[Federal Register Volume 82, Number 9 (Friday, January 13, 2017)]
[Proposed Rules]
[Pages 4464-4501]
[FR Doc No: 2016-30972]

Vol. 82

Friday,

No. 9

January 13, 2017

Part II

Department of Energy

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Federal Energy Regulatory Commission

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18 CFR Parts 35 and 37

Reform of Generator Interconnection Procedures and Agreements; Proposed
Rule

Federal Register / Vol. 82, No. 9 / Friday, January 13, 2017 /
Proposed Rules

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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

18 CFR Parts 35 and 37

[Docket No. RM17-8-000]

Reform of Generator Interconnection Procedures and Agreements

AGENCY: Federal Energy Regulatory Commission, Department of Energy.

ACTION: Notice of proposed rulemaking.

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SUMMARY: The Federal Energy Regulatory Commission (Commission) is
proposing to revise its regulations and the pro forma Large Generator
Interconnection Procedures and pro forma Large Generator
Interconnection Agreement. The Commission proposes reforms designed to
improve certainty, promote more informed interconnection, and enhance
interconnection processes. The proposed reforms are intended to ensure
that the generator interconnection process is just and reasonable and
not unduly discriminatory or preferential.

DATES: Comments are due March 14, 2017.

ADDRESSES: Comments, identified by docket number, may be filed in the
following ways:
     Electronic Filing through http://www.ferc.gov. Documents
created electronically using word processing software should be filed
in native applications or print-to-PDF format and not in a scanned
format.
     Mail/Hand Delivery: Those unable to file electronically
may mail or hand-deliver comments to: Federal Energy Regulatory
Commission, Secretary of the Commission, 888 First Street NE.,
Washington, DC 20426.
    Instructions: For detailed instructions on submitting comments and
additional information on the rulemaking process, see the Comment
Procedures section of this document.

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_ADDRESS>Adam Pan (Legal Information), Office of the General Counsel, Federal
Energy Regulatory Commission, 888 First Street NE.,Washington, DC
20426,<PHONE_NUMBER><EMAIL_ADDRESS>
SUPPLEMENTARY INFORMATION:

Table of Contents

                                                           Paragraph No.

I. Introduction.........................................               1
II. Background..........................................              12
    A. Order No. 2003...................................              12
    B. 2008 Order on Interconnection Queueing Practices.              16
    C. 2015 American Wind Energy Association Petition...              19
    D. 2016 Technical Conference........................              22
III. Need for Reform of the Interconnection Process.....              24
IV. Proposed Reforms....................................              32
    A. Improving Certainty for Interconnection Customers              37
        1. Scheduled Periodic Restudies.................              38
        2. The Interconnection Customer's Option to                   52
         Build..........................................
        3. Self-Funding by the Transmission Owner.......              64
        4. RTO/ISO Dispute Resolution...................              78
        5. Capping Costs for Network Upgrades...........              88
    B. Promoting More Informed Interconnection..........              96
        1. Identification and Definition of Contingent                97
         Facilities.....................................
        2. Transparency Regarding Study Models and                   109
         Assumptions....................................
        3. Congestion and Curtailment Information.......             122
        4. Definition of Generating Facility in the Pro              134
         Forma LGIP and LGIA............................
        5. Interconnection Study Deadlines..............             140
        6. Improving Coordination with Affected Systems.             152
    C. Enhancing Interconnection Processes..............             160
        1. Requesting Interconnection Service Below                  161
         Generating Facility Capacity...................
        2. Provisional Interconnection Service..........             181
        3. Utilization of Surplus Interconnection                    191
         Service........................................
        4. Material Modification and Incorporation of                212
         Advanced Technologies..........................
        5. Modeling of Electric Storage Resources for                224
         Interconnection Studies........................
V. Proposed Compliance Procedures.......................             231
VI. Information Collection Statement....................             235
VII. Regulatory Flexibility Act.........................             239
VIII. Environmental Analysis............................             242
IX. Comment Procedures..................................             243
X. Document Availability................................             247

                  NOT PUBLISHED IN THE FEDERAL REGISTER
Appendix A: List of Short Names of Commenters on the AWEA Petition
 (Docket No. RM 15-21-000) and the 2016 Technical Conference (Docket No.
 RM16-12-000)
Appendix B: Compilation of proposed changes to the pro forma LGIP
Appendix C: Compilation of proposed changes to the pro forma LGIA

I. Introduction

    1. In this Notice of Proposed Rulemaking (Proposed Rule), the
Commission is proposing to revise its regulations and the pro forma
Large Generator Interconnection Procedures (LGIP) and pro forma Large
Generator Interconnection Agreement (LGIA).\1\ The Commission proposes
reforms designed to improve certainty, promote more informed
interconnection, and enhance interconnection processes. The proposed
reforms are intended to ensure that the generator interconnection
process is just and reasonable and not unduly discriminatory or
preferential.\2\
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    \1\ 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 (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 (D.C. Cir. 2007), cert. denied, 552 U.S. 1230
(2008).
    \2\ In this proceeding, the Commission refers to comments and
filings in Docket Nos. RM15-21-000 and RM16-12-000. A list of
commenters in those proceedings and the abbreviated names used in
this Proposed Rule appears in Appendix A. Any comments to this
Proposed Rule should be filed in this proceeding, Docket No. RM17-8-
000.
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    2. The pro forma LGIP and LGIA establish the terms and conditions
under which public utilities \3\ must provide interconnection service
to Large Generating Facilities.\4\ While Order No. 2003 was a
significant step to reduce undue discrimination in the generator
interconnection process, interconnection customers have continued to
express concerns with systemic inefficiencies and discriminatory
practices that affect them.\5\ In addition, there have been a number of
developments that impact generator interconnection, including the
changing resource mix, the emergence of new technologies, and state and
federal policies that have impacted the resource mix. 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 have little chance of reaching
commercial operation. Upon consideration of these issues, the
Commission finds that it is appropriate to propose reforms to the
interconnection processes.
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    \3\ 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
Order No. 2003-A, FERC Stats. & Regs. ] 31,160 at P 773.
    \4\ A large generating facility is ``a Generating Facility
having a Generating Facility Capacity of more than 20 MW.'' Pro
forma LGIA Art. 1.
    \5\ See, e.g., AWEA June 19, 2015 Petition at 2 (Petition).
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    3. In 2015, the American Wind Energy Association (AWEA) filed a
Petition for Rulemaking (Petition) requesting changes to the
Commission's interconnection rules and procedures.\6\ The Commission
sought and received comments on the Petition. In May 2016, a technical
conference was convened to further explore these issues (2016 Technical
Conference). Comments were requested and received both prior to the
technical conference and after the technical conference.
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    \6\ American Wind Energy Association, Petition for Rulemaking to
Revise Generator Interconnection Rules and Procedures, Docket No.
RM15-21-000 (filed June 19, 2015).
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    4. Based, in part, on that input, the Commission has identified
proposed reforms that could remedy potential shortcomings in the
existing interconnection processes. The Commission believes the
proposed reforms will benefit interconnection customers through more
timely and cost-effective interconnection and will benefit transmission
providers by mitigating the potential for serial re-studies associated
with late-stage interconnection request withdrawals. Specifically, the
Commission believes that the provision of more timely and accurate
information could increase certainty for interconnection customers and
assist them in earlier evaluation and quicker development, as well as
assist in earlier, less disruptive withdrawals from the interconnection
queue. The Commission also believes that more thorough and transparent
information presented for the interconnection customer could enable
more informed decisions earlier in the interconnection process, which
could reduce late-stage interconnection request withdrawals and result
in fewer restudies and delays. More timely and accurate information
regarding an interconnection request, as well as greater transparency,
will also reduce the incentive for interconnection customers to submit
multiple interconnection requests when they only intend to see one to
commercial operation. The Commission has also identified a set of
reforms that enhance the interconnection process by, for example,
addressing interconnection issues experienced most acutely by new
technologies. The Commission believes there are ways to allow
flexibility in the interconnection process to accommodate innovation.
    5. Specifically, the Commission preliminarily finds that certain
interconnection practices may not be just and reasonable and may be
unduly discriminatory or preferential and proposes several potential
reforms. The Commission is proposing fourteen reforms that focus on
improving aspects of the pro forma LGIP and LGIA, the pro forma Open
Access Transmission Tariff, and the Commission's regulations. The
proposed reforms fall into three broad categories and are intended to:
(1) Improve certainty in the interconnection process; (2) improve
transparency by providing more information to interconnection
customers; and (3) enhance interconnection processes.
    6. First, the Commission proposes four reforms to improve certainty
by affording interconnection customers more predictability in the
interconnection process. To accomplish this goal, the Commission
proposes 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 owner 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 the Regional Transmission Organizations (RTO) and
Independent System Operators (ISO) establish dispute resolution
procedures for interconnection disputes. The Commission also seeks
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.
    7. Second, the Commission proposes five reforms to improve
transparency by providing improved information for the benefit of all
participants in the interconnection process. These reforms would
provide a fuller picture of the considerations involved in
interconnecting a new large generating facility. The Commission
proposes 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 Proposed Rule; (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 LGIA to explicitly include electric storage resources; and (5)
create a system of reporting requirements for aggregate interconnection
study performance. The Commission also seeks comment on proposals or
additional steps that the Commission could take to improve the
resolution of issues that arise when affected systems are impacted by a
proposed interconnection.
    8. Third, the Commission proposes 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 proposes 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.
    9. The Commission seeks comments on these proposed reforms and
areas for further comment within 60 days after publication of this
Proposed Rule in the Federal Register.
    10. The purpose of these proposals is to ensure that the processing
of generator interconnection requests will be just and reasonable and
not unduly discriminatory or preferential consistent with Federal Power
Act (FPA) sections 205 and 206. These proposed reforms could help
improve the efficiency of processing interconnection requests for both
transmission providers and interconnection customers, maintain
reliability, increase energy supply, balance the needs of
interconnection customers and transmission owners and remove barriers
to needed resource development.\7\
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    \7\ 16 U.S.C. 824d and 824e (2012).
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    11. Unless otherwise noted, the proposed reforms described below
would result in changes to the pro forma LGIP and pro forma LGIA and
regulations that affect transmission provider LGIPs and LGIAs. The
Commission also seeks comment, however, on whether any of these
proposed reforms should be applied to small generating facilities and
implemented in the pro forma Small Generator Interconnection Procedures
(SGIP) and Small Generator Interconnection Agreement (SGIA).\8\
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    \8\ The Commission adopted these documents in Order No. 2006.
Standardization of Small Generator Interconnection Agreements and
Procedures, Order No. 2006, FERC Stats. & Regs. ] 31,180, order on
reh'g, Order No. 2006-A, FERC Stats. & Regs. ] 31,196 (2005), order
granting clarification, Order No. 2006-B, FERC Stats. & Regs. ]
31,221 (2006).
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II. Background

A. Order No. 2003

    12. In 1996, the Commission issued Order No. 888,\9\ which
``established the foundation necessary to develop competitive bulk
power markets in the United States: Nondiscriminatory open access
transmission services by public utilities and stranded cost recovery
rules to provide a fair transition to competitive markets.'' \10\ In
Order No. 888, the Commission did not, however, address generator
interconnection issues. In Tennessee Power Company, the Commission
encouraged, but did not require, transmission providers to revise their
OATTs to include interconnection procedures, including a standard
interconnection agreement and specific criteria, procedures,
milestones, and timelines for evaluating interconnection requests.\11\
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    \9\ Promoting Wholesale Competition Through Open Access Non-
Discriminatory Transmission Services by Public Utilities; Recovery
of Stranded Costs by Public Utilities and Transmitting Utilities,
Order No. 888, FERC Stats. & Regs. ] 31,036 (1996), order on reh'g,
Order No. 888-A, FERC Stats. & Regs. ] 31,048, order on reh'g, Order
No. 888-B, 81 FERC ] 61,248 (1997), order on reh'g, Order No. 888-C,
82 FERC ] 61,046 (1998), aff'd in relevant part sub nom.
Transmission Access Policy Study Group v. FERC, 225 F.3d 667 (D.C.
Cir. 2000), aff'd sub nom. New York v. FERC, 535 U.S. 1 (2002).
    \10\ Order No. 2003, FERC Stats. & Regs. ] 31,146 at P 8.
    \11\ Tenn. Power Co., 90 FERC ] 61,238 (Tennessee).
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    13. 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.'' \12\ Prior to the issuance of Order No. 2003,
the Commission addressed interconnection issues on a case-by-case basis
through, for example, applications under FPA section 205.
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    \12\ Order No. 2003, FERC Stats. & Regs. ] 31,146 at P 11.
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    14. In Order No. 2003, the Commission asserted 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.'' \13\ The Commission found that a standard set of
procedures would ``minimize opportunities for undue discrimination and
expedite the development of new generation, while protecting
reliability and ensuring that rates are just and reasonable.'' \14\
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    \13\ Order No. 2003, FERC Stats. & Regs. ] 31,146 at P 9 (citing
Tennessee, 90 FERC ] 61,238).
    \14\ Order No. 2003, FERC Stats. & Regs. ] 31,146 at P 11.
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    15. 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 LGIA and required all public utilities
subject to Order No. 2003 to modify their OATTs to incorporate the pro
forma LGIP and LGIA.

B. 2008 Order on Interconnection Queueing Practices

    16. The Commission held a technical conference on December 17, 2007
and issued a notice inviting further comments in response to concerns
raised about the effectiveness of queue management practices.\15\
Comments revealed that some transmission providers were not processing
their interconnection queues with the timelines envisioned in Order No.
2003. Commenters pointed to surges in the volume of new generation
development in some regions, particularly for renewable resources, as
taxing interconnection queues. Commenters

also noted that some regions had developed capacity markets after the
issuance of Order No. 2003 and struggled with accommodating these new
markets.\16\
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    \15\ Interconnection Queuing Practices, Docket No. AD08-2-000,
November 2, 2007 Notice of Technical Conference.
    \16\ Interconnection Queuing Practices, 122 FERC ] 61,252, at P
3 (2008) (2008 Order). With regard to capacity markets, commenters
noted that in regions that had established capacity markets,
interconnection queue delays could prevent least cost resources from
being available in new capacity market auctions. Id. P 5.
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    17. On March 20, 2008, the Commission issued an order addressing
interconnection queue issues (2008 Order). The Commission acknowledged
that delays in processing interconnection queues were more pronounced
in RTOs/ISOs that were attracting significant new entry.
    18. 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.\17\ The Commission further stated that, while
it ``may need to [impose solutions] if the RTOs and ISOs do not act
themselves,'' each region would be provided an opportunity to propose
its own solutions through ``consensus proposals.'' \18\ Following the
2008 Order, RTOs/ISOs submitted multiple queue reform proposals to the
Commission, generally moving their interconnection queuing practices
from a ``first-come, first-served'' approach to a ``first-ready, first-
served'' approach.
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    \17\ 2008 Order, 122 FERC ] 61,252 at PP 16-18.
    \18\ 2008 Order, 122 FERC ] 61,252 at P 8.
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C. 2015 American Wind Energy Association Petition

    19. On June 19, 2015, AWEA filed the Petition in Docket No. RM15-
21-000 requesting that the Commission revise the pro forma LGIP and pro
forma LGIA. AWEA asserts that the current interconnection process has
``imbedded unjust and unreasonable and unduly discriminatory delays,
costs, rates, terms and conditions'' and ``imposes barriers to the
development of needed new generation resources.'' \19\ AWEA states that
while transmission providers have modified their LGIPs in ways that
``occasionally [provide] limited benefits. . . . [they] have not
solved, and have even exacerbated, problems encountered by
interconnection customers.'' \20\ AWEA contends that, consequently, the
interconnection process often results in ``complex, time consuming
technical disputes about . . . interconnection feasibility, cost, and
cost responsibility'' with delays that ``undermine the ability of new
generators to compete.'' \21\
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    \19\ Petition at 2.
    \20\ Petition at 3.
    \21\ Petition at 3.
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    20. AWEA proposes multiple reforms to improve: (1) Certainty in the
interconnection study/restudy process; (2) transparency in the
interconnection process; (3) certainty with respect to network upgrade
costs; and (4) accountability.\22\
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    \22\ Petition at 4-5.
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    21. On July 7, 2015, the Commission issued a Notice of Petition for
Rulemaking in Docket No. RM15-21-000 to seek public comment on the
Petition. The Commission received thirty-five comments and three
answers and reply comments.\23\
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    \23\ See Appendix A: List of Short Names of Commenters on the
AWEA Petition (Docket No. RM15-21-000) and the 2016 Technical
Conference (Docket No. RM16-12-000).
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D. 2016 Technical Conference

    22. On May 13, 2016, Commission staff convened the 2016 Technical
Conference at Commission headquarters. 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, non-independent
transmission providers, transmission owners within RTOs/ISOs, renewable
generation developers, and other stakeholders.
    23. On June 3, 2016, the Commission issued a Notice Inviting Post-
Technical Conference Comments. The Commission received 24 post-
technical conference comments.

III. Need for Reform of the Interconnection Process

    24. Since the issuance of Order No. 2003, the electric power
industry has undergone numerous changes. For example, the nation's
resource mix has undergone significant change. In many regions, the
resource mix now includes increasing amounts of generation powered by
wind,\24\ natural gas, solar, and most recently, electric storage
resources.\25\ These changes are the result of a multitude of factors,
such as the economics of new power generation largely driven by
sustained low natural gas prices, technology advances, and federal and
state policies, including federal environmental regulations and state-
level mandates for renewable capacity. The changing resource mix has
impacted the Commission's interconnection policies.
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    \24\ In 2015, for example, wind, natural gas, and solar power
were the largest classes of new entrants. See Wind Adds the Most
Electric Generation Capacity in 2015, Followed by Natural Gas and
Solar (Mar. 23, 2016) https://www.eia.gov/todayinenergy/detail.php?id=25492.
    \25\ See U.S. Energy Information Administration, Natural Gas
Expected to Surpass Coal in Mix of Fuel Used for U.S. Power
Generation in 2016 (Mar. 16, 2016), http://www.eia.gov/todayinenergy/detail.cfm?id=25392; see also Energy Storage
Association, US Surpasses 100 MW of Storage Deployments through Q3
2015, Already Best Year Ever (Dec. 3, 2015, 11:13 a.m.), http://energystorage.org/resources/us-surpasses-100-mw-storage-deployments-through-q3-2015-already-best-year-ever. The Commission defines an
electric storage resource as a facility that can receive electric
energy from the grid and store it for later injection of electricity
back to the grid. This includes all types of electric storage
technologies, regardless of their size or storage medium (e.g.,
batteries, flywheels, compressed air, pumped-hydro, etc.). See
Midcontinent Indep. Sys. Operator, Inc., 155 FERC ] 61,211, at n.7
(2016).
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    25. The increasing penetration of variables energy resources and
emerging technologies has implications for the interconnection process,
for both interconnection customers and transmission providers.\26\ For
example, wind generation is limited geographically because it is
concentrated in locations where there are dependable windy conditions
that are sufficient to generate electricity. Additionally, a lengthy
interconnection process affects all resources attempting to
interconnect and can have a disproportionate effect on resources that
can be built more quickly than traditional resources. Further,
interconnection processes should consider the evolving capabilities of
electric storage resources, which may involve different considerations
than the interconnection of more traditional generation resources.
These factors suggest a need for the Commission to reevaluate its
interconnection policies to ensure that they are just and reasonable
and not unduly discriminatory or preferential.
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    \26\ See, e.g., Monitoring Analytics, PJM State of the Market at
Table 12-17, http://monitoringanalytics.com/reports/PJM_State_of_the_Market/2016/2016q2-som-pjm-sec12.pdf.
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    26. As described above, beginning with Order No. 2003, the
Commission has sought to improve the interconnection process by
minimizing opportunities for undue discrimination and expediting the
development of new generation while protecting system reliability and
ensuring just and reasonable rates. However, at present, many
interconnection customers

experience delays, and interconnection queues have significant backlogs
and long timelines.\27\ According to interconnection customers and
transmission providers, a recurring problem is that late-stage
interconnection request withdrawals lead to interconnection study
restudies and consequent delays for lower-queued interconnection
customers.\28\ Interconnection request withdrawals can also lead to
increased network upgrade cost responsibility for lower-queued
interconnection customers, which could, in turn, result in further
cascading withdrawals. Further, a lack of cost and timing certainty can
hinder interconnection customers from obtaining financing. Cost
uncertainty in particular presents a significant obstacle, as some
interconnection customers are less able to absorb unexpected and
potentially higher costs.
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    \27\ See, e.g., 2016 Technical Conference Tr. 210: 1-10
(discussion of delays up to a year).
    \28\ See, e.g., 2016 Technical Conference Tr. 20:15-23
(discussion regarding MISO's experiencing 50 percent withdrawal
rates in many parts of the queue).
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    27. Consistent with the 2008 Order, where the Commission allowed
RTOs/ISOs to develop and propose their own solutions to interconnection
timing issues, most RTOs/ISOs have implemented different procedures to
alleviate queue delays. MISO, in particular, has proposed four
different queue reforms, each of which have been designed to improve
and expedite the interconnection process.\29\ SPP has implemented two
queue reforms, for similar reasons.\30\ CAISO has employed network
upgrade cost caps and periodic, scheduled restudies in order to provide
certainty to the interconnection customer.\31\ Despite these efforts,
delays, backlogs, and long queue times continue to affect
interconnection customers.\32\
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    \29\ See Midwest Indep. Transmission Sys. Operator, Inc., 124
FERC ] 61,183 (2008), order on reh'g, 127 FERC ] 61,294 (2009);
Midwest Indep. Transmission Sys. Operator, Inc., 129 FERC ] 61,301
(2009); Midwest Indep. Transmission Sys. Operator, Inc., 138 FERC ]
61,233, order on reh'g and compliance, 139 FERC ] 61,253 (2012);
Docket No. ER17-156-000.
    \30\ See Sw. Power Pool, Inc., 128 FERC ] 61,114, order on
compliance, 129 FERC ] 61,226 (2009), order on compliance, 133 FERC
] 61,139 (2010); Sw. Power Pool, Inc., 147 FERC ] 61,201 (2014),
order on reh'g and compliance, 151 FERC ] 61,235 (2015).
    \31\ See California Indep. Sys. Operator Corp., 124 FERC ]
61,292 (2008).
    \32\ See Petition at 8-11.
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    28. The Petition highlighted some of the issues affecting the
interconnection process and encouraged the Commission to consider these
and other interconnection issues as well as the overall state of
interconnection queues. In light of these issues, the Commission in
this proceeding reviewed current interconnection processes and proposes
reforms to ensure that these processes continue to ``minimize
opportunities for undue discrimination and expedite the development of
new generation, while protecting reliability and ensuring that rates
are just and reasonable.'' \33\ The Commission conducted this review
and developed proposals based on information provided in the 2016
Technical Conference and comments submitted in that proceeding.
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    \33\ Order No. 2003, FERC Stats. & Regs. ] 31,146 at P 11.
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    29. The Commission preliminarily finds that aspects of 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. The current
interconnection process can create uncertainty for interconnection
customers regarding both costs and timing. A lack of transparency in
the interconnection process can result in interconnection customers
submitting interconnection requests to the queue that may be
speculative or unlikely to reach commercial operation, which can affect
other interconnection customers and create difficulties for
transmission providers and owners. Increasing transparency will allow
for interconnection customers to better evaluate the viability of an
interconnection request prior to entering the queue, which could result
in fewer interconnection requests dropping out of the queue. A lack of
timely and clear information can also affect an interconnection
customer's decisions regarding whether and where to build a generating
facility or other resource and can also affect the viability of an
interconnection request after it enters the interconnection queue.
Finally, the current interconnection process can involve unnecessary
obstacles to the interconnection of new technologies and as such, the
Commission has proposed reforms to address these issues.
    30. The Commission also preliminarily finds that the process for a
transmission provider to conduct interconnection studies may result in
uncertainty and inaccurate information. The current interconnection
study process is meant to allow for refinements in the study estimates
of interconnection costs as an interconnection request moves through
each of the interconnection study phases.\34\ However, uncertainty in
study results and a lack of transparency may hamper generation
development. Cost uncertainty presents a particularly significant
obstacle as some interconnection customers are less able to absorb
unexpected and potentially higher costs for interconnection facilities
and network upgrades that may occur either in the normal course of
refined estimates or as a result of restudy. Moreover, if an
interconnection customer does not obtain timely studies or is assessed
previously unanticipated network upgrade costs, this could affect a
number of development aspects, including the interconnection customer's
land lease agreements required to support unanticipated network
upgrades, additional project financing required for increased network
upgrade costs, and/or ability to obtain a power purchase agreement in
the face of a potential delay.
---------------------------------------------------------------------------

    \34\ See Order No. 2003, FERC Stats. & Regs. ] 31,146 at PP 195,
217-34.
---------------------------------------------------------------------------

    31. Additionally, the Commission preliminarily finds that the
potential for discriminatory interconnection processes exists as new
technologies enter the power generation sphere. New technologies may be
hampered in the study process as study conductors come up to speed on
how to evaluate the incorporation of these technologies onto the
system. Interconnection customers involving new technologies may be
affected more by process and information uncertainty than incumbents
experienced with the interconnection process in certain regions.

IV. Proposed Reforms

    32. The Commission is proposing to reform certain aspects of the
Commission's regulations and the pro forma LGIP and pro forma LGIA that
affect the interconnection process to ensure that they are just and
reasonable and not unduly discriminatory or preferential.
    33. The provision of more timely and accurate information could
increase certainty for interconnection customers and assist them in
earlier project evaluation and quicker project development, as well as
assist in earlier, less disruptive withdrawals from the interconnection
queue. Interconnection customers and transmission providers alike have
frequently expressed frustration at the need for repeated restudies and
prolonged queue times resulting from the withdrawal of higher-queued
interconnection requests.\35\

With improvements in certainty and the quality of information conveyed
at an earlier stage in the interconnection process, some of these
withdrawals could be eliminated, and the queue could proceed more
quickly. At the same time, fewer withdrawals would benefit transmission
providers by reducing the burden of processing requests that are
unlikely to reach commercial operation.
---------------------------------------------------------------------------

    \35\ See, e.g., 2016 Technical Conference Tr. 20:15-23.
---------------------------------------------------------------------------

    34. The Commission also believes that providing interconnection
customers with access to more detailed information could enable the
interconnection customer to make more informed decisions earlier in the
interconnection process. For example, increased knowledge of the
assumptions used in interconnection studies could assist an
interconnection customer with identifying optimal points of
interconnection as well as allow it to better anticipate the duration
of the interconnection process and better understand issues that may
arise as the result of study outcomes. Interconnection customers may
also benefit from a more complete up front understanding of the network
upgrades, contingencies, and risks of curtailment that their
interconnection requests may face, which could reduce late-stage
interconnection request withdrawals and result in fewer restudies and
delays. More timely and accurate information regarding an
interconnection request, as well as greater transparency of the study
process and of congestion, will reduce the incentive for
interconnection customers to submit multiple interconnection requests
when expecting to interconnect a large generating facility. While
interconnection customers may still submit multiple requests, the
Commission anticipates that they would submit fewer requests with
better information and that the interconnection customer would
terminate a non-viable interconnection request earlier.
    35. The Commission also proposes reforms that could enhance
interconnection processes. The Commission believes that new
technologies will drive grid innovation, as well as offer other
facility efficiencies and advances. These innovations may reach the
market after an interconnection customer has initiated or completed an
interconnection request. However, in some circumstances, there are
likely ways to inject efficiencies in the traditional interconnection
process or to preempt the need for a transmission provider to construct
new, unnecessary interconnection facilities and network upgrades.
Additionally, the Commission believes there are ways to allow
flexibility in the interconnection process to incorporate innovation or
developments that transpire while an interconnection request is in the
queue.
    36. At this time, the Commission does not propose reforms to
generator interconnection processes and agreements other than those
described herein. This limitation includes any reforms proposed by AWEA
in its Petition that are not included in this Proposed Reforms section.

A. Improving Certainty for Interconnection Customers

    37. The reforms proposed below would 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 grid. Increasing certainty for
interconnection customers--particularly cost certainty--may decrease
the number of late-stage interconnection request withdrawals from the
interconnection queue, which could meaningfully ameliorate the cycle of
repeated, cascading restudies. In addition to the proposed reforms, the
Commission seeks comment on the extent to which capping interconnection
customer cost responsibility for actual network upgrade costs to some
margin above estimated network upgrade costs can mitigate the potential
for serial restudies without inappropriately shifting cost
responsibility.
1. Scheduled Periodic Restudies
    38. As discussed below, the Commission proposes to revise the pro
forma LGIP to require transmission providers that conduct cluster
studies to establish a schedule for conducting periodic restudies.
a. Current Provisions and Background
    39. The current pro forma LGIP requires the transmission provider
to make reasonable efforts \36\ to provide: (i) Feasibility study
results within 45 days after receipt of a signed feasibility agreement;
(ii) system impact study results within 90 days after receipt of a
signed system impact study agreement or after the cluster window
closes; and (iii) facilities study results either within 90 days after
receipt of a signed facilities study agreement or 180 days after
receipt of a signed facilities study agreement, depending on the
accuracy margin provided.\37\ For the purpose of conducting the system
impact study, the current pro forma LGIP allows transmission providers
the option to process interconnection requests on a serial basis or in
groups using clusters.\38\
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    \36\ Reasonable Efforts ``shall mean, with respect to an action
required to be attempted or taken by a Party under the Standard
Large Generator Interconnection Agreement, efforts that are timely
and consistent with Good Utility Practice and are otherwise
substantially equivalent to those a Party would use to protect its
own interests.'' Pro forma LGIP Sec. 1 (Definitions).
    \37\ See Pro forma LGIP Sec. 6.3, 7.4 and 8.3.
    \38\ See Pro forma LGIP Sec. 4.2.
---------------------------------------------------------------------------

    40. A transmission provider may require a restudy of an
interconnection customer's study results if a higher-queued
interconnection request drops out of the queue or an interconnection
customer modifies its interconnection request.\39\ A transmission
provider may also require restudy if either the feasibility or system
impact studies uncover any unexpected result not contemplated during
the scoping meeting that will require re-designation of the point of
interconnection. According to the pro forma LGIP, restudy of an
interconnection feasibility study shall take no longer than 45 days
from the date the transmission provider provides notice that such
restudy is required. Restudy of an interconnection system impact study
or interconnection facilities study shall not take longer than 60 days
from the date the transmission provider provides notice to the
interconnection customer that such restudy is required.\40\ While the
current pro forma language establishes timeframes in which to complete
restudies after an interconnection customer is notified, it does not
provide guidance on the frequency at which such restudies should occur
for clustered or grouped interconnection requests.
---------------------------------------------------------------------------

    \39\ See Pro forma LGIP Sec. 6.4, 7.6, and 8.5.
    \40\ See Pro forma LGIP Sec. 6.4, 7.6 and 8.5.
---------------------------------------------------------------------------

b. AWEA Petition and Comments
    41. In its Petition, AWEA recognizes that restudies are often
necessary, but it states that, in certain regions, restudies are
conducted on an ad hoc basis as the need arises.\41\ AWEA argues that
repeated restudies conducted at irregular intervals may increase or
prolong uncertainty for interconnection customers.
---------------------------------------------------------------------------

    \41\ Petition at 22.
---------------------------------------------------------------------------

    42. AWEA further explains that, under the current pro forma LGIP,
the withdrawal of a higher-queued interconnection request may
necessitate a restudy, which may then change the assumptions for other
queued interconnection requests within a cluster, necessitating further
restudies in a cascading effect. AWEA contends that these cascading
restudies prolong

cost uncertainty, cause delays in finalizing interconnection study
results, and delay the execution of LGIAs. As a potential solution,
AWEA proposes an annual or periodic restudy process for interconnection
requests within a cluster, in which the transmission provider would
consider all relevant system condition changes, including higher-queued
interconnection requests that withdraw from the queue. AWEA contends
that such a restudy process provides certainty because each restudy
would be completed according to a schedule, rather than conducted on an
ad hoc basis due to intervening events.\42\
---------------------------------------------------------------------------

    \42\ Petition at 22-25.
---------------------------------------------------------------------------

    43. However, AWEA also asserts that when an unplanned restudy
becomes necessary outside of the scheduled restudy process, it is of
critical importance that the restudy be processed in as timely a manner
as possible. AWEA adds that the transmission provider should, if
necessary, hire additional consultants or staff to ensure proper
resources to process the restudy in a consistent and timely manner.\43\
---------------------------------------------------------------------------

    \43\ AWEA 2016 Comments at 30.
---------------------------------------------------------------------------

    44. Several commenters, including a number of entities that have
been interconnection customers for wind generation such as NRG, EDF,
and NextEra, support a scheduled restudy process and offer suggestions
for how transmission providers should conduct this process.\44\ MISO
also acknowledges that the withdrawal of higher-queued interconnection
requests creates the need for cascading restudies of lower-queued
interconnection requests and that scheduled restudies may alleviate the
need for multiple ad hoc restudies.\45\ NextEra states that, under an
annual restudy process, the transmission provider should consider all
relevant system condition changes, as well as all higher-queued
interconnection requests that dropped out of the queue, in one restudy
for the applicable interconnection requests in a cluster or sub-region.
Although it believes there may be some efficiency in a group restudy,
EDF cautions that, if the restudy were to include different
interconnection requests from different clusters, it could result in as
many issues and inefficiencies as are produced by the current
process.\46\
---------------------------------------------------------------------------

    \44\ NRG 2015 Comments at 4; EDF 2016 Comments at 31; NextEra
2015 Comments at 8-9.
    \45\ MISO 2016 Comments at 13.
    \46\ EDP 2016 Comments at 17.
---------------------------------------------------------------------------

    45. Some commenters oppose scheduled, periodic restudies. ISO-NE.,
Xcel, and ITC express the belief that an annual, group restudy would
not be useful. These commenters assert that the primary cause for
restudies--namely, the withdrawal of higher-queued interconnection
requests--is out of the transmission provider's control and can occur
at any time. These commenters contend that limiting restudies to once a
year could force viable generation interconnection requests to wait
longer than necessary for restudy results.\47\ The ISO/RTO Council
states that this proposal is inapplicable to NYISO due to its ``non-
serial'' interconnection queue approach, in which an interconnection
request is only included in the base case for restudy when it has
satisfied certain requirements. The ISO/RTO Council also notes that
ISO-NE's interconnection process is merged with the Forward Capacity
Market. Thus, the ISO/RTO Council argues, AWEA's proposals for the
restudy process could be disruptive.\48\
---------------------------------------------------------------------------

    \47\ ISO-NE 2016 Comments at 24; Xcel 2016 Comments at 13; ITC
2016 Comments at 8.
    \48\ ISO/RTO Council 2015 Comments at 5-7.
---------------------------------------------------------------------------

c. Proposal
    46. The Commission proposes to revise the pro forma LGIP to require
transmission providers that conduct cluster studies 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). The Commission proposes to require transmission
providers to update their LGIPs to specify the frequency of restudies
for interconnection customers in a cluster study and post the dates of
these restudies on the transmission provider's OASIS.
    47. A scheduled, periodic restudy process could enhance the
efficiency and certainty of the study process for all parties by
mitigating the problem of cascading restudies. This reform could
achieve this result because it creates some milestones that can serve
as decision points for interconnection customers and allows
transmission providers to further revise their interconnection
processes as necessary to incorporate scheduled restudies. Further, the
Commission notes that it is not proposing that all transmission
providers establish the same restudy schedule; rather, the Commission
proposes to give transmission providers flexibility in establishing the
frequency of restudies to best accommodate the needs of interconnection
customers and transmission providers.
    48. Accordingly, the Commission proposes to require each
transmission provider that conducts cluster studies to revise sections
6.4 and 7.6 of the pro forma LGIP as follows (proposing to delete
italicized text):

    If Re-Study of the [insert appropriate study] Study is required
due to a higher queued project dropping out of the queue, or a
modification of a higher queued project subject to Section 4.4, or
re-designation of the Point of Interconnection pursuant to Section
[insert appropriate section] Transmission Provider shall notify
Interconnection Customer in writing. Serially processed Re-Studies
Such Re-Study shall take no longer than [forty-five (45)/sixty (60)]
Calendar Days from the date of the notice. Any cost of Re-Study
shall be borne by the Interconnection Customer being re-studied.
    If a Transmission Provider that conducts cluster studies
identifies a need for restudies, it will conduct periodic Re-Studies
for each cluster [placeholder for time frame proposed by each
Transmission Provider]. Re-Study dates for each cluster will also be
posted on the Transmission Provider's OASIS. Re-Study shall take no
longer than [forty-five (45)/sixty (60)] Calendar Days from the
commencement date of the Re-Study. Any cost of Re-Study shall be
borne by the Interconnection Customer being re-studied.

    49. Likewise, the Commission proposes to require each transmission
provider that conducts cluster studies to revise section 8.5 of the pro
forma LGIP as follows (proposing to delete italicized text):

    If Re-Study of the Interconnection Facilities Study is required
due to a higher queued project dropping out of the queue or a
modification of a higher queued project pursuant to Section 4.4,
Transmission Provider shall so notify Interconnection Customer in
writing. Serially processed Re-Studies Such Re-Study-shall take no
longer than sixty (60) Calendar Days from the date of the notice.
Any cost of Re-Study shall be borne by the Interconnection Customer
being re-studied.
    A Transmission Provider that conducts cluster studies will
conduct periodic Re-studies for each cluster [placeholder for time
frame proposed by each Transmission Provider]. Re-Study dates for
each cluster will also be posted on the Transmission Provider's
OASIS. Re-Study of the cluster shall take no longer than sixty (60)
Calendar Days from the commencement date of the Re-Study.

    50. The Commission acknowledges the concern held by some
stakeholders that a scheduled, periodic restudy process could force
viable interconnection requests to wait longer than necessary to
progress through the interconnection process. The Commission seeks
comment on whether regions that conduct cluster studies and move to
periodic re-studies should retain some discretion to conduct restudies
outside of the established schedule at the request of interconnection
customers or under specific circumstances that deem such

deviations necessary. The Commission seeks comments on when this
discretion should be restricted and the circumstances under which such
deviations should be allowed.
    51. Additionally, some commenters allege that transmission provider
tariffs generally provide insufficient transparency regarding the type
of triggers that would require restudy for projects processed through
serial or cluster studies; they also contend that transmission
providers do not apply such triggers consistently.\49\ In contrast,
some transmission providers assert that their tariffs sufficiently
detail restudy triggers.\50\ We believe that the Commission's proposal
above to require scheduled, periodic restudies could help address these
concerns for interconnection requests processed through cluster
studies. However, the Commission also seeks comment on (1) whether the
Commission should further revise the pro forma LGIP to improve the
transparency and application of restudy triggers generally, and (2) if
so, what reforms are needed.
---------------------------------------------------------------------------

    \49\ E.g., AWEA 2016 Comments at 30; Invenergy 2016 Comments at
19-20; EDPR NA 2016 Comments at 16-17.
    \50\ MISO 2016 Comments at 15; ISO-NE 2016 Comments at 23.
---------------------------------------------------------------------------

2. The Interconnection Customer's Option To Build
    52. The Commission proposes to allow the interconnection customer
to exercise the option to build unilaterally; that is, the Commission
proposes that the interconnection customer's option to assume
responsibility for construction of the transmission provider's
interconnection facilities and stand alone network upgrades is not
contingent on the transmission provider notifying the interconnection
customer that it cannot complete such facilities on the schedule
proposed by the interconnection customer.
a. Current Provisions and Background
    53. Under the current pro forma LGIA, the interconnection
customer's option to build is contingent on the transmission provider's
notification that the transmission provider cannot complete the
facilities on schedule. Specifically, under the pro forma LGIA, the
interconnection customer selects the ``In-Service Date, Initial
Synchronization Date, and Commercial Date'' \51\ and ``either the
Standard Option or Alternative Option'' unless mutually agreed to
between the parties to the agreement.\52\ Under the standard option,
the transmission provider ``shall construct the Transmission Provider's
Interconnection Facilities \53\ and Network Upgrades using Reasonable
Efforts to complete the construction by the dates designated by the
Interconnection Customer.'' \54\ Under the alternate option,
``Transmission Provider shall construct the Transmission Provider's
Interconnection Facilities and Network Upgrades according to the
construction completion dates established by the Interconnection
Customer, and if it fails to meet those dates, it may be liable for
liquidated damages,'' although the transmission provider may decline
this option ``within 30 Calendar Days of executing the LGIA.'' \55\
---------------------------------------------------------------------------

    \51\ 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.'' Pro forma LGIA Art. 1. 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.
    \52\ Pro forma LGIA Sec. 5.1.
    \53\ 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.
    \54\ Order No. 2003, FERC Stats. & Regs. ] 31,146 at P 351.
    \55\ Order No. 2003, FERC Stats. & Regs. ] 31,146 at P 352.
---------------------------------------------------------------------------

    54. Under the current OATT, there are two other options, which are
available if the transmission provider informs the interconnection
customer that it cannot meet the proposed dates: The ``Option to
Build'' and the ``Negotiated Option.'' \56\ The ``Option to Build,''
which the pro forma LGIA describes in section 5.1.3, provides an
interconnection customer with the option to build the transmission
provider's interconnection facilities and stand alone network upgrades,
but limits that option to circumstances where the transmission provider
cannot meet the dates proposed by the interconnection customer. That
is, an interconnection customer may ``assume responsibility for the
design, procurement and construction of Transmission Provider's
Interconnection Facilities and Stand Alone Network Upgrades.'' \57\
However, the interconnection customer may only exercise this option if
the transmission provider notifies the interconnection customer that
the transmission provider cannot meet the interconnection customer's
preferred construction completion dates.\58\
---------------------------------------------------------------------------

    \56\ Order No. 2003, FERC Stats. & Regs. ] 31,146 at P 353.
    \57\ Pro forma LGIA Sec. 5.1.3.
    \58\ See, e.g., ISO New England Inc., 149 FERC ] 61,274, at P 18
(2014).
---------------------------------------------------------------------------

    55. The ``Negotiated Option'' applies ``if the Transmission
Provider notifies the Interconnection Customer that it cannot meet the
dates established by the Interconnection Customer, and the
Interconnection Customer does not want to assume responsibility for
construction.'' \59\ Under this option, the ``Interconnection Customer
may decide that the Parties shall negotiate in good faith to revise the
construction completion dates and other provisions under which the
Transmission Provider is responsible for the construction.'' \60\ If
the parties are unable to reach an agreement during these negotiations,
the transmission provider assumes responsibility ``for construction of
the Transmission Provider's Interconnection Facilities and Network
Upgrades in accordance with the Standard Option.'' \61\
---------------------------------------------------------------------------

    \59\ Order No. 2003, FERC Stats. & Regs. ] 31,146 at P 354.
    \60\ Order No. 2003, FERC Stats. & Regs. ] 31,146 at P 354.
    \61\ Order No. 2003, FERC Stats. & Regs. ] 31,146 at P 354.
---------------------------------------------------------------------------

b. Comments
    56. Multiple parties that have experience as interconnection
customers at the 2016 Technical Conference expressed support for
reforms that would allow them to build some interconnection facilities
and network upgrades, explaining that they are often able to build more
rapidly and at lower cost than transmission owners.\62\ Several
commenters advocate expanding the option to build to circumstances
beyond those described in current section 5.1.3 of the LGIA.\63\ They
contend that the Commission should not condition the usage of the
option to build on timing but should instead allow for an absolute
right for interconnection customers to build interconnection facilities
and stand alone upgrades.
---------------------------------------------------------------------------

    \62\ 2016 Technical Conference Tr. 121: 1-22.
    \63\ E.g., E.ON 2016 Comments at 15; Xcel 2016 Comments at 16;
Invenergy 2016 Comments at 26; EDP 2016 Comments at 19; EDF 2016
Comments at 40.
---------------------------------------------------------------------------

    57. Other commenters oppose expansion of the circumstances under
which an interconnection customer may exercise the option to build.\64\
For

instance, ITC suggests that removing the limitation on when the option
to build can be exercised would threaten system reliability.\65\
Additionally, MISO TOs states that in Order No. 2003-A, the Commission
clarified that the transmission provider has no obligation to cede
ownership of stand alone network upgrades or the transmission
provider's interconnection facilities to the interconnection
customer.\66\ Some commenters that support expanding the option to
build acknowledge that usage of this option should still require that
reliability standards be maintained.\67\
---------------------------------------------------------------------------

    \64\ ISO-NE 2016 Comments at 27.
    \65\ ITC 2016 Comments at 10.
    \66\ MISO TOs 2016 Comments at 21.
    \67\ See AES 2016 Comments at 9.
---------------------------------------------------------------------------

c. Proposal
    58. The Commission preliminarily finds that limiting the option to
build only to circumstances where the transmission provider cannot meet
the interconnection customer's requested dates may not be just and
reasonable and may be unduly discriminatory or preferential. The
limitation may restrict an interconnection customer's ability to
efficiently build the transmission provider's interconnection
facilities and the interconnection customer's stand alone network
upgrades in a cost-effective manner.\68\ As a result, an
interconnection customer may pay more for the transmission provider's
interconnection facilities and standalone upgrades. Furthermore,
removing the limitation may provide interconnection customers more
control and certainty during the design and construction phase of the
interconnection process.
---------------------------------------------------------------------------

    \68\ The pro forma LGIA states that:
    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.
    Pro forma LGIA Art. 1.
---------------------------------------------------------------------------

    59. The Commission proposes to modify the pro forma LGIA to allow
an interconnection customer to exercise the option to build regardless
of whether the transmission provider can meet the requested
construction dates. More specifically, the Commission proposes to
modify the pro forma LGIA to allow an interconnection customer to
design, procure, and construct the transmission provider's
interconnection facilities and stand alone network upgrades--even if
the transmission provider can meet the requested construction dates--
where the interconnection customer and transmission provider (and
transmission owner, if applicable) are in agreement as to the
transmission provider's interconnection facilities and stand alone
network upgrades that would be built, including the design and
construction details. Existing responsibilities and protections,
including reliability considerations, in section 5.2 of the pro forma
LGIP under ``General Conditions Applicable to Option to Build'' would
continue to apply.
    60. The Commission is not proposing changes with respect to how
transmission provider's interconnection facilities and stand-alone
network upgrades are designed or approved, which standards or practices
must be followed, or the ownership of transmission provider's
interconnection facilities and stand-alone network upgrades that are
built under the option to build.\69\ Nor is the Commission proposing to
expand the types of stand-alone facilities that interconnection
customers may construct under the option to build beyond transmission
provider's interconnection facilities and stand-alone network upgrades.
The proposal instead removes the limitation on when the interconnection
customer can exercise the option to build such that an interconnection
customer may opt to build in an effort to reduce its costs or improve
the timeline for construction. Specifically, the Commission proposes to
modify the language in section 5.1 of the pro forma LGIA as follows
(proposing to delete italicized text):
---------------------------------------------------------------------------

    \69\ Pro forma LGIA Sec. 5.2.

    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 section 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.

    61. The Commission also proposes to modify the language in article
5.1.3 of the pro forma LGIA as follows (proposing to delete italicized
text):

    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.

    62. Given the changes proposed above, revisions to the negotiated
option are necessary because the current version of the negotiated
option references the current limitations on the option to build. For
this reason, it is necessary to remove these references in the
negotiated option and to address scenarios in which an interconnection
customer exercises the option to build and still wishes to negotiate
completion times for other facilities, including network upgrades that
are not stand alone network upgrades, as well as circumstances in which
the interconnection customer does not wish to exercise the option to
build. 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 negotiated option must also contemplate the
possibility that the transmission provider does not agree to the
interconnection customer's proposed dates as to other facilities not
covered by the option to build (i.e., other than transmission
provider's interconnection facilities and stand-alone network
upgrades). 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 the
interconnection facilities and network upgrades other than transmission
provider's interconnection facilities and stand-alone network upgrades.
The option to build does not grant any right to the interconnection
customer to construct network upgrades that are not stand-alone
upgrades. Furthermore, both the

transmission provider and the interconnection customer must agree on
which facilities are the stand-alone network upgrades and identify them
in Appendix A to the LGIA.\70\
---------------------------------------------------------------------------

    \70\ Order No. 2003, FERC Stats. & Regs. ] 31,146 at P 353.
---------------------------------------------------------------------------

    63. The Commission therefore proposes to modify the language in
article 5.1.4 of the pro forma LGIA as follows (proposing to delete
italicized text):

    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 5.1.1 (Standard Option),
Transmission Provider shall assume responsibility for the design,
procurement and construction of Transmission Provider's
Interconnection Facilities and Network Upgradesall facilities other
than Transmission Provider's Interconnection Facilities and Stand
Alone Network Upgrades if the Interconnection Customer elects to
exercise the Option to Buildpursuant to 5.1.1, Standard Option.
3. Self-Funding by the Transmission Owner
    64. The Commission proposes 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.
a. Existing Provisions and Background
    65. Order No. 2003 laid out a pricing policy with regard to the
costs of interconnection. There, the Commission stated that, where the
transmission provider is not an RTO/ISO, it is appropriate for the
interconnection customer to ``be solely responsible for the costs of
Interconnection Facilities'' \71\ and for network upgrades \72\ to be
``funded initially by the interconnection customer unless the
Transmission Provider elects to fund them.'' \73\ If the
interconnection customer funds the network upgrades, then the
interconnection customer is ``entitled to a cash equivalent refund . .
. equal to the total amount paid for the Network Upgrades'' paid ``as
credits against the Interconnection Customer's payments for
transmission services, with the full amount to be refunded . . . within
five years of the date the Network Upgrades are placed in service.''
\74\ This upfront payment from the interconnection customer ``serves
not as a rate for interconnection or transmission service, but simply
as a financing mechanism that is designed to facilitate the efficient
construction of Network Upgrades'' \75\ In Order No. 2003, the
Commission explained that, while it is appropriate for the
interconnection customer to pay the initial full cost for network
upgrades that ``would not be needed but for the interconnection,'' the
interconnection customer must receive transmission service credits in
return to ensure that it ``will not have to pay both incremental costs
and an average embedded cost rate for the use of the Transmission
System.'' \76\ The Commission further stated that this policy helps
ensure that every interconnection ``is treated comparably to the
interconnections that a non-independent Transmission Provider completes
for its own Generating Facilities.'' \77\ The Commission further
explained that the costs of network upgrades for a transmission
provider's own generation are traditionally rolled into the
transmission provider's transmission rates. The Commission allows some
pricing flexibility for transmission providers that are part of an RTO/
ISO and independent of market participants, as these transmission
providers have ``no incentive to use the cost determination and
allocation process to unfairly advantage [their] own generation.'' \78\
---------------------------------------------------------------------------

    \71\ Interconnection Facilities refer to:
    shall mean the Transmission Provider's Interconnection
Facilities and the Interconnection Customer's Interconnection
Facilities. Collectively, Interconnection Facilities include all
facilities and equipment between the Generating Facility and the
Point of Interconnection, including any modification, additions or
upgrades that are necessary to physically and electrically
interconnect the Generating Facility to the Transmission Provider's
Transmission System. Interconnection Facilities are sole use
facilities and shall not include Distribution Upgrades, Stand Alone
Network Upgrades or Network Upgrades.
    Pro forma LGIA Art. 1.
    \72\ Network upgrades refer to:
    the additions, modifications, and upgrades to the Transmission
Provider's Transmission System required at or beyond the point at
which the Interconnection Facilities connect to the Transmission
Provider's Transmission System to accommodate the interconnection of
the Large Generating Facility to the Transmission Provider's
Transmission System.
    Pro forma LGIA Art. 1.
    \73\ Order No. 2003, FERC Stats. & Regs. ] 31,146 at PP 693-694,
676.
    \74\ Order No. 2003, FERC Stats. & Regs. ] 31,146 at P 676.
    \75\ Order No. 2003-A, FERC Stats. & Regs. ] 31,160 at P 612.
    \76\ Order No. 2003, FERC Stats. & Regs. ] 31,146 at P 694.
    \77\ Order No. 2003, FERC Stats. & Regs. ] 31,146 at P 694.
    \78\ Order No. 2003, FERC Stats. & Regs. ] 31,146 at P 694;
Order No. 2003-A, FERC Stats. & Regs. ] 31,160 at P 587.
---------------------------------------------------------------------------

    66. Currently, article 11.3 of the pro forma LGIA states that:

    Network Upgrades and Distribution Upgrades. 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, they shall be solely funded by
Interconnection Customer.

The option for the transmission owner or provider to fund the cost for
network upgrades is termed the ``self-fund option.'' Under Order No.
2003, a transmission owner or provider electing the self-fund option
provides the up-front funding for the capital cost of the network
upgrades and then recovers the costs of those upgrades through its
rolled-in transmission rates charged to transmission customers.\79\
---------------------------------------------------------------------------

    \79\ See Order No. 2003, FERC Stats. & Regs. ] 31,146 at P 676.
Order No. 2003, however, allows independent entities to depart from
the pro forma LGIA approach. See Interstate Power and Light Co. v.
ITC Midwest, LLC, 144 FERC ] 61,052, at P 38 (2013).
---------------------------------------------------------------------------

    67. In 2009, the Commission accepted a MISO proposal to increase
the cost responsibility of an interconnection customer to 100 percent
of the costs of network upgrades with a possible 10 percent
reimbursement for network upgrades that are 345 kV or above.\80\ This
approach reflects a departure from the pro forma LGIA interconnection
pricing policy provided in Order No. 2003. In 2013, MISO proposed to
allow a transmission owner to elect to initially fund network upgrades
and to directly assign those costs to the interconnection customer
under MISO's interconnection customer funding policy.\81\ 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.\82\
---------------------------------------------------------------------------

    \80\ Midwest Indep. Transmission Sys. Operator, Inc., 129 FERC ]
61,060, at P 8 (2009).
    \81\ Midcontinent Indep. Sys. Operator, Inc., 145 FERC ] 61,111
(2013) (Hoopeston).
    \82\ Hoopeston, 145 FERC ] 61,111 at P 41.
---------------------------------------------------------------------------

    68. Recently, another transmission owner in MISO sought to
unilaterally elect the self-fund option for network upgrades.\83\ The
Commission found that article 11.3 of MISO's pro forma GIA may be
unjust, unreasonable, unduly discriminatory or preferential because it
allows the transmission owner the discretion to elect to initially fund
the upgrades and subsequently assess the interconnection customer a
network upgrade charge that is not later reimbursed through the
provision of credits. The Commission found that this practice could
result in discriminatory treatment by the transmission owner of
different interconnection customers.\84\ The Commission additionally
found that, by unilaterally electing to initially fund network upgrades
for which the interconnection customer is ultimately financially
responsible and does not receive credits for those costs, the affected
system operator or transmission owner may deprive the interconnection
customer of more favorable network upgrade financing options. For
instance, the Commission found that the transmission owner's unilateral
election to initially fund network upgrades may increase costs of
interconnection service by assigning increased capital costs and a
security requirement to the interconnection customer with no
corresponding increase in service.\85\ As a result, the Commission
directed MISO to revise article 11.3 of its GIA to require mutual
agreement with the interconnection customer for the transmission owner
to elect to initially fund network upgrades.\86\
---------------------------------------------------------------------------

    \83\ See Otter Tail Power Co. v. Midcontinent Indep. Sys.
Operator, Inc., 153 FERC ] 61,352 (2015).
    \84\ See Otter Tail Power Co. v. Midcontinent Indep. Sys.
Operator, Inc., 153 FERC ] 61,352 at P 14; Midcontinent Indep. Sys.
Operator, Inc., 151 FERC ] 61,220 (2015); Otter Tail Power Co. v.
Midcontinent Indep. Sys. Operator, Inc., 156 FERC ] 61,099 (2016)
(Otter Tail Proceedings).
    \85\ Otter Tail Power Co. v. Midcontinent Indep. Sys. Operator,
Inc., 153 FERC ] 61,352 at P 9.
    \86\ Midcontinent Indep. Sys. Operator, Inc., 151 FERC ] 61,220
at P 53.
---------------------------------------------------------------------------

b. AWEA Petition and Comments
    69. In its Petition, AWEA argues that, where the Commission has
granted independent entity variations that do not credit back network
upgrade costs to the interconnection customer, transmission owners or
providers should not have exclusive decision-making authority with
respect to the self-fund option. AWEA specifically raises concerns that
the self-fund option hinders competition and provides an opportunity
for undue discrimination and affiliate abuse. In support, AWEA argues
that the self-fund option allows transmission owners or providers to
levy large upgrade costs onto the interconnection customer. AWEA
requests that the Commission allow the transmission owner or provider
to self-fund network upgrades only if the interconnection customer
agrees.\87\
---------------------------------------------------------------------------

    \87\ RENEW and Wind on the Wires support this request. RENEW
2015 Comments at 6; Wind on the Wires 2015 Comments at 3.
---------------------------------------------------------------------------

    70. Some commenters oppose requiring mutual agreement for self-
funding in all regions. MISO TOs view the proposal as eliminating a
transmission owner's right to self-fund network upgrades, arguing that
this could preclude the transmission owner from the ability to earn a
return on its investment.\88\ ITC agrees, arguing that it is just and
reasonable for transmission owners to earn a fair rate of return on
constructed network upgrades.\89\ EEI argues that the Commission has
long permitted transmission owners to self-fund upgrades while
collecting the capital costs for such upgrades, further asserting that
self-funding is an important aspect of the Commission's interconnection
pricing policy. EEI notes that the Commission has clarified that the
self-fund option should not include the recovery of costs other than
the return of and on the capital costs of the network upgrades.\90\
Additionally, several commenters state that self-funding is a regional
issue; thus, a generic rulemaking is not needed.\91\
---------------------------------------------------------------------------

    \88\ MISO TOs 2015 Comments at 18.
    \89\ ITC 2015 Comments at 12 (citing, e.g., Ameren Energy
Resource Generating Co. v. Midcontinent Indep. Sys. Operator, Inc.,
148 FERC ] 61,057, at P 38 (2014)).
    \90\ EEI 2015 Comments at 44-45 (citing Hoopeston, 145 FERC ]
61,111 at P 42).
    \91\ MISO TOs 2015 Comments at 18; MISO 2015 Comments at 21.
---------------------------------------------------------------------------

c. Proposal
    71. The Commission proposes to revise the pro forma LGIA to require
mutual agreement between the interconnection customer and the
transmission owner or provider for the transmission owner or provider
to elect to fund the capital for network upgrades. Specifically, the
Commission proposes to revise section 11.3 of the pro forma LGIA to
include the requirements established in the Otter Tail Proceedings. To
which, the Otter Tail Proceedings resulted in the changes as indicated
below to article 3.2.1 of MISO's Attachment X to read:

    Transmission Owner shall provide Transmission Provider and
Interconnection Customer with written notice pursuant to Article 15
that Transmission Owner elects to fund the capital for the Network
Upgrades and Transmission Owner's System Protection Facilities,
which election shall only be available upon mutual agreement of
Interconnection Customer and Transmission Owner; otherwise, such
facilities, if any, shall be solely funded by Interconnection
Customer.

    As such, the Commission proposes to modify the language in article
11.3 of the pro forma LGIA as follows:

    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
agreement of Interconnection Customer and Transmission Owner or
Transmission Provider, they shall be solely funded by
Interconnection Customer.

    72. The Commission preliminarily finds that allowing the unilateral
option to self-fund to continue for any transmission owner or
transmission provider may be unjust, unreasonable, unduly
discriminatory, or preferential. The Commission affirmed in the Otter
Tail Proceedings that the unilateral election to self-fund created the
same condition that was of concern in E.ON Climate & Renewables North
America, LLC v. Midwest Indep. Transmission Sys. Operator, Inc., namely
``unacceptable opportunities for undue discrimination by affording a
transmission owner the discretion to increase the costs of
interconnection service by assigning both increased capital costs, as
well as non-capital costs . . . to particular interconnecting
generators, but not others.'' \92\ The Commission further added that
the unilateral election for the transmission owner to provide initial
funding for network upgrades may deprive the interconnection customer
of other options to finance the cost of the network upgrades that may
provide more favorable terms and rates.\93\
---------------------------------------------------------------------------

    \92\ E.ON Climate & Renewables North America, LLC v. Midwest
Indep. Transmission Sys. Operator, Inc., 137 FERC ] 61,076, at P 37
(2011), order on reh'g, 142 FERC ] 61,048, at P 21 (2013).
    \93\ Midcontinent Indep. Sys. Operator, Inc., 151 FERC ] 61,220
at P 49 (citing E.ON, 137 FERC ] 61,076 at P 37).
---------------------------------------------------------------------------

    73. The Commission proposes this reform to balance the
interconnection customer's ability to manage the cost of

interconnection with the transmission owner's or provider's desire to
earn a return on any network upgrades. The Commission recognizes that
interconnection customers may have internal reasons for funding their
own network upgrades and that doing so may enhance the interconnection
customer's ability to manage the cost of interconnection. The
Commission, in addition, does not believe that requiring mutual
agreement in order for the transmission provider or owner to initially
fund network upgrades in regions that follow the pro forma LGIA
crediting approach would harm the transmission provider or owner. To
the extent an interconnection customer does not withhold agreement to
allow the transmission owner or provider to pay the upfront cost of
network upgrades, the transmission provider or owner will be able to
earn a return. The Commission invites comment on benefits the
interconnection customer may realize by forgoing its opportunity to
fund network upgrades and thereby allowing the transmission owner or
provider to initially fund the network upgrades. The Commission is
similarly interested in the comments regarding the benefits an
interconnection customer may realize by funding network upgrades
itself. Finally, the Commission seeks further comment on whether
extending the requirement for mutual agreement for the transmission
owner or provider to initially fund the network upgrades would result
in circumstances that could harm an interconnection customer.
    74. While the concern motivating this proposed change may typically
be more salient in regions where transmission credits are not provided
for the costs paid by interconnection customers, there may occasionally
be reasons that interconnection customers in regions where transmission
credits are provided may want to require mutual agreement with the
transmission owner or provider before it could self-fund. Accordingly,
the Commission proposes that all transmission providers revise article
11.3 in their pro forma LGIA to require mutual agreement between the
interconnection customer and transmission owner or provider before the
transmission owner or provider can choose to self-fund, but seeks
comment as to whether the proposal should apply to all regions, as
proposed, or be limited to RTOs/ISOs or regions that do not provide
transmission credits.
    75. The Commission preliminarily disagrees with MISO TOs and ITC
that requiring mutual agreement is akin to removing the option to self-
fund. In regions where transmission credits are not provided,
transmission owners or providers may still exercise the self-funding
option, as long as there is mutual agreement between the
interconnection customer and the transmission owner or provider.
    76. The Commission agrees that self-funding is an important aspect
of the Commission's interconnection pricing policy and that
transmission owners or providers opting to self-fund in regions where
transmission credits are not provided, pursuant to mutual agreement
with the interconnection customer, may recover the return of and on
their capital costs. Further, the Commission believes that requiring
mutual agreement between the transmission owner or provider and the
interconnection customer should not affect the costs recovered by the
transmission owner or provider when the self-fund option is utilized.
    77. As stated above, the Commission's proposal will clarify article
11.3 of the existing pro forma LGIA to require mutual agreement between
the transmission owner or provider and interconnection customer before
the transmission owner or provider may elect to initially fund network
upgrades. The Commission also seeks comment on whether this proposal,
if adopted, should apply to all regions as proposed or be limited to
RTOs/ISOs or regions that do not provide transmission credits.
4. RTO/ISO Dispute Resolution
    78. The Commission proposes that RTOs/ISOs establish
interconnection dispute resolution procedures that allow a disputing
party to unilaterally seek dispute resolution in RTO/ISO regions.
Commenters have not raised dispute resolution procedures outside of
RTO/ISO regions as an issue, so the Commission has not proposed changes
to non-RTO/ISO dispute resolution procedures in this Proposed Rule.
However, as discussed below, the Commission invites comments regarding
the adequacy of dispute resolution processes outside of RTO/ISO
regions.
a. Current Provisions and Background
    79. The current interconnection dispute resolution process is
described in article 13.5 of the pro forma LGIP. This article states
that, if a dispute ``arises out of or in connection with'' the LGIA,
LGIP, or either party's performance thereunder, a disputing party
provides written notice of dispute to the other party outlining the
dispute's terms.\94\ If the parties have not resolved the dispute
within thirty days, one party may, ``upon mutual consent,'' submit the
dispute for external arbitration procedures.\95\ If the parties fail to
agree upon a single arbitrator within ten days, they may each select an
arbitrator, and both arbitrators will have twenty days to select a
third arbitrator. Each arbitrator must be knowledgeable ``in electric
utility matters, including electric transmission and bulk power issues,
and shall not have any current or past substantial business or
financial relationships with any party to the arbitration.'' \96\
Unless otherwise agreed, the arbitrator(s) must render a decision
within ninety days, and the parties must pay their own costs and the
costs of the arbitrators.\97\
---------------------------------------------------------------------------

    \94\ Pro forma LGIP Sec. 13.5.1.
    \95\ Pro forma LGIP Sec. 13.5.1.
    \96\ Pro forma LGIP Sec. 13.5.2.
    \97\ Pro forma LGIP Sec. 13.5.3, 13.5.4. Under section 13.5.4,
each party must pay (1) the cost of the arbitrator chosen by the
party to sit on the three member panel and one half of the cost of
the third arbitrator chosen; or (2) one half the cost of the single
arbitrator jointly chosen by the parties.
---------------------------------------------------------------------------

    80. Some RTOs/ISOs have adopted interconnection dispute resolution
procedures similar to those laid out in the pro forma LGIP; \98\ others
direct parties to their general dispute resolution procedures.\99\
---------------------------------------------------------------------------

    \98\ ISO-NE., Transmission, Markets and Services Tariff, Section
II, Schedule 22 (9.0.0), Section 13.5; NYISO, NYISO Tariffs, OATT
Section 30.13 (2.0.0) (Miscellaneous); CAISO, eTariff, FERC Electric
Tariff, OATT, app. DD, Section 15 (1.0.0) (Miscellaneous); SPP,
OATT, Attachment V, Section 1.5 (2.0.0).
    \99\ MISO, FERC Electric Tariff, Attachment X (49.0.0), art.
11.5 (Disputes); PJM Interconnection, L.L.C., 123 FERC ] 61,163, at
n. 41 (2008) (``dispute resolution procedures in section 12 [PJM,
Intra-PJM Tariffs, OATT, Section 12 (0.0.0)] are applicable to
disputes arising regarding the interconnection process''). PJM's
general dispute resolution procedures are similar to those laid out
in section 13.5 of the pro forma LGIP.
---------------------------------------------------------------------------

b. AWEA Petition and Comments
    81. Interconnection customers can have disputes with transmission
owners about a number of issues, including costs, construction
schedules, and the design of interconnection facilities and network
upgrades.\100\ Multiple renewable interconnection customers state that
they consider current RTO/ISO dispute resolution procedures inadequate
and argue that the filing of a complaint pursuant to FPA section 206 is
not a serviceable substitute for dispute resolution because the
complaint process is too expensive and time-consuming, given the time
sensitivity of the interconnection process.\101\ Nonetheless,
commenters

disagree about how to improve RTO/ISO dispute resolution procedures.
EDP contends that RTOs/ISOs are often in the best position to mediate
such discussions and disputes.\102\ NextEra asserts, however, that on
occasion, RTOs refuse to be a party to dispute resolution and tell the
parties to resolve the issues themselves.\103\ Furthermore, EDP argues
that there is some question about RTO/ISO independence because RTOs/
ISOs ``often lean on'' the transmission owner for assistance in
modeling or design information.\104\ Similarly, EDF argues that the
interconnection customer ``almost always loses'' because issues are
judged by the RTO/ISO and fellow transmission owners and transmission
providers.\105\
---------------------------------------------------------------------------

    \100\ 2016 Technical Conference Tr. 131: 4-17; 133: 18-21.
    \101\ Invenergy 2016 Comments at 2, 3, 26; EDF 2016 Comments at
40-41; EDP 2016 Comments at 20; NextEra 2016 Comments at 9-10.
    \102\ EDP 2016 Comments at 20.
    \103\ 2016 Technical Conference Tr. 141:11-16.
    \104\ EDP 2016 Comments at 20.
    \105\ EDF 2016 Comments at 40.
---------------------------------------------------------------------------

    82. Because of its unease with RTOs/ISOs, NextEra states that the
Commission is the ``ideal adjudicator'' of such conflicts and asks the
Commission to devise an expeditious interconnection dispute
adjudication process.\106\ NextEra states that this process could
involve more formal predictable procedures through the Commission's
hotline or some other method to quickly respond to the facts
presented.\107\ Similarly, Invenergy and AWEA propose that each RTO/ISO
establish an in-house ombudsman that can reach out to designated
Commission staff to intervene as needed.\108\ EDP also voices the need
for an independent arbiter to assist in resolving these disputes
without relying on the RTO/ISO.\109\
---------------------------------------------------------------------------

    \106\ NextEra 2016 Comments at 9-10.
    \107\ NextEra 2016 Comments at 10.
    \108\ Invenergy 2016 Comments at 2, 3, 26; 2016 Technical
Conference Tr. 63:11-18; AWEA 2016 Comments at 38.
    \109\ EDP 2016 Comments at 40-41.
---------------------------------------------------------------------------

    83. Not all commenters argue that the current available procedures
are defective or that dispute resolution reform is necessary. For
instance, MISO argues that parties rarely take advantage of its dispute
resolution process for interconnection issues.\110\ Similarly, CAISO
and ISO-NE state that issues that require dispute resolution seldom
arise.\111\ These commenters and others consider the available dispute
resolution procedures adequate.\112\
---------------------------------------------------------------------------

    \110\ MISO 2016 Comments at 21.
    \111\ 2016 Technical Conference Tr. 135: 13-15; 137: 6-9; ISO-NE
2016 Comments at 27.
    \112\ ISO-NE 2016 Comments at 27; NYISO 2016 Comments at 26;
AVANGRID 2016 Comments at 12; MISO 2016 Comments at 21; Modesto
Irrigation District at 11-12.
---------------------------------------------------------------------------

c. Proposal
    84. The Commission preliminarily finds that RTO/ISO generator
interconnection dispute resolution procedures may not be just and
reasonable or may be unduly discriminatory or preferential. The current
processes allow a disputing party to pursue a streamlined dispute
resolution process only if the other party to the dispute agrees to
this process. As a result, disputing parties may have little recourse.
Multiple commenters have suggested that the Commission, rather than the
RTO/ISO, is in the best position to resolve interconnection disputes.
It is not clear whether such commenters are suggesting that the
Commission adopt the dispute resolution provisions of the pro forma
SGIP, which allow disputing parties to contact the Commission's Dispute
Resolution Service to assist in either resolving a dispute or in
selecting an appropriate dispute resolution venue.\113\ Regardless,
because RTOs/ISOs are more familiar with the details regarding their
respective systems and interconnection processes, the Commission
proposes to require that RTOs/ISOs serve as the neutral decision-makers
to interconnection disputes. While several commenters have expressed
concern about the RTOs'/ISOs' neutrality, independence of market
participants was, and is, a foundational requirement of the RTOs/
ISOs.\114\ The Commission proposes that RTOs/ISOs provide staff
member(s) or utilize subcontractor(s) to preside over such dispute
resolution (e.g., as mediators or arbitrators) and that such staff
member(s) or subcontractor(s) be independent of the influence of
transmission owners and interconnection customers and can thus serve as
neutral decision-makers. To establish this neutrality, the Commission
proposes that the selected staff member(s) or subcontractor(s) shall
not have any current or past substantial business or financial
relationships with any party to the dispute.\115\ This standard is
identical to the one provided in section 13.5.2 of the pro forma LGIP.
Additionally, the RTO/ISO-devised procedures must account for the time
sensitivity of the generator interconnection process.
---------------------------------------------------------------------------

    \113\ Pro forma SGIP Sections 4.2.2 & 4.2.4.
    \114\ See Regional Transmission Organizations, Order No. 2000,
FERC Stats. & Regs. ] 31,089, at PP 193-94 (1999), order on reh'g,
Order No. 2000-A, FERC Stats. & Regs. ] 31,092 (2000), aff'd sub
nom. Pub. Util. Dist. No. 1 v. FERC, 272 F.3d 607 (D.C. Cir. 2001).
    \115\ See Pro Forma LGIP Sec. 13.5.2.
---------------------------------------------------------------------------

    85. The Commission also proposes that RTOs/ISOs eliminate the
requirement that a dispute resolution process only be available ``upon
the mutual agreement of the Parties.'' \116\ While no commenter has
suggested that the arbitration process embodied in section 13.5 of the
pro forma LGIP lacks neutrality, this process is effectively
unavailable to the interconnection customer if a transmission provider
or a transmission owner opposes this arbitration process. The
Commission also proposes that each Commission-approved RTO/ISO amend
its generator interconnection procedures to provide dispute resolution
procedures (e.g., mediation or arbitration) that are tailored to
address interconnection process disputes.
---------------------------------------------------------------------------

    \116\ Pro forma LGIP Sec. 13.5.1.
---------------------------------------------------------------------------

    86. The comments received regarding dispute resolution procedures
only express concerns about dispute resolution within RTOs/ISOs.
Accordingly, the Commission has preliminarily concluded that
interconnection customers and non-RTO/ISO transmission providers are
satisfied with the dispute resolution procedures outside of RTOs/ISOs.
In any case, the Commission does not propose to change section 13.5
(Disputes) of the pro forma LGIP at this time. Additionally, at this
time, the Commission does not propose to adopt procedures in the pro
forma LGIP similar to those adopted in section 4.2 (Disputes) of the
pro forma SGIP, which directs disputing parties to address their issues
through the Commission's Dispute Resolution Service. The Commission
seeks comment, however, on the need for reform to generator
interconnection dispute procedures outside of the RTOs/ISOs and the
appropriateness of adopting procedures similar to those outlined in the
pro forma SGIP.
    87. To effectuate this proposal, the Commission proposes to revise
section 35.28(g)(9) of the Code of Federal Regulations to require every
Commission-approved independent system operator or regional
transmission organization to maintain tariff provisions governing
generator interconnection dispute resolution procedures to allow a
disputing party to unilaterally initiate dispute resolution procedures
under the respective tariff. Such provisions must provide for
independent system operator or regional transmission organization staff
member(s) or utilize subcontractor(s) to serve as the neutral decision-
maker(s) or presiding staff member(s) or subcontractor(s) to the
dispute resolution procedures. Such staff participating in dispute
resolution

procedures shall not have any current or past substantial business or
financial relationships with any party. Additionally, such dispute
resolution procedures must account for the time sensitivity of the
generator interconnection process.
5. Capping Costs for Network Upgrades
a. Existing Provisions and Background
    88. The pro forma LGIP requires that transmission providers provide
a good faith estimate of the cost of interconnection facilities and
network upgrades needed to accommodate an interconnection customer's
requested level of interconnection service.\117\ The transmission
provider includes this cost estimate with the facilities study results,
typically with a stated accuracy margin within 10 to 20 percent of the
estimate.\118\ After completion of the construction of the transmission
provider's interconnection facilities and network upgrades needed to
interconnect a generating facility, the transmission provider conducts
a true-up to assess the final cost of construction to the
interconnection customer. The transmission provider provides a final
invoice to the interconnection customer that details variations between
actual and estimated costs. Overpayment by the interconnection customer
results in a refund to the interconnection customer, or a surcharge in
case of an underpayment.\119\
---------------------------------------------------------------------------

    \117\ See, e.g., pro forma LGIP Sec. 6.2 and 7.3.
    \118\ Pro forma LGIP Sec. 8.3.
    \119\ Pro forma LGIA Art. 12.
---------------------------------------------------------------------------

    89. In Order No. 2003-A, the Commission also clarified that the
cost of network upgrades originally assigned to a higher-queued
interconnection customer that has withdrawn its interconnection request
could fall to a lower-queued interconnection customer, if the network
upgrades are still necessary to support the interconnection of the
lower-queued interconnection customer's generating facility. The
Commission acknowledged that this business risk creates uncertainty for
the interconnection customer. However, the Commission found that such
costs shifts were just and reasonable, as the lower-queued
interconnection customer would need the network upgrades to support the
interconnection of its generating facility.\120\
---------------------------------------------------------------------------

    \120\ Order No. 2003-A, FERC Stats. & Regs. ] 31,160 at P 320.
---------------------------------------------------------------------------

    90. The Commission has approved an independent entity variation
from this Commission policy in the CAISO region.\121\ CAISO caps cost
responsibility for reliability and local delivery network upgrades
\122\ at the lower of its Phase I and Phase II study report amounts.
Transmission owners are responsible for additional reliability network
upgrade and local delivery network upgrade costs beyond the cap, unless
they are due to interconnection customer errors or changes.\123\
Transmission owners, in turn, reflect these costs in their transmission
service rates, which ultimately shifts these costs onto load.\124\
---------------------------------------------------------------------------

    \121\ California Indep. Sys. Operator Corp., 124 FERC ] 61,292.
    \122\ The CAISO Tariff defines the term ``Reliability Network
Upgrade'' as:
    The transmission facilities at or beyond the Point of
Interconnection identified in the Interconnection Studies as
necessary to interconnect one or more Generating Facility(ies)
safely and reliably to the CAISO Controlled Grid, which would not
have been necessary but for the interconnection of one or more
Generating Facility(ies), including Network Upgrades necessary to
remedy short circuit or stability problems, or thermal overloads.
Reliability Network Upgrades shall only be deemed necessary for
system operating limits, occurring under any system condition, which
system operating limits cannot be adequately mitigated through
Congestion Management, Operating Procedures, or Special Protection
Systems based on the characteristics of the Generating Facilities
included in the Interconnection Studies, limitations on market
models, systems, or information, or other factors specifically
identified in the Interconnection Studies. Reliability Network
Upgrades also include, consistent with [Western Electricity
Coordinating Council] practice, the facilities necessary to mitigate
any adverse impact the Generating Facility's interconnection may
have on a path's [Western Electricity Coordinating Council]
rating.'' CAISO Tariff, Appendix A, Definition--Reliability Network
Upgrade.
    The CAISO Tariff defines ``Local Deliverability Network
Upgrade'' as:
    ``A transmission upgrade or addition identified by the CAISO in
the [Generator Interconnection and Deliverability Allocation
Procedures] interconnection study process to relieve a Local
Deliverability Constraint.'' CAISO Tariff, Appendix A, Definition--
Local Delivery Network Upgrade.
    \123\ CAISO Tariff, Appendix DD, Sec. 10.
    \124\ 2016 Technical Conference Tr. 161: 7-23.
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b. AWEA Petition and Comments
    91. In its Petition, AWEA claims that interconnection customers
frequently pay costs that exceed the higher bound of a transmission
provider's cost estimates and that significant excess costs can disrupt
an interconnection customer's business model. AWEA asserts that it is
just and reasonable to protect interconnection customers from excessive
cost overruns. AWEA contends that the transmission provider should be
obligated to pay the portion of any final cost beyond the estimated
cost accuracy margin for interconnection studies, excluding
demonstrated, extraordinary costs beyond its control. AWEA asserts that
it is unjust and unreasonable to shift the consequences of a
transmission provider's inaccurate cost estimates onto the
interconnection customer. It argues that the transmission provider
should assume such risk because it has control over the interconnection
process. AWEA points to CAISO's phased study approach as an example of
a cost cap mechanism that would provide more cost certainty.\125\
Several commenters support AWEA's request to cap costs at the higher
bound of a stated accuracy margin, absent demonstrated, extraordinary
circumstances beyond a transmission provider's control.\126\ Six Cities
supports establishing maximum cost responsibility for network upgrades
but opposes a cap on interconnection facility costs, contending that
interconnection customers should bear all cost responsibility for
interconnection facilities.\127\ CAISO states that its phased study
approach, coupled with a cost cap, has helped reduce the need for
restudies in its region and provided more certainty to interconnection
customers earlier in the study process.\128\
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    \125\ AWEA Petition at 47-48.
    \126\ RENEW 2015 Comments at 6; Wind Coalition 2015 Comments at
3; Wind on the Wires 2015 Comments at 3.
    \127\ Six Cities 2015 Comments at 8.
    \128\ 2016 Technical Conference Tr. 83: 17-25, 84: 1-25, 85: 1-
4.
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    92. Other commenters oppose AWEA's proposal to impose caps on
interconnection cost estimates.\129\ These commenters argue that this
proposal would achieve little because the most significant contributors
to cost overruns, such as the withdrawal of higher-queued
interconnection requests and inaccurate cost estimates provided by
transmission owners, are outside the transmission provider's
control.\130\ Additionally, commenters express concerns that
implementing a cost cap will result in inappropriate cost shifts,
particularly to load, that violate traditional cost causation
principles.\131\ Several commenters also express concern that AWEA's
proposal would be problematic in regions in which the Commission has
approved cost allocation variations from the pro forma GIA. MISO
asserts that, because CAISO is a single-state RTO, any cost overruns
are ultimately shifted to load, which

will eventually benefit from any generation resulting from the
interconnection. MISO argues, however, that capping costs, whether in
aggregate or per unit, and socializing the cost of overruns is not
necessarily embraced by regulators in multistate RTOs/ISOs that require
generator costs to be more specifically borne by the beneficiaries of
the power from the resource.\132\ ISO-NE concurs, contending that
implementing a cost cap would shift costs to ratepayers that the
interconnection customer should bear. That shift, argues ISO-NE, is not
an option under its ``but for'' cost allocation design.\133\
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    \129\ CMUA 2015 Comments at 4-6; EEI 2015 Comments at 23-24;
KCP&L 2015 Comments at 18; MISO 2015 Comments at 20; MISO TOs 2015
Comments at 10-13; Modesto Irrigation District 2015 Comments at 7-
12; NYTOs 2015 Comments at 7; PSEG 2015 Comments at 8.
    \130\ CMUA 2015 Comments at 5-6; MISO 2015 Comments at 20; MISO
TOs 2015 Comments at 12; Modesto Irrigation District 2015 Comments
at 7-8; PSEG 2015 Comments at 8.
    \131\ EEI 2015 Comments at 23; MISO TOs 2015 Comments at 11.
    \132\ MISO 2016 Comments at 2-3.
    \133\ ISO-NE 2016 Comments at 24.
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c. Request for Comments
    93. Several of the proposed reforms in this Proposed Rule seek to
provide more certainty to interconnection customers during the
interconnection study process, such as the proposal to schedule the
frequency of restudies. As noted above, increasing certainty for
interconnection customers--particularly cost certainty--may decrease
the number of late-stage interconnection request withdrawals from the
interconnection queue, which could meaningfully ameliorate the cycle of
repeated, cascading restudies. Capping costs at a certain variance
above estimates could provide interconnection customers with business
certainty useful to more efficiently develop an interconnection
request. A cost cap could also discipline the study process to produce
more accurate cost estimates. The Commission acknowledges, however,
that a cost cap could incentivize transmission providers to
overestimate network upgrade costs in order to minimize potential cost
shifts.
    94. The Commission also recognizes that the prospect of
implementing a cost cap raises difficult issues. Several RTO/ISO
regions have reached consensus on cost allocation policies under the
independent entity variation that differ from the pricing policy laid
out in Order No. 2003. These cost allocation policies, in turn, have
become embedded in these RTO/ISO regions and have supported other cost
allocation strategies, which are not easily disturbed. Implementing a
cost cap would diverge from the Commission's ``but for'' cost
allocation policy with respect to network upgrades because it would
reallocate costs that would not have been necessary but for a
particular interconnection request. The Commission appreciates insights
into balancing the benefits of increasing cost certainty to
interconnection customers against the potential drawbacks of shifting
costs to other parties, particularly load.
    95. The Commission seeks comment on whether it should revise the
pro forma LGIP and LGIA to provide for a cost cap that would limit an
interconnection customer's network upgrade costs at the higher bound of
a transmission provider's cost estimate plus a stated accuracy margin
following a certain stage in the interconnection study process. Such a
cap could permit the interconnection customer to assume costs that
exceed the cap under limited circumstances, such as where there is
demonstrable proof that the cause of a cost increase is beyond the
transmission provider's control. The cost cap could also specify which
party or parties would assume network upgrade costs in excess of the
cap. The Commission seeks comment on how to minimize potential cost
shifts to other parties if such a cost cap is imposed. The Commission
also seeks comments on alternative proposals, or additional steps that
the Commission could take, to provide more cost certainty to
interconnection customers during the interconnection study process.
B. Promoting More Informed Interconnection
    96. The five reforms in this section would improve transparency
regarding the interconnection process and provide improved information
to the benefit of all participants in the interconnection process.
These benefits have the potential to lead to efficiencies in the
development process and a reduction in participation disagreements or
uncertainty. Additionally, these reforms may address aspects of the
interconnection process that may not be just and reasonable or that may
be unduly discriminatory or preferential. In addition to the proposed
reforms, the Commission seeks comment on proposals or additional steps
that the Commission could take to improve the resolution of issues that
arise when affected systems are impacted by a proposed interconnection.
1. Identification and Definition of Contingent Facilities
    97. The Commission proposes to revise the pro forma LGIP to require
transmission providers to detail the method they use to determine
contingent facilities. The Commission proposes to define contingent
facilities as those unbuilt interconnection facilities and network
upgrades upon which the interconnection request's costs, timing, and
study findings are dependent, and if not built, could cause a need for
restudies of the interconnection request or a reassessment of network
upgrades and/or costs and timing.
a. Existing Provisions
    98. The Commission currently requires transmission providers to
identify for interconnection customers contingencies potentially
affecting interconnection studies \134\ and list applicable contingent
facilities in interconnection agreements.\135\
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    \134\ Pro forma LGIP Section 2.3.
    \135\ Order No. 2003, FERC Stats. & Regs. ] 31,146 at P 409
(``[i]f it is apparent to the Parties . . . that contingencies (such
as other Interconnection Customers terminating their LGIAs) might
affect the financial arrangements, the Parties should include such
contingencies in their LGIA and address the effect of such
contingencies on their financial obligations'').
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b. AWEA Petition and Comments
    99. In its Petition, AWEA asserts that interconnection customers
rely on the detailed list of contingent facilities that are listed in
studies and their interconnection agreements in order to assess future
risk.\136\ AWEA states that transmission providers are not consistently
providing full and accurate lists of contingent facilities within
interconnection studies and interconnection agreements. Moreover, AWEA
asserts that transmission providers and transmission owners may add
more contingent facilities after the interconnection agreement has been
signed or filed with the Commission.\137\ AWEA also states that some,
but not all, LGIPs or related business practices manuals acknowledge
the need to study contingent facilities. AWEA asserts that there is
often neither a clear definition of contingent facilities in LGIPs or
in business practice manuals, nor an affirmative obligation in the
LGIPs to apprise the interconnection customer of such contingencies in
the facilities study and interconnection agreement. AWEA further
asserts that in some cases, the appendices to an interconnection
agreement may contain a long list of contingencies, including higher-
queued generators throughout the RTO and numerous transmission
upgrades; however, no showing has been made regarding whether these
interconnection requests and facilities will impact a particular
interconnection request.\138\ AWEA supports MISO's practice of listing,
in the interconnection agreement, contingent facilities that have a
five percent or greater distribution factor impact on an
interconnection request. AWEA notes that this practice has resulted in
a

reduction in the number of contingent facilities listed in
interconnection agreements by focusing on those that are electrically-
impacted by the proposed interconnection request.\139\ In particular,
AWEA states that MISO's five percent threshold has resulted in an 85
percent reduction in contingent facilities listed in interconnection
agreements.\140\
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    \136\ Petition at 25-26.
    \137\ Petition at 26.
    \138\ Petition at 27.
    \139\ Petition at 27.
    \140\ Petition at 27.
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    100. Several commenters assert that there is little clarity on how
a transmission provider identifies contingent facilities and request
that the Commission require transmission providers to specify the
method they use to identify contingent facilities.\141\ Invenergy
states that the number of contingent facilities can change dramatically
from the system impact study phase to the interconnection agreement
phase, which can result in disputes between stakeholders regarding the
study assumptions that resulted in addition or removal of certain
contingent facilities from the list.\142\ NextEra encourages the
Commission to identify additional best practices that can be
implemented in all regions.\143\
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    \141\ EDF 2016 Comments at 38-39; AWEA 2016 Comments at 36-37;
Invenergy 2016 Comments at 23-24; NextEra 2015 Comments at 7.
    \142\ Invenergy 2016 Comments at 23-24.
    \143\ NextEra 2015 Comments at 7.
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    101. Some commenters note the potential difficulties in creating a
generic methodology for determining the list of contingent facilities
or note that a generic methodology may not be applicable to a given
region. For example, EEI asserts that providing additional information,
in line with MISO's five percent threshold, may increase the time and
cost for preparing interconnection studies, cautioning that the five
percent threshold might not work outside of MISO.\144\ Indicated NYTOs
note that developing a contingent facilities method is not applicable
to NYISO because of NYISO's Class Year Study process.\145\ MISO states
that it is currently reviewing ``how to identify the network upgrades
[that] a generation interconnection would be contingent upon.'' \146\
ISO-NE states that contingent facilities are identified in the system
impact study and are memorialized in the interconnection agreement, and
the interconnection customer learns about these contingent facilities
through the study of its interconnection request.\147\
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    \144\ EEI 2015 Comments at 25.
    \145\ Indicated NYTOs 2015 Comments at 4.
    \146\ MISO 2016 Comments at 19.
    \147\ ISO-NE 2016 Comments at 26.
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c. Proposal
    102. As noted above, the Commission requires transmission providers
to list applicable contingent facilities in interconnection
agreements.\148\ However, the existing requirements do not specify how
transmission providers should determine the list of contingent
facilities, and this omission could result in uncertainty for
interconnection customers. The Commission preliminarily finds that some
practices with regard to these contingent facilities may not be just