Standardization of Small Generator Interconnection Agreements and Procedures

Issue: Does CREPC need to become involved in FERC’s latest interconnection proposal in either sharing information or offering collective comments?

Background: On August 16, 2002, FERC issued an Advance Notice of Proposed Rulemaking that seeks to establish consistent guidelines for small generator interconnection agreements (SGIAs) and procedures (SGIPs). The rules would apply to facilities up to and including 20 MW and would be applicable to all public utilities that own, operate or control transmission facilities under the Federal Power Act. (On April 24, 2002, FERC issued proposed rules for interconnection of larger generators.)

FERC argues that its proposal endeavors to strike a balance between interconnection procedures and grid impact by incorporating initial comments and existing agreements and procedures accepted in several states. Issues such as price, cost responsibility for fees, interconnection studies, construction, tax treatment and preference for generation type or size are left to the discretion of state and local regulators. Issues that are addressed by the rule include:

• rights and responsibilities of transmission owners and distributed generators;
• expedited interconnection procedures for generators £ 2 MW;
• technical standards for generating equipment and its interconnection;
• transmission owner’s right of access to generation facilities; and
• contract provisions -- liability, indemnification, warranties, severability, termination, choice of law, assignment, integration and dispute resolution.

FERC’s actions on standardizing interconnection agreements and procedures have spawned debate as to how such rules should be implemented. To date, three states have adopted comprehensive distributed generation interconnection standards, while several others are in the process. Some argue that interconnection standardization should be left to the discretion of states. Others hold that the FERC order should operate as a default rule to take effect absent any state regulation on the subject. Still others tout the ANOPR as long overdue and critical to the fledgling industry.

Comments on the ANOPR are due by November 4, 2002. FERC has interconnection web page. NRRI has an extensive site on interconnection standards. including a state-by-state survey of interconnection standardization activity.

NARUC staff has been very involved and issued a September 12 update including three documents comparing FERC’s proposal and NARUC’s model rule.