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March 13, 2015

FERC Draws a Line on Transmission Queue Waivers

Generation project developers generally face significant hurdles in securing authority to interconnect to regional grids. Recognizing that ISO tariff provisions governing interconnection can prove overly stringent in practice, from time to time FERC grants waivers to allow developers to advance through the interconnection approval queue without meeting all tariff milestones. Among the criteria considered by FERC in determining whether to approve waiver request is that the waiver be “limited in scope.” In Cassadaga Wind LLC, 150 FERC ¶ 61,182 (March 11, 2015), the Commission found that the developer’s  waiver request did not satisfy that criterion, offering guidance on the meaning of “limited” in that context.

The developer in Cassadaga Wind planned a 126 MW project to be interconnected to the NYISO grid in Chatauqua County, New York. Under the NYISO tariff, a major developer seeking authority to interconnect to the grid is required to proceed through three study processes and meet specified milestones. The first study, Interconnection Feasibility, examines the configuration and local system impacts at a high level. The second is the Interconnection System Reliability Impact Study, which evaluates the project’s impact on transfer capability and system reliability in more detail. The third is the Class Year Study, which evaluates the cumulative impact of a group of projects that have met specified Class Year Study eligibility requirements by the Class Year Start Date. 150 FERC ¶ 61,182 at P 3. Because failing to be included in a Class Year Study can result in a significant delay in interconnection, the process for being allowed to participate in those Studies is important to developers.

The tariff allows a project to enter a Class Year Study when it satisfies two developmental milestones: (1) NYISO’s approval of an Interconnection System Reliability Study; and (2) a regulatory milestone, which requires a determination that the developer has submitted a complete application for approval with the New York Board on Electric Generation Siting and the Environment (Siting Board).

The developer in Cassadaga satisfied the first milestone in time to participate in the 2015 Class Year Study. For reasons it claimed were outside of its control, it could not meet the second criterion in time for that Study. Concerned over possible harm to the viability of its project if it had to await participation in a later Class Year, it asked FERC to waive the second milestone and allow it to participate in the 2015 Class Year Study so long as it satisfied the regulatory milestone within an additional 13 months. FERC’s denial of that request sheds light on what FERC considers necessary to establish that a waiver is “limited in scope.”

In support of its waiver request, the developer attempted to demonstrate that New York’s pre-requisites for applying for siting authority were especially onerous and time-consuming. It noted that those prerequisites only came into being with the promulgation by the Siting Board of regulations in July 2012, just two days before the developer’s project initially entered the NYISO transmission queue. Moreover, those regulations require developers to file a Public Involvement Program Plan at least 150 days prior to filing a Preliminary Scoping Statement, which in turn must be filed at least 90 days prior to the filing of an application. The Siting Board then has 60 days to review and determine whether or not the application is complete. Thus, a minimum of 10 months must pass from the time a Program Plan is filed before an application can be deemed complete. However, the developer argued that greater than 12 months is a more reasonable time frame from the Program Plan filing to a complete application because delays are likely in the Program Plan implementation and Scoping Statement phase, as well as the likelihood that the Siting Board will take more than 60 days to deem the application complete. In addition, as yet no developer had successfully navigated the full pre-application process, let alone filed an application deemed to be complete.

As to the harm from being required to await participation in a subsequent Class Year Study, the developer argued that the delay would likely preclude it from participating in NYSERDA’s 2015 solicitation for renewable energy projects, and that that could be the last of those solicitations.

The Commission has granted requests for waivers of tariffs where (1) the applicant has been unable to comply with the tariff provision at issue in good faith; (2) the waiver is of limited scope; (3) a concrete problem must be remedied; and (4) the waiver does not have undesirable consequences, such as harming third parties. The developer claimed its waiver request met all of those tests, since (1) it had worked diligently to move through the NY siting application steps; (2) it was only requesting an extension of the deadline to have made a complete siting application until March 31, 2016; (3) it faced the concrete problem of missing would might be NYSERDA’s last solicitation for renewable projects; and (4) granting the waiver would allow it to be included in the 2015 Class Year Study before the Study begins and not cause any disruptions to other customers’ study assumptions.

The sole party to object to the request was NYISO. NYISO argued that allowing a delay of 13 months for meeting the regulatory milestone would set a dangerous precedent, and that while the regulations defining the pre-application process for siting approvals in New York was new, the tariff milestone for complete applications to participate in Class Year Studies had been in existence since 2001. It also pointed to a significant risk of harm to third parties if the developer failed to achieve the extended deadline, because that would change a major assumption in the Class Year Study which could significantly delay its completion. In addition, NYISO pointed out that failing to be allowed to participate in the 2015 Class Year Study did not preclude the developer from proceeding to negotiate an interconnection agreement, nor did it necessarily require the developer to postpone starting operation of the plant.

In denying the waiver request, FERC essentially agreed with all of NYISO’s arguments. Of particular interest, however, is its discussion of the developer’s failure to satisfy the requirement that a waiver be of limited scope. FERC held that a delay of 13 months in achieving that milestone was excessive, especially since it was not even certain that the developer could meet the milestone by that time. FERC distinguished its decision to grant a waiver in Air Energy TCI, Inc., 143 FERC ¶ 61,172 (2013) on the ground that the developer in that case had obtained the necessary regulatory approvals only five months after the tariff deadline:

Cassadaga’s waiver request reflects considerable uncertainty as to whether, even with the Commission’s grant of a waiver, it would be eligible to participate in the 2015 Class Year and, therefore, does not appear to be limited in scope. In other circumstances, the Commission has granted tariff waivers for limited periods that would result in the inclusion of a project in the requested Class Year. For instance, in Air Energy, Air Energy TCI, Inc. (TCI) had received the necessary regulatory approvals five months after the deadline for satisfying NYISO’ regulatory milestones. In granting TCI’s waiver request, the Commission found that it was “not granting an open-ended waiver, but rather a limited extension of the time allowed to meet the regulatory milestone.” [citation omitted] However, granting waiver in this instance is complicated by the fact that Cassadaga has not received the necessary regulatory approvals; at this time, Cassadaga has not yet completed even the pre-application requirements for a completed [siting] application.

150 FERC ¶ 61,182 at P 19.

Thus, Cassadaga added some clarity to what constitutes a “limited” waiver of tariff milestones for interconnection. At least insofar as the NYISO Tariff is concerned, a request for a five-month extension of the regulatory milestone satisfies the requirement that a waiver be limited in scope; a request for a 13-month extension, with no certainty that the applicant will meet that deadline, does not.

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