on the NOPR. Therefore, we do not think additional
steps are necessary in this proceeding at this time. In response to
Duke's requests that transmission providers need to have adequate time
to evaluate reliability impacts and to provide generators ``with
reasonable estimates within the time needed to effectuate
interconnection and necessary supporting upgrades,'' we point out that
this final action neither changes the deadlines for interconnection
studies nor eliminates the reasonable efforts standard or the deadlines
for construction of facilities necessary to interconnect a particular
large generating facility.\67\
---------------------------------------------------------------------------

    \67\ Duke 2017 Comments at 3.
---------------------------------------------------------------------------

IV. Proposed Reforms

A. Improving Certainty for Interconnection Customers

    45. The Commission proposed reforms intended to improve certainty
by providing interconnection customers more predictability in the
interconnection process, including more predictability regarding the
costs and the timing of interconnecting to the transmission system. In
addition to the proposed reforms, the Commission sought comment on the
extent to which capping interconnection customer cost responsibility
for actual network upgrade costs to some margin above estimated network
upgrade costs could mitigate the potential for serial restudies without
inappropriately shifting cost responsibility.
1. Scheduled Periodic Restudies
a. NOPR Proposal
    46. The Commission proposed to revise the pro forma LGIP to require
transmission providers that conduct cluster studies \68\ to conduct
restudies on a scheduled, periodic basis (e.g., annually, semi-
annually, quarterly, or a set number of days after the completion of
the cluster study).\69\ Specifically, the Commission proposed to
require each transmission provider that conducts cluster studies to
revise Sections 6.4, 7.6, and 8.5 of the pro forma LGIP with time
frames for periodic restudies.\70\ The Commission also sought comment
on: (1) If the Commission's proposal were adopted, whether transmission
providers that conduct cluster studies should be allowed to retain some
discretion to conduct a restudy outside of the established schedule at
the request of interconnection customers or under specific
circumstances that make such schedule deviations necessary; and (2)
when this discretion should be restricted and the circumstances under
which such schedule deviations should be allowed.\71\ The Commission
also sought comment on whether there are improvements to the pro forma
LGIP necessary to clarify events that would trigger a restudy (restudy
triggers).\72\
---------------------------------------------------------------------------

    \68\ Clustering allows transmission providers to simultaneously
study all interconnection requests received during a specified
period. See Order No. 2003, FERC Stats. & Regs. ] 31,146 at PP 149-
156.
    \69\ NOPR, FERC Stats. & Regs. ] 32,719 at P 46.
    \70\ Id. PP 48-49.
    \71\ Id. P 50.
    \72\ Id. P 51.
---------------------------------------------------------------------------

b. Comments
    47. Several commenters argue that, although restudies are often
necessary, repeated restudies conducted at irregular intervals create
cost and timing uncertainty for interconnection customers, impose
delays on the process, and put development of new generation at risk,
despite reductions in some RTOs/ISOs' interconnection requests and the
use of cluster studies.\73\ Some of these commenters assert that,
because the withdrawal of higher-queued interconnection requests can
create cascading restudies of lower-queued interconnection requests,
regularly scheduled restudies would help alleviate the need for
multiple ad hoc restudies, thereby helping to reduce uncertainty and
delays.\74\
---------------------------------------------------------------------------

    \73\ AFPA 2017 Comments at 5; AVANGRID 2017 Comments at 5-6;
AWEA 2017 Comments at 8-9; Generation Developers 2017 Comments at 6;
NextEra 2017 Comments at 6; IECA 2017 Comments at 2.
    \74\ AFPA 2017 Comments at 5; AVANGRID 2017 Comments at 5-6;
AWEA 2017 Comments at 8-9; Generation Developers 2017 Comments at 6;
NextEra 2017 Comments at 6.
---------------------------------------------------------------------------

    48. Some commenters note that the unpredictable start and stop of
the generation interconnection study process has caused project
cancellations because delays in obtaining an LGIA or small generator
interconnection agreement (SGIA) can affect project financing.\75\
NextEra explains that, in some cases, restudies have taken years to
complete due to projects withdrawing from the queue, transmission
project changes, inadequate transmission provider resources, and other
factors.\76\ NextEra further notes that transmission providers then
have to restart the study with the remaining members of the
interconnection customer study group. NextEra contends that this
occurrence can delay the interconnection customer's receipt of its
study results and finalized GIA, which could prevent it from accurately
evaluating the timing and costs of necessary network upgrades.\77\
NextEra suggests that a regularly scheduled restudy process will allow
transmission providers to consider relevant changes on a set timetable
and reduce the need for ad hoc restudies. NextEra also argues that, by
ensuring that studies are completed, an interconnection customer will
receive some network upgrade information that it would not receive if
studies are restarted or delayed.\78\
---------------------------------------------------------------------------

    \75\ Generation Developers 2017 Comments at 6; NextEra 2017
Comments at 6.
    \76\ NextEra 2017 Comments at 6.
    \77\ Id.
    \78\ Id. at 6-7.
---------------------------------------------------------------------------

    49. AWEA states that requiring transmission providers to identify
the frequency of restudies of a cluster study and post the dates of
these scheduled restudies on OASIS will increase certainty and give
transmission providers flexibility.\79\ NextEra suggests that periodic
restudies should be conducted every six months, noting that, with that
frequency, there should be little need for intervening studies, and
yearly studies would be frequent enough.\80\
---------------------------------------------------------------------------

    \79\ AWEA 2017 Comments at 9-10.
    \80\ NextEra 2017 Comments at 7.

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

    50. Xcel supports the Commission's proposal but requests that the
Commission clarify that restudies will commence within a specified time
period (e.g., ninety days) of a triggering event, instead of after the
completion of the cluster study. Xcel suggests that explicitly defining
triggering events is not necessary and notes that determination of
triggering events tends to vary between regions.\81\
---------------------------------------------------------------------------

    \81\ Xcel 2017 Comments at 7.
---------------------------------------------------------------------------

    51. AVANGRID recommends that transmission providers provide cost
estimates for the proposed scheduled periodic restudies for
interconnection customers with interconnection requests included in a
group or cluster, instead of providing interconnection customers
estimates for the initial study only.\82\ AFPA supports regular cluster
studies but believes that RTOs/ISOs should have the ability to avoid
restudies and the associated costs where they can demonstrate no
material change in relevant assumptions or inputs.\83\
---------------------------------------------------------------------------

    \82\ AVANGRID 2017 comments at 5-6.
    \83\ AFPA 2017 Comments at 3.
---------------------------------------------------------------------------

    52. APPA/LPPC states that a schedule detailing periodic restudies
may provide added predictability that could be valuable to project
developers.\84\ However, it argues that, where interconnection queues
are short, there may be no need to await specified dates to perform
restudies, and in those circumstances, a fixed schedule may hamper the
interconnection process.\85\
---------------------------------------------------------------------------

    \84\ APPA/LPPC 2017 Comments at 5.
    \85\ Id.
---------------------------------------------------------------------------

    53. Duke states that it does not regularly conduct cluster studies,
but it supports the proposal and the flexibility provided for
transmission providers that do conduct cluster studies.\86\ Southern
agrees with the Commission that transmission providers that do not
conduct interconnection studies in clusters should not have to perform
periodic restudies.\87\
---------------------------------------------------------------------------

    \86\ Duke 2017 Comments at 4.
    \87\ Southern 2017 Comments at 9.
---------------------------------------------------------------------------

    54. CAISO cautions that periodic restudies are effective in CAISO
because it uses a cluster study approach with firm cost caps, and
transmission owners finance network upgrade costs beyond these cost
caps.\88\ CAISO asserts that only with both of these mechanisms is it
reasonable for interconnection customers to wait for an annual restudy
to find out how their projects may have been affected by project
withdrawals over the course of the prior year.\89\ CAISO states that,
with the transmission owners picking up any costs above the cost cap,
withdrawals can decrease or increase interconnection customers' network
upgrade costs depending upon whether the upgrade is still necessary for
other interconnection customers.\90\ CAISO states that costs decrease
when sufficient interconnection customers withdraw and obviate the need
for a network upgrade. However, CAISO states that costs may increase if
the network upgrade is still necessary but fewer interconnection
customers remain to finance it.\91\
---------------------------------------------------------------------------

    \88\ CAISO 2017 Comments at 7.
    \89\ Id.
    \90\ Id. at 7-8.
    \91\ Id. at 8.
---------------------------------------------------------------------------

    55. CAISO asserts that imposing scheduled periodic restudies in
other RTOs/ISOs that do not share CAISO's market features may be
problematic.\92\ CAISO states that, as ISO-NE and others pointed out in
response to the AWEA petition, an interconnection customer must wait
for a periodic restudy to find out that its project costs have
increased dramatically.\93\
---------------------------------------------------------------------------

    \92\ Id.
    \93\ Id.
---------------------------------------------------------------------------

    56. CAISO cautions that the Commission should consider the various
proposed reforms in concert with each other, including changes to
schedules in periodic studies, because cost caps and the definition of
contingent facilities also have a significant impact on the efficacy of
periodic restudies.\94\
---------------------------------------------------------------------------

    \94\ Id.
---------------------------------------------------------------------------

    57. SoCal Edison and PG&E state that scheduled periodic annual
restudies are the standard practice for CAISO and that they appreciate
the predictability of CAISO's restudy process.\95\
---------------------------------------------------------------------------

    \95\ PG&E 2017 Comments at 3 (citing CAISO, eTariff, FERC
Electric Tariff, OATT, app. DD Section 7.4 (6.0.0)).
---------------------------------------------------------------------------

    58. Generation Developers support the Commission's proposal, but
they assert that semi-annual or quarterly restudies could be
problematic and unpredictable, especially if the RTO/ISO has missed the
study completion deadline listed in its tariff.\96\ Similarly, EDP
indicates that, although each transmission provider should be able to
establish its own unique schedule, a pro forma restudy schedule should
be developed that serves as the default schedule unless a transmission
provider demonstrates the need for an alternative schedule.\97\
---------------------------------------------------------------------------

    \96\ Generation Developers 2017 Comments at 6-7.
    \97\ EDP 2017 Comments at 3.
---------------------------------------------------------------------------

    59. Invenergy states that restudies can be useful but should not
add unnecessary time and expense, citing the substantial time
differences for restudies within several RTOs/ISOs.\98\ According to
Invenergy, an important missing element in the restudy process is
transparency for the interconnection customer. Invenergy suggests a
requirement that RTOs/ISOs inform the customer of the restudy prior to
its initiation. Invenergy suggests that the transmission provider
should provide information in sufficient detail so that the customer
can understand the need for restudy, including whether there is an
addition or change to the necessary network upgrades.\99\
---------------------------------------------------------------------------

    \98\ Invenergy 2017 Comments at 5.
    \99\ Id.
---------------------------------------------------------------------------

    60. Several commenters oppose the Commission's proposed revisions
to require transmission providers that conduct cluster studies to
conduct restudies on a scheduled, periodic basis. As discussed further
below, commenters state that the Commission's proposal may cause
unnecessary delays, may not be appropriate in each region, and may
unduly burden smaller transmission providers.
    61. PJM contends that the NOPR may have the opposite effect from
what is intended by causing unnecessary delays.\100\ PJM argues that,
in a situation where a project withdraws during the system impact
study, or prior to the completion of the facilities study, and restudy
is necessary, the NOPR proposal would harm all subsequently queued
projects. PJM explains that these projects would remain in a ``holding
pattern'' until the scheduled, periodic restudy is complete.\101\ PJM
states that improvements in transparency can achieve the intended goals
of the NOPR proposal without the drawbacks.\102\
---------------------------------------------------------------------------

    \100\ PJM 2017 Comments at 5.
    \101\ Id. at 4-5.
    \102\ Id. at 5.
---------------------------------------------------------------------------

    62. PJM explains that although it performs cluster studies at the
feasibility and system impact study stages, it does not conduct
restudies at the feasibility study stage because of the broad scope of
the feasibility study and because the system impact study can account
for withdrawals.\103\ However, PJM states that it does not oppose
conducting periodic restudies within a cluster after the issuance of a
system impact study report and receipt of an executed facilities study
agreement from the projects that need to be restudied.\104\ PJM states
that it could commit to post such restudy dates on its website.\105\
---------------------------------------------------------------------------

    \103\ Id. at 3-4.
    \104\ Id. at 4.
    \105\ Id.
---------------------------------------------------------------------------

    63. PJM asserts that the pro forma LGIP appropriately requires
restudied interconnection customers to bear the cost of restudy.\106\
PJM also states that, at the facilities study stage, interconnection
customers should bear all costs, including any impacts caused

to lower-queued projects by changes made to a higher-queued
project.\107\
---------------------------------------------------------------------------

    \106\ Id. at 6 (citing pro forma LGIP Sections 6.4, 7.6, and
8.5).
    \107\ Id.
---------------------------------------------------------------------------

    64. PJM opposes the NOPR's 45/60 day restudy timeframe because
restudies ``come in all sizes and complexities.'' \108\ PJM states that
committing to a strict timeframe would then necessitate granting the
transmission provider the flexibility to extend the timeframe beyond
the study period found in the tariff, regardless of whether a
transmission provider is serially processing a restudy or restudying a
cluster.\109\ PJM maintains that reporting and sharing of status
information with the affected parties is more effective than inflexible
restudy deadlines.\110\
---------------------------------------------------------------------------

    \108\ Id. at 5.
    \109\ Id.
    \110\ Id. at 5-6.
---------------------------------------------------------------------------

    65. NYISO and Indicated NYTOs state that NYISO does not perform
restudies in its Standard Large Facility Interconnection Procedures to
modify the upgrades required for projects or their cost estimates based
on changes to higher-queued projects or system conditions.\111\
---------------------------------------------------------------------------

    \111\ NYISO 2017 Comments at 13; Indicated NYTOs 2017 Comments
at 4-5.
---------------------------------------------------------------------------

    66. ISO-NE and NEPOOL state that the Commission should not adopt
the NOPR proposal because it may not be appropriate in each
region.\112\ As an example, ISO-NE states that the recent revisions to
its interconnection procedures incorporate a clustering approach that
does not include scheduled restudies.\113\ ISO-NE argues that a
scheduled restudy would result in less certainty for interconnection
customers because it would delay the study outcome. On the other hand,
ISO-NE states that its clustering approach would still meet the
objectives of the NOPR by establishing milestones that can serve as
decision points for interconnection customers.\114\
---------------------------------------------------------------------------

    \112\ ISO-NE 2017 Comments at 15-16.
    \113\ Id. at 16.
    \114\ Id. at 16-17.
---------------------------------------------------------------------------

    67. Specifically, ISO-NE states that its proposed two-phased
cluster study structure is designed to provide interconnection
customers with information regarding the likely outcome of the cluster
study in the first phase. ISO-NE states that interconnection customers
could then determine whether they would like to proceed to the second-
phase, move to the end of the interconnection queue, or withdraw from
the interconnection queue.\115\ ISO-NE states that its cluster study
approach minimizes the need for restudy through provisions that allow
for the participation of lower-queued requests in the event of
withdrawals.\116\
---------------------------------------------------------------------------

    \115\ Id.
    \116\ Id. at 17.
---------------------------------------------------------------------------

    68. MISO, MISO TOs, ITC, and MidAmerican state that MISO's 2016
queue reform proposal addressed unstructured and repeated restudies.
MISO asserts that, consistent with the independent entity variation
standard, its revised procedures are now in effect and should be
implemented.\117\ MISO states that the Commission should not deviate
from its current requirement that allows transmission providers to use
reasonable efforts. It also contends that the Commission should not
impose inflexible timeframes on restudies, and asserts that a one-size-
fits-all approach would not be appropriate here. MISO notes that in
RTOs/ISOs, the interconnection process involves many parties, and
imposing inflexible restudy deadlines would be counter-productive,
particularly where delays are caused by third parties or by factors
outside of the RTO/ISO's control.\118\ ITC urges the Commission to
accept MISO's Definitive Planning Phase \119\ process, which addresses
restudies, as consistent with or superior to the revisions made to the
pro forma LGIP in this proceeding.\120\
---------------------------------------------------------------------------

    \117\ MISO 2017 Comments at 12-13.
    \118\ Id. at 13-14.
    \119\ Under MISO's Definitive Planning Phase process, MISO
performs three sequential system impact studies after successive
milestone payments to account for queue withdrawals.
    \120\ ITC 2017 Comments at 6.
---------------------------------------------------------------------------

    69. Imperial states that the Commission's proposal to require
scheduled, periodic restudies for cluster studies would unduly burden
smaller transmission providers.\121\ Imperial states that transmission
providers may not be willing to memorialize an aggressive restudy
commitment if they expect to experience variations in the number of
interconnection requests that would be appropriate for cluster studies
or restudies over a period of time.\122\ Additionally, for smaller
transmission providers that conduct few restudies, such a proposal may
be less efficient than studying each project individually as the need
to restudy arises.\123\ Therefore, Imperial requests that the
Commission allow transmission providers, particularly smaller
transmission providers, the discretion to conduct periodic cluster
restudies within their selected timeframes.\124\
---------------------------------------------------------------------------

    \121\ Imperial 2017 Comments at 15.
    \122\ Id. at 16.
    \123\ Id.
    \124\ Id.
---------------------------------------------------------------------------

c. Commission Determination
    70. We decline to adopt the proposal in the NOPR to require
transmission providers that conduct cluster studies to conduct
scheduled periodic restudies. We find that the record does not support
a finding that cascading restudies are an issue that the final action
should address by adopting the proposal on scheduled periodic
restudies. We recognize that scheduled periodic restudies may provide
timing certainty for interconnection queues that experience cascading
restudies, but the record does not suggest that this is a significant
problem in all or many regions' interconnection queues where cluster
studies are used. We agree with the commenters' concern that requiring
scheduled periodic restudies would unnecessarily constrain the restudy
process for transmission providers that are not experiencing cascading
restudies. As explained in the RTO/ISO comments on this issue, existing
variations in interconnection processes suggest that a one-size-fits-
all approach is not appropriate at this time. For example, CAISO's firm
cost caps allow customers to know in advance that network upgrade costs
will not exceed the cost cap, even if a restudy occurs. In other RTOs/
ISOs, however, adopting CAISO's annual restudy approach would require
interconnection customers to wait for a scheduled periodic restudy to
learn of cost changes.
    71. We note that restudies are sometimes necessary due to a number
of factors, including project withdrawals, modifications of higher-
queued projects subject to section 4.4 of the LGIP, and/or a change to
a project's point of interconnection.\125\ We agree with the comments
that, regardless of the restudy schedule, restudies that result from
such actions by a higher-queued interconnection customer may not be
foreseeable or preventable. Implementing a scheduled periodic restudy
process may reduce timing uncertainty by creating decision points, but
it would not eliminate the cost uncertainty created by the withdrawal
or modification of a higher-queued project. In that case, restudy would
be necessary to recalculate network upgrade cost distribution among the
remaining customers, and restricting the timing of these restudies may
cause, rather than prevent, unnecessary delays.
---------------------------------------------------------------------------

    \125\ Pro forma LGIP Sections 6.4, 7.6, and 8.5.
---------------------------------------------------------------------------

    72. Accordingly, we decline to adopt revisions to the pro forma
LGIP that would require transmission providers that conduct cluster
studies to establish a schedule for conducting periodic restudies. We
also decline to adopt revisions to the pro forma LGIP to address the
transmission provider's

discretion to conduct restudies outside of an established schedule, and
decline to propose revisions to the restudy triggers in the pro forma
LGIP.
2. The Interconnection Customer's Option To Build
a. NOPR Proposal
    73. In the NOPR, the Commission proposed modifications to the pro
forma LGIA to allow interconnection customers to exercise the option to
build regardless of whether the transmission provider can meet the
interconnection customer's proposed dates.\126\
---------------------------------------------------------------------------

    \126\ NOPR, FERC Stats. & Regs. ] 32,719 at P 52.
---------------------------------------------------------------------------

    74. Generally, in the interconnection process, the transmission
provider is responsible for the construction of all network upgrades
and the transmission provider's interconnection facilities. Under
article 5.1.3 of the current pro forma LGIA, however, the
interconnection customer has the option to build the transmission
provider's interconnection facilities \127\ and stand alone network
upgrades,\128\ but only if the transmission provider notifies the
interconnection customer that the transmission provider cannot complete
construction of such facilities by the interconnection customer's
proposed in-service date, initial synchronization date, or commercial
operation date; this is termed the ``option to build.'' To expand the
opportunity for interconnection customers to exercise the option to
build to reduce costs or complete construction more quickly, the
Commission proposed in the NOPR to allow the interconnection customer
to exercise the option to build regardless of whether the transmission
provider finds the interconnection customer's selected in-service date,
initial synchronization date, and commercial operation date acceptable.
---------------------------------------------------------------------------

    \127\ According to the pro forma LGIA:
    Transmission Provider's Interconnection Facilities shall mean
all facilities and equipment owned, controlled or operated by the
Transmission Provider from the Point of Change of Ownership to the
Point of Interconnection as identified in Appendix A to the Standard
Large Generator Interconnection Agreement, including any
modifications, additions or upgrades to such facilities and
equipment. Transmission Provider's Interconnection Facilities are
sole use facilities and shall not include Distribution Upgrades,
Stand Alone Network Upgrades or Network Upgrades.
    Pro forma LGIA Art. 1.
    \128\ Stand alone network upgrades:
    Shall mean Network Upgrades that an Interconnection Customer may
construct without affecting day-to-day operations of the
Transmission System during their construction. Both the Transmission
Provider and the Interconnection Customer must agree as to what
constitutes Stand Alone Network Upgrades and identify them in
Appendix A to the Standard Large Generator Interconnection
Agreement.
    Id.
---------------------------------------------------------------------------

    75. Under the current pro forma LGIA, unless otherwise mutually
agreed to by the parties, the interconnection customer selects the
``In-Service Date, Initial Synchronization Date, and Commercial Date''
\129\ and ``either the Standard Option or Alternative Option.'' \130\
Under both of these options, the transmission provider is responsible
for construction of the transmission provider's interconnection
facilities and all network upgrades.
---------------------------------------------------------------------------

    \129\ The In-Service Date is ``the date upon which the
Interconnection Customer reasonably expects it will be ready to
begin use of the Transmission Provider's Interconnection Facilities
to obtain back feed power.'' Id. The Initial Synchronization Date is
``the date upon which the Generating Facility is initially
synchronized and upon which Trial Operation begins.'' Id. The
Commercial Operation Date is ``the date on which the Generating
Facility commences Commercial Operation as agreed to by the Parties
pursuant to Appendix E to the Standard Large Generator
Interconnection Agreement.'' Id.
    \130\ Pro forma LGIA Art. 5.1.
---------------------------------------------------------------------------

    76. Under the ``standard option,'' the transmission provider
``shall construct the Transmission Provider's Interconnection
Facilities and Network Upgrades using Reasonable Efforts to complete
the construction by the dates designated by the Interconnection
Customer.'' \131\ Under the ``alternate option,'' the transmission
provider may be liable for liquidated damages if it does not construct
the transmission provider's interconnection facilities and ``Network
Upgrades according to the construction completion dates established by
the Interconnection Customer.'' \132\
---------------------------------------------------------------------------

    \131\ Pro forma LGIA Art. 5.1.1.
    \132\ The transmission provider has the ability to decline this
option within 30 days of the LGIA's execution.
---------------------------------------------------------------------------

    77. Under the current pro forma LGIA, there are two additional
options for assuming responsibility for constructing certain
facilities, which are available if the transmission provider informs
the interconnection customer that it cannot meet proposed construction
completion dates: The option to build, described above, and the
``negotiated option.'' \133\ The negotiated option, described in
article 5.1.4 of the pro forma LGIA, applies if the transmission
provider cannot meet the interconnection customer's proposed dates but
the interconnection customer does not want to assume responsibility for
construction of the transmission provider's interconnection facilities
and stand alone network upgrades. In this case, the transmission
provider would construct the transmission provider's interconnection
facilities and all network upgrades.
---------------------------------------------------------------------------

    \133\ Pro forma LGIA Art. 5.1.4.
---------------------------------------------------------------------------

    78. In the NOPR, the Commission proposed modifications to articles
5.1, 5.1.3, and 5.1.4 of the pro forma LGIA to allow interconnection
customers to exercise the option to build with respect to the
transmission provider's interconnection facilities and stand alone
network upgrades regardless of whether the transmission provider can
meet the interconnection customer's proposed dates. Specifically, the
Commission proposed to modify the language in article 5.1 of the pro
forma LGIA as follows (with proposed deletions in brackets and proposed
additions in italics):
    Options. Unless otherwise mutually agreed to between the Parties,
Interconnection Customer shall select the In-Service Date, Initial
Synchronization Date, and Commercial Operation Date; and either the
Standard Option or Alternate Option set forth below [for completion of
Transmission Provider's Interconnection Facilities and Network
Upgrades, as set forth in Appendix A, Interconnection Facilities and
Network Upgrades,] and such dates and selected option shall be set
forth in Appendix B, Milestones. At the same time, Interconnection
Customer shall indicate whether it elects to exercise the Option to
Build set forth in article 5.1.3 below. If the dates designated by
Interconnection Customer are not acceptable to Transmission Provider,
Transmission Provider shall so notify Interconnection Customer within
thirty (30) Calendar Days. Upon receipt of the notification that
Interconnection Customer's designated dates are not acceptable to
Transmission Provider, the Interconnection Customer shall notify the
Transmission Provider within thirty (30) Calendar Days whether it
elects to exercise the Option to Build if it has not already elected to
exercise the Option to Build.\134\
---------------------------------------------------------------------------

    \134\ In this final action, the adopted language differs
slightly from the NOPR language because we remove the word ``the''
before ``Transmission Provider'' in the final sentence of this
article.
---------------------------------------------------------------------------

    79. The Commission also proposed to modify the language in article
5.1.3 of the pro forma LGIA as follows (with proposed deletions in
brackets):

    Option to Build. [If the dates designated by Interconnection
Customer are not acceptable to Transmission Provider, Transmission
Provider shall so notify Interconnection Customer within thirty (30)
Calendar Days and unless the Parties agree otherwise,]
Interconnection Customer shall have the option to assume
responsibility for the design, procurement and construction of
Transmission Provider's Interconnection Facilities and Stand Alone
Network

Upgrades on the dates specified in article 5.1.2. Transmission
Provider and Interconnection Customer must agree as to what
constitutes Stand Alone Network Upgrades and identify such Stand
Alone Network Upgrades in Appendix A. Except for Stand Alone Network
Upgrades, Interconnection Customer shall have no right to construct
Network Upgrades under this option.

    80. The Commission stated that, given the changes proposed above,
revisions to the negotiated option were necessary because the
negotiated option references the current limitations on the option to
build.\135\ For this reason, it proposed to revise the negotiated
option to remove references to limitations on the option to build, to
address scenarios in which an interconnection customer exercises the
option to build and still wishes to negotiate completion times for
network upgrades that are not stand alone network upgrades, and to
address circumstances in which the interconnection customer does not
wish to exercise the option to build. The Commission asserted that such
revisions are necessary because the ability to exercise the option to
build would no longer be contingent upon a transmission provider's
inability to meet the interconnection customer's proposed dates.
However, the Commission noted that the negotiated option must also
contemplate the possibility that the transmission provider does not
agree to the interconnection customer's proposed dates as to network
upgrades that are not stand alone. That is, even if the interconnection
customer elects to exercise the option to build, the transmission
provider would still be responsible for the design, procurement, and
construction of network upgrades that are not stand alone network
upgrades.
---------------------------------------------------------------------------

    \135\ NOPR, FERC Stats. & Regs. ] 32,719 at P 62.
---------------------------------------------------------------------------

    81. Therefore, the Commission also proposed to modify the language
in article 5.1.4 of the pro forma LGIA as follows (with proposed
deletions in brackets and proposed additions in italics):

    Negotiated Option. [If Interconnection Customer elects not to
exercise its option under Article 5.1.3, Option to Build,
Interconnection Customer shall so notify Transmission Provider
within thirty (30) Calendar Days, and] If the dates designated by
Interconnection Customer are not acceptable to Transmission
Provider, the Parties shall in good faith attempt to negotiate terms
and conditions (including revision of the specified dates and
liquidated damages, the provision of incentives, or the procurement
and construction of [a portion of Transmission Provider's
Interconnection Facilities and Stand Alone Network Upgrades by
Interconnection Customer] all facilities other than Transmission
Provider's Interconnection Facilities and Stand Alone Network
Upgrades if the Interconnection Customer elects to exercise the
Option to Build under article 5.1.3) [pursuant to which Transmission
Provider is responsible for the design, procurement and construction
of Transmission Provider's Interconnection Facilities and Network
Upgrades]. If the Parties are unable to reach agreement on such
terms and conditions, then, pursuant to article 5.1.1 (Standard
Option), Transmission Provider shall assume responsibility for the
design, procurement and construction of [Transmission Provider's
Interconnection Facilities and Network Upgrades] all facilities
other than Transmission Provider's Interconnection Facilities and
Stand Alone Network Upgrades if the Interconnection Customer elects
to exercise the Option to Build [pursuant to article 5.1.1, Standard
Option].

    82. Consistent with article 5.2 of the current pro forma LGIA, the
interconnection customer and transmission provider (and transmission
owner, if applicable) would continue to reach agreement on the design
and construction of the transmission provider's interconnection
facilities and stand alone network upgrades; the Commission proposed no
changes to article 5.2 in the NOPR.
b. General
i. Comments
    83. Many commenters support this proposal.\136\ AWEA states that
the current restriction on when the option to build can be exercised is
unnecessary, unjust, and unreasonable because it restricts an
interconnection customer's ability to build interconnection facilities
and stand alone network upgrades cost-effectively.\137\ Several
commenters contend that the proposal will reduce costs and improve
construction timelines.\138\ NextEra states that, in late 2016, one of
its subsidiaries in SPP exercised the option to build and completed
construction of facilities for a cost of approximately $12 million,
even though the relevant transmission owner asserted that it could not
complete such facilities until late 2017 for an estimated cost of $18
million. NextEra argues that if the Commission expanded interconnection
customers' ability to exercise the option to build, there would be more
instances where an interconnection customer constructs more efficiently
than the transmission owner.\139\ AFPA asserts that the proposal will
provide competitive and commercial discipline to utility cost
estimates, construction timelines, and negotiating strategies.\140\
Competitive Suppliers and NEPOOL state that the proposal provides more
flexibility to market participants and has the potential to increase
efficiency.\141\ AFPA argues that the market for engineering and
construction contractors is sufficiently robust that interconnection
customers can often find cheaper and more efficient alternatives to
utility construction.\142\ CAISO and PJM comment that they each
currently allow this option to some degree.\143\ MISO and NYISO take no
position on the proposal.\144\
---------------------------------------------------------------------------

    \136\ AFPA; AVANGRID; AWEA; Bonneville; CAISO; Joint Renewable
Parties; Duke; Generation Developers; EDP; ELCON; Competitive
Suppliers; FTC; IECA; NEPOOL; NextEra; PJM; Public Interest
Organizations; SEIA; TDU Systems; TVA.
    \137\ AWEA 2017 Comments at 12-13.
    \138\ Id. at 13; EDP 2017 Comments at 3-4; ELCON 2017 Comments
at 3; Public Interest Organizations 2017 Comments at 5-8;
Competitive Suppliers 2017 Comments at 4.
    \139\ NextEra 2017 Comments at 9.
    \140\ AFPA 2017 Comments at 4.
    \141\ Competitive Suppliers 2017 Comments at 4; NEPOOL 2017
Comments at 7.
    \142\ AFPA 2017 Comments at 6.
    \143\ CAISO 2017 Comments at 9; PJM 2017 Comments at 7 (citing
PJM, Intra-PJM Tariffs, OATT, Attachment P, app. 2, Section 3.2.3
(3.0.0)).
    \144\ MISO 2017 Comments at 15; NYISO 2017 Comments at 14.
---------------------------------------------------------------------------

    84. A number of commenters also oppose the proposal.\145\ EEI, and
MISO TOs argue that there has been no demonstration that the options
under the existing pro forma LGIA result in unjust and unreasonable
rates, undue discrimination, or preferential treatment.\146\ Both
Imperial and MISO TOs question whether exercising the option to build
would result in significant decreases in cost or construction
time.\147\ AEP, Xcel, and National Grid argue that only transmission
owners have the required knowledge, processes, and access to suppliers
and contractors to properly construct network upgrades.\148\ Several
commenters state that the additional coordination needed between
transmission owners and interconnection customers may undercut the
interconnection customer's ability to achieve lower costs or quicker
construction.\149\ AEP contends that the

Commission has ``appropriately recognized [that] the expansion of an
existing station should be treated differently than a green field
construction project, and this is precisely why the Commission should
not broaden the Option-to-Build.'' \150\
---------------------------------------------------------------------------

    \145\ AEP; AES; APPA/LPPC; EEI; Eversource; Imperial; Indicated
NYTOs; ITC; MidAmerican; MISO TOs; National Grid; PG&E
NorthWestern; SoCal Edison; Southern; Xcel; Sunflower.
    \146\ EEI 2017 Comments at 17; MISO TOs 2017 Comments at 13.
    \147\ Imperial 2017 Comments at 17; MISO TOs 2017 Comments at
13.
    \148\ AEP 2017 Comments at 6; Xcel 2017 Comments at 8-10;
National Grid 2017 Comments at 6-7.
    \149\ Duke 2017 Comments at 6; TVA 2017 Comments at 4; ITC 2017
Comments at 7; MidAmerican 2017 Comments at 9-10; NorthWestern 2017
Comments at 3; Southern 2017 Comments at 10-11; Xcel 2017 Comments
at 8-9.
    \150\ AEP 2017 Comments at 6.
---------------------------------------------------------------------------

ii. Commission Determination
    85. In this final action, we adopt the NOPR proposal to modify
articles 5.1, 5.1.3, and 5.1.4 of the pro forma LGIA to allow
interconnection customers to exercise the option to build with respect
to the transmission provider's interconnection facilities and stand
alone network upgrades regardless of whether the transmission provider
can meet the interconnection customer's proposed dates. We conclude
that this reform will benefit the interconnection process by providing
interconnection customers more control and certainty during the design
and construction phases of the interconnection process.\151\ Further,
we find that limiting exercise of the option to build to circumstances
where the transmission provider cannot meet the interconnection
customer's requested dates is not just and reasonable. The limitation
restricts an interconnection customer's ability to efficiently build
the transmission provider's interconnection facilities and stand alone
network upgrades in a cost-effective manner, which could result in
higher costs for interconnection customers.
---------------------------------------------------------------------------

    \151\ NOPR, FERC Stats. & Regs. ] 32,719 at P 58.
---------------------------------------------------------------------------

    86. In response to EEI's and MISO TOs' contention that there has
been no demonstration that the options under the existing pro forma
LGIA result in unjust and unreasonable rates, undue discrimination, or
preferential treatment, we find that in circumstances where an
interconnection customer cannot exercise the option to build, it may
pay more and/or wait longer for the construction of the transmission
provider's interconnection facilities and stand alone network upgrades.
With regard to Imperial and MISO TOs' skepticism regarding the
potential cost and construction efficiencies gained by exercising the
option to build, the record suggests that such savings can occur and
have already occurred. For example, NextEra states that its subsidiary
exercised the option to build in SPP in 2016 and was able to complete
the project one year sooner and for $6 million less than estimated by
the transmission provider. NextEra also notes that its subsidiary used
approved subcontractors, built to the transmission owner's
specifications, and purchased components from vendors approved by the
transmission owner.\152\
---------------------------------------------------------------------------

    \152\ See, e.g., NextEra 2017 Comments at 9.
---------------------------------------------------------------------------

    87. Although AEP, Xcel, and National Grid question interconnection
customers' abilities to properly construct stand alone network
upgrades, we note that the NOPR proposal makes no changes to the
transmission provider's right to approve the engineering design, the
equipment tests, and the construction of its interconnection facilities
and stand alone network upgrades. In response to AEP, we note that the
final action does not change the type of facilities for which the
option to build is available, and neither the final action nor the NOPR
discuss the applicability of the option to build to an ``existing
station'' versus a ``green field construction project.''
c. Reliability Concerns
i. Comments
    88. APPA/LPPC, MidAmerican, EEI, ITC, National Grid, and Southern
contend that this proposal could compromise grid reliability.\153\ EEI,
ITC, MidAmerican, National Grid, and Southern argue that the proposal
favors granting interconnection customers the potential for quicker or
less costly construction over potential degradation of safety and
reliability.\154\ APPA/LPPC state that the existing option to build
provision sufficiently balances the needs of interconnection customers
with best utility practice and reliability concerns.\155\ They argue
that the NOPR proposal, however, will ``alter dramatically'' the risk
to long-term reliability of transmission providers' systems and that
the safeguards in article 5.2 of the pro forma LGIA lack a grasp of the
``short- and long-term reliability implications associated with
construction, interconnection and operation of interconnection
facilities and network upgrades.'' \156\
---------------------------------------------------------------------------

    \153\ APPA/LPPC 2017 Comments at 4; MidAmerican 2017 Comments at
9-10; EEI 2017 Comments at 17; ITC 2017 Comments at 7; National Grid
2017 Comments at 6-7; Southern 2017 Comments at 10.
    \154\ EEI 2017 Comments at 17; ITC 2017 Comments at 7;
MidAmerican 2017 Comments at 9-10; National Grid 2017 Comments at 6-
7; Southern 2017 Comments at 10.
    \155\ APPA/LPPC 2017 Comments at 2.
    \156\ Id. at 3.
---------------------------------------------------------------------------

    89. Three commenters state that article 5.2 of the pro forma LGIA
does not fully cover the ongoing system operations, planning, and
reliability requirements that are inherent in interconnection and
network upgrades.\157\ CAISO asserts that interconnection customers
must follow the transmission owners' existing standards as well as meet
grid engineering and reliability standards.\158\ EEI requests that the
Commission ensure that any facilities constructed by the
interconnection customer that are transferred to the transmission
provider comply with any applicable North American Electric Reliability
Corporation (NERC) reliability standards.\159\
---------------------------------------------------------------------------

    \157\ Id. at 4; MISO TOs 2017 Comments at 15; National Grid 2017
Comments at 6-7.
    \158\ CAISO 2017 Comments at 10.
    \159\ EEI 2017 Comments at 20.
---------------------------------------------------------------------------

    90. Other commenters disagree and argue that the expanded option to
build would not affect system reliability.\160\ NextEra, for example,
states that there is little evidence that the NOPR proposal would
compromise grid reliability, and any contrary arguments ignore the fact
that this proposal only loosens the conditions for exercising this
right with regard to the option to build.\161\ AWEA asserts that
expanding the option to build should not increase reliability concerns
because it does not change existing approval requirements.\162\
---------------------------------------------------------------------------

    \160\ AWEA 2017 Comments at 14; Generation Developers 2017
Comments at 12; NextEra 2017 Comments at 10.
    \161\ Id.
    \162\ AWEA 2017 Comments at 14.
---------------------------------------------------------------------------

ii. Commission Determination
    91. Concerns that the option to build, as revised by the final
action, will compromise system reliability are misplaced because they
ignore the safeguards for reliability already in place for the existing
option to build. We note that a number of commenters expressed similar
concerns in the Order No. 2003 proceeding.\163\ There, in response to
such concerns, the Commission established several safeguards.\164\
These safeguards, embodied in article 5.2 of the pro forma LGIA,
require, among other things, that the interconnection customer exercise
good utility practice and adhere to the standards and specifications
provided in advance by the transmission providers. Further, these
safeguards give the transmission provider the right to approve the
engineering design, equipment acceptance tests, and the construction
itself. In Order No. 2003-A, the Commission stated that vague
reliability concerns about the option to build are misplaced, and that
articles 5.2.1, 5.2.3, 5.2.5, and 5.2.6 of the pro

forma LGIA are sufficient to guarantee the reliability of the
facilities in question.\165\ In this final action, we make no changes
to the requirements in article 5.2. Furthermore, we note that because
article 5.2 already gives the transmission provider a significant role
with regard to the option to build and provides sufficient safeguards
to ensure reliable operations, we see no reason why the expanded option
to build should cause a new reliability concern.
---------------------------------------------------------------------------

    \163\ Order No. 2003, FERC Stats. & Regs. ] 31,146 at P 341.
    \164\ Id. PP 356-357.
    \165\ Order No. 2003-A, FERC Stats. & Regs. ] 31,160 at P 232.
---------------------------------------------------------------------------

    92. In response to EEI's and CAISO's concerns about whether any
facilities constructed pursuant to the option to build comply with
applicable NERC reliability standards, we note that article 5.2 already
addresses this concern. For example, article 5.2(2) states that the
interconnection customer ``shall comply with all requirements of law to
which Transmission Provider would be subject.''
d. Liability and Cost Responsibility Concerns
i. Comments
    93. EEI, Xcel, and National Grid ask the Commission to ensure that
interconnection customers indemnify the transmission owner or provider
from any damages that result from facilities built pursuant to the
option to build, including damages to adjacent facilities.\166\ Six
commenters maintain that interconnection customers should assume all
additional costs that may result from this proposal without cash,
transmission credit, or congestion revenue right reimbursement.\167\
CAISO, NextEra, PG&E, and SoCal Edison also argue that the Commission
should require that interconnection customers not receive such
reimbursements to the extent that stand alone network upgrade costs
exceed a specified cap.\168\
---------------------------------------------------------------------------

    \166\ EEI 2017 Comments at 23; Xcel 2017 Comments at 10;
National Grid 2017 Comments at 8-11.
    \167\ CAISO 2017 Comments at 10; Bonneville 2017 Comments at 2-
3; EEI 2017 Comments at 23-24; MISO TOs 2017 Comments at 16;
Southern 2017 Comments at 12; SoCal Edison 2017 Comments at 5.
    \168\ CAISO 2017 Comments at 10; NextEra 2017 Comments at 11;
PG&E 2017 Comments at 4; SoCal Edison 2017 Comments at 5.
---------------------------------------------------------------------------

ii. Commission Determination
    94. In response to EEI's, Xcel's, and National Grid's comments, we
note that article 5.2(7) of the pro forma LGIA requires the
interconnection customer to ``indemnify the Transmission Provider for
claims arising from Interconnection Customer's construction of
Transmission Provider's Interconnection Facilities and Stand Alone
Upgrades.'' We consider this provision sufficiently broad to address
EEI's, Xcel's, and National Grid's concerns.\169\
---------------------------------------------------------------------------

    \169\ We note that the pro forma LGIA states that the term
transmission provider ``should be read to include the Transmission
Owner when the Transmission Owner is separate from the Transmission
Provider.'' Pro forma LGIA Art.1 (Definitions).
---------------------------------------------------------------------------

    95. In response to arguments that interconnection customers should
assume all additional costs that result from exercise of the option to
build, we note that the final action makes no changes with regard to
cost assignment for transmission provider's interconnection facilities
and stand alone network upgrades. Additionally, apart from the
modifications to articles 5.1, 5.1.3, and 5.1.4 of the pro forma LGIA
to allow interconnection customers to exercise the option to build
regardless of whether the transmission provider can meet the
interconnection customer's proposed dates, this final action makes no
changes to the option to build process. In response to CAISO, NextEra,
PG&E, and SoCal Edison, we note that the issue of cost caps is
currently unique to CAISO; therefore, issues regarding the interaction
of the option to build and the CAISO network upgrade cost cap would be
better addressed when CAISO submits its compliance filing to this final
action.
e. Other
i. Comments
    96. AES claims that the proposal increases the transmission
provider's risk regarding security compliance and project
management.\170\ APPA/LPPC, MISO TOs, and National Grid express concern
that transmission owners will have to expend significant resources to
perform the oversight functions in article 5.2 of the pro forma
LGIA.\171\
---------------------------------------------------------------------------

    \170\ AES 2017 Comments at 7.
    \171\ ITC 2017 Comments at 7; MISO TOs 2017 Comments at 14; AES
2017 Comments at 7.
---------------------------------------------------------------------------

    97. Multiple commenters also identify barriers that will continue
to exist under the current proposal. AWEA worries that requirements to
adhere to jurisdictional transmission owner guidelines may remain a
barrier to exercising the option to build under existing tariffs.\172\
APPA/LPPC note that interconnection customers may be constrained by
state laws affecting the ability of non-utilities to exercise eminent
domain to construct facilities and upgrades.\173\ CAISO states that
later-queued projects may rely on network upgrades being built by
interconnection customers and could be adversely affected if the
customer withdraws from the queue or delays construction.\174\
---------------------------------------------------------------------------

    \172\ AWEA 2017 Comments at 15.
    \173\ APPA/LPPC 2017 Comments at 4.
    \174\ CAISO 2017 Comments at 9.
---------------------------------------------------------------------------

    98. Some commenters recommend that additional, specific options and
regulatory language be added to the proposal. AVANGRID and AWEA
recommend that the Commission ensure the expanded option to build would
apply to identified transmission provider interconnection facilities
and stand alone network upgrades identified through cluster
studies.\175\ To ensure that transmission providers cannot refuse to
build facilities and force interconnection customers to do so, EDP
recommends that the Commission clarify that a transmission provider
retains the obligation to build unless and until an interconnection
customer exercises its option to build.\176\
---------------------------------------------------------------------------

    \175\ AVANGRID 2017 Comments at 14-15; AWEA 2017 Comments at 14.
    \176\ EDP 2017 Comments at 4.
---------------------------------------------------------------------------

    99. AVANGRID also recommends that the Commission provide two
additional options for interconnection customers. Under the first, the
transmission provider would construct, and the interconnection customer
would pay the costs of, the transmission provider's interconnection
facilities and stand alone network upgrades upfront, including an
opportunity cost capped at 10 percent. Second, for all other network
upgrades, the transmission provider, with the agreement of the
interconnection customer, would construct and fund network upgrades,
with charges to the interconnection customer made over time or the
interconnection customer paying the costs up front, which would not
include any margin.\177\ Bonneville recommends the option to build only
be available if the customer can demonstrate it can build the
facilities more cost-effectively than the transmission provider or
improve the timeline for construction.\178\
---------------------------------------------------------------------------

    \177\ AVANGRID 2017 Comments at 14-15.
    \178\ Bonneville 2017 Comments at 2-3.
---------------------------------------------------------------------------

    100. Duke and EEI recommend that the Commission revise article
9.7.1 of the LGIA to require that parties coordinate actions regarding
stand alone network upgrades that may impact other parties' facilities
during outages needed for maintenance, testing, or installation.\179\
Duke recommends revising article 11.5 of the pro forma LGIA (Provision
of Security) to include stand alone network upgrades, as well as
article 26.1 of the pro forma LGIA to clarify that the transmission
provider is

not prevented from using subcontractors to perform its obligations
under the LGIA. Duke also recommends adding language to require the
transmission provider's approval of subcontractors.\180\ EEI requests
that articles 5.1, 5.1.3, and 5.1.4 of the pro forma LGIA be revised to
note that, if during the study process it is determined that upgrades
and facilities need to be expedited, the option to build will be
superseded.
---------------------------------------------------------------------------

    \179\ Duke 2017 Comments at 5; EEI 2017 Comments at 22.
    \180\ Duke 2017 Comments at 6.
---------------------------------------------------------------------------

    101. National Grid recommends that the Commission revise article
5.2 of the pro forma LGIA to require: (1) Transmission owner's prior
written approval of all contractors and any information requested to
evaluate the creditworthiness and technical capabilities of proposed
contractors; (2) prior written transmission owner approval of
agreements between interconnection customers and contractors and
provisions that allow transmission owners to directly enforce the
agreement against the contractor; and (3) that the interconnection
customer and transmission owner enter into a written transfer agreement
regarding the transfer of ownership of facilities built by the
interconnection customer.\181\ Similarly, Eversource suggests that the
Commission grant blanket authorization for the transfer of these
facilities.\182\
---------------------------------------------------------------------------

    \181\ National Grid 2017 Comments at 8-11.
    \182\ Eversource 2017 Comments at 17.
---------------------------------------------------------------------------

    102. TVA and EEI suggest that interconnection customers should meet
standards similar to those required under Order No. 1000 for
transmission construction qualification.\183\ Generation Developers,
NextEra, and EEI support transmission owners maintaining a list of pre-
approved contractors.\184\ Some commenters suggest that the Commission
require the transmission provider to post the standards and
specifications used for the transmission provider's interconnection
facilities and stand alone network upgrades on the transmission
provider's website.\185\ Generation Developers state that there is a
need for the transmission provider or interconnecting transmission
owner to agree as to what constitutes a stand alone network
upgrade.\186\ Generation Developers also request that transmission
providers be required to provide written documentation and post on
their website the reasons why they disagree that a facility is
considered a stand alone network upgrade, in order to prevent undue
discrimination.\187\ Eversource asks the Commission to require the
interconnection customer to obtain transmission owner approval before
ordering electrical material and equipment.\188\ Eversource and MISO
recommend requiring that interconnection customers provide sufficient
land rights for the transmission owners to access, operate, and
maintain the transmission facilities and that the Commission terminate
the interconnection customer's authority to construct during emergency
situations.\189\
---------------------------------------------------------------------------

    \183\ TVA 2017 Comments at 4; EEI 2017 Comments at 18.
    \184\ Generation Developers 2017 Comments at 11; NextEra 2017
Comments at 11; EEI 2017 Comments at 21.
    \185\ Generation Developers 2017 Comments at 11; EDP 2017
Comments at 4; SEIA 2017 Comments at 14.
    \186\ Generation Developers 2017 Comments at 9-10.
    \187\ Id. at 10.
    \188\ Eversource 2017 Comments at 9-11.
    \189\ Id. at 1; MISO TOs 2017 Comments at 15-16.
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ii. Commission Determination
    103. In response to AES's concern that the proposal increases
transmission providers' risk regarding security compliance and project
management, we again note that the final action does not relax the
established safeguards in article 5.2 of the pro forma LGIA. In
response to concerns raised by APPA/LPPC, MISO TOs, and National Grid
that transmission owners will have to expend significant resources to
perform oversight functions, we note that the final action does not
alter the role that the transmission provider would play in overseeing
the option to build process. However, it may result in more
interconnection customers exercising the expanded option to build.
    104. In response to AWEA's and APPA/LPPC's assertions about
jurisdictional barriers, states laws, and eminent domain, we note that
the specific purpose of this proposal is only to eliminate the pro
forma LGIP's existing limitation on the option to build. It is not to
ensure that there are no jurisdictional or other legal barriers to
construction by interconnection customers. Although more
interconnection customers are likely to exercise the option to build as
a result of the final action, there are still situations where an
interconnection customer may not be able to do so due to jurisdictional
or legal constraints. In those situations, we would not expect the
interconnection customer to exercise its option to build if it could
not do so effectively due to jurisdictional or legal constraints, such
as limitations imposed by state law. Additionally, an interconnection
customer might find that that there may be interconnection requests for
which the option to build is unlikely to result in cost or time
savings. Consequently, we believe that interconnection customers are in
the best position to determine whether they will realize any cost or
time savings from exercising the option to build for a particular
interconnection request. Finally, the fact that this reform will not
necessarily be useful to all interconnection requests does not mean
that this reform will not afford an opportunity to some interconnection
customers.
    105. In response to CAISO's comment that later-queued projects may
be adversely affected if a higher-queued customer withdraws from the
queue or delays construction, we see no reason to believe that an
interconnection customer that exercises the option to build is more
likely to adversely affect a later-queued project than would a delay
caused by a transmission provider. In fact, it is our expectation that
customers that exercise the option to build are likely only to do so if
they believe they can construct the facilities faster than the
transmission provider. Additionally, we agree with AVANGRID and AWEA
that the expanded option to build would apply to identified
transmission provider interconnection facilities and stand alone
network upgrades regardless of whether those facilities were identified
through clustering, serial, or another study method. This is consistent
with the current option to build, which does not restrict the study
method.
    106. In response to EDP, we note that the pro forma LGIA, as
modified by the final action, makes clear that the interconnection
customer may exercise the option to build at its discretion with regard
to transmission provider's interconnection facilities and stand alone
network upgrades. If the interconnection customer does not exercise
this discretion, pursuant to articles 5.1.1, 5.1.2, and 5.1.4, the
transmission provider would be responsible for the construction of
transmission provider's interconnection facilities and stand alone
network upgrades.
    107. We choose not to adopt AVANGRID's two additional proposals and
find that the revisions adopted by the final action strike the
appropriate balance. Additionally, we disagree with Bonneville's
recommendation that we allow the interconnection customer to exercise
the option to build only if it can demonstrate its ability to construct
the subject facilities cost-effectively. It is unnecessary to impose
such a requirement for interconnection customers because they will
ultimately

bear the costs of the transmission provider's interconnection
facilities and the stand alone network upgrades; thus, they have more
incentive than transmission providers to select the most cost effective
option.
    108. We disagree with Duke and EEI regarding the need to revise
article 9.7.1 of the pro forma LGIA to require parties to coordinate
maintenance, testing, or installation actions for stand alone upgrades.
Article 5.2 provides sufficient safeguards to ensure coordination of
maintenance, testing, and installation by providing for transmission
provider access and requiring the ultimate transfer of ownership. We
also disagree with National Grid's and Eversource's proposals regarding
the transfer of ownership because articles 5.2(8) and (9) already
require the transfer of control and ownership to the transmission
provider.
    109. Furthermore, we disagree with Duke's proposal to revise
article 11.5 of the pro forma LGIA to include stand alone upgrades.
Duke provides no reason why such revision is necessary. Additionally,
we read the phrase ``applicable portion'' in article 11.5 to exclude
facilities that an interconnection customer would construct pursuant to
the option to build. Since the purpose of article 11.5 is for the
interconnection customer to provide funds to the transmission provider
for construction costs, there would be no need for the interconnection
customer to provide security to the transmission provider for
facilities the transmission provider will not construct (because the
interconnection customer is exercising the option to build).
    110. We also see no need to revise article 26.1 of the pro forma
LGIA, as Duke proposed, to limit the interconnection customer's ability
to use subcontractors. Similarly, while we agree with Generation
Developers, NextEra, and EEI that it could be helpful for transmission
owners to maintain a list of contractors available to interconnection
customers for the option to build, given the adequacy of the safeguards
in article 5.2, we find that it is not necessary to require
transmission owners to do so. We find the safeguards in article 5.2 to
be sufficient because they give the transmission provider significant
oversight authority to review and approve the design, equipment
testing, and construction, ``unrestricted access'' to inspect the
construction, and the ability to require the interconnection customer
to remedy deficiencies that may arise at ``any time during
construction.'' \190\ Similarly, we do not agree with Duke's and
National Grid's suggestion that the transmission provider should have
the right to approve subcontractors because of the multiple preexisting
protections in article 5.2. Further, we are not persuaded by EEI's
contention that revisions are necessary to supersede the option to
build if facilities need to be expedited. First, article 5.2 already
obligates the interconnection customer to ``remedy deficiencies''
should ``any phase of the engineering, equipment procurement, or
construction . . . not meet the standards and specifications provided
by Transmission Provider.'' \191\ Second, the option to build is
limited to the construction of transmission provider's interconnection
facilities and stand alone network upgrades, the latter of which the
pro forma LGIA defines as those network upgrades that the
interconnection customer ``may construct without affecting day-to-day
operations of the Transmission System during their construction.''
\192\ Together, these provisions minimize the likelihood that any
delays in construction will adversely affect reliability.
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    \190\ Pro forma LGIA Articles 5.2 (3), (5), & (6).
    \191\ Pro forma LGIA Art. 5.2(6).
    \192\ Pro forma LGIA Art. 1 (Definitions).
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    111. In response to TVA and EEI, we find that article 5.2 already
provides sufficient safeguards regarding transmission construction
qualifications because it requires, for example, that interconnection
customers use good utility practice and follow the standards and
specifications outlined by the transmission provider. Additionally,
while Generation Developers, EDP, and SEIA advocate that transmission
providers post the standards and specifications for interconnection
facilities and stand alone network upgrades on their websites, we will
not require them to do so. Although posting such standards and
specifications on a website could be useful, we do not think it
appropriate to impose this requirement on transmission providers in
this final action given the questionable usefulness of this
information.
    112. In response to Generation Developers' request that
transmission providers be required to provide an explanation when they
disagree that a facility is a stand alone network upgrade, we find that
it would be difficult for a transmission provider to determine whether
or not a facility would be considered a stand alone network upgrade
until it is presented with the results of a system impact study. While
we recognize that questions regarding what constitutes a stand alone
network upgrade could lead to disputes, interconnection customers are
free to seek dispute resolution on such questions and/or pursue a
complaint under section 206 of the FPA.
    113. We disagree with Eversource's request to require that
interconnection customers receive transmission owner approval before
ordering electrical materials and equipment. Article 5.2 already
provides sufficient responsibilities to interconnection customers to
mitigate the concerns Eversource raised through, for example, the
requirements that the interconnection customer use good utility
practice and abide by the transmission provider's standards and
specifications, and the requirement that the transmission provider
approve the design, equipment acceptance tests, and construction. We
also disagree with Eversource's and MISO's recommendations to require
that interconnection customers provide sufficient land rights to allow
transmission provider access to transmission facilities and to
terminate interconnection customers' authority to construct during
emergency situations. We do not see the need to impose a further
requirement on the interconnection customer, especially because the
revisions adopted in this final action do not relax the existing
requirements.
3. Self-Funding by the Transmission Owner
a. NOPR Proposal
    114. In the NOPR, the Commission proposed to require agreement
between a transmission owner or provider and interconnection customer
before the transmission owner or provider may elect to initially fund
network upgrades.\193\
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    \193\ NOPR, FERC Stats. & Regs. ] 32,719 at P 64.
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    115. Prior to the revisions proposed in the NOPR, article 11.3 in
the pro forma LGIA stated that ``[u]nless Transmission Provider or
Transmission Owner elects to fund the capital for the Network Upgrades,
they shall be solely funded by Interconnection Customer.'' This
provision allowed the transmission provider or owner to unilaterally
elect to ``self-fund'' network upgrades.
    116. In 2013, MISO proposed allowing a transmission owner to elect
to directly assign costs associated with self-funded network upgrades
to the interconnection customer.\194\ In that proceeding, the
Commission accepted

MISO's proposal for a transmission owner that elects to initially fund
network upgrades under MISO's pro forma GIA to recover the capital
costs for network upgrades through a network upgrade charge assessed to
the interconnection customer.\195\
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    \194\ Midcontinent Indep. Sys. Operator, Inc., 145 FERC ] 61,111
(2013) (Hoopeston).
    \195\ Hoopeston, 145 FERC ] 61,111 at P 41.
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    117. The Commission revisited that approach in the Otter Tail
proceedings.\196\ In those proceedings, the Commission found that
article 11.3 in MISO's pro forma GIA, which allows a transmission owner
to self-fund network upgrades, to be unjust, unreasonable, and unduly
discriminatory or preferential. Consequently, the Commission directed
MISO to revise article 11.3 to require mutual agreement with the
interconnection customer for the transmission owner to elect to
initially fund network upgrades. Ameren Services Company, a
transmission owner in MISO, challenged this order in the United States
Court of Appeals for the District of Columbia Circuit (D.C. Circuit).
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    \196\ Midcontinent Indep. Sys. Operator, Inc., 151 FERC ] 61,220
(2015); Otter Tail Power Co. v. Midcontinent Indep. Sys. Operator,
Inc., 153 FERC ] 61,352, at P 14 (2015); Otter Tail Power Co. v.
Midcontinent Indep. Sys. Operator, Inc., 156 FERC ] 61,099 (2016)
(collectively, the Otter Tail proceedings).
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    118. In the NOPR in this proceeding, the Commission proposed to
revise article 11.3 of the pro forma LGIA to require mutual agreement
between the interconnection customer and the transmission owner for the
transmission owner to initially fund the cost of network upgrades.
Specifically, the Commission proposed in the NOPR to modify the
language in article 11.3 of the pro forma LGIA as follows (with
proposed additions in italics):

    Transmission Provider or Transmission Owner shall design,
procure, construct, install, and own the Network Upgrades and
Distribution Upgrades described in Appendix A, Interconnection
Facilities, Network Upgrades and Distribution Upgrades. The
Interconnection Customer shall be responsible for all costs related
to Distribution Upgrades. Unless Transmission Provider or
Transmission Owner elects to fund the capital for the Network
Upgrades, which election shall only be available upon mutual