The proposal won a $464.5 million award from the U.S. Department of Energy and uses a novel portfolio-and-subscription approach, which could be used in other regions.
Note: Duane Morris was counsel for Midcontinent Independent System Operator Inc. in this matter. The views or opinions expressed herein do not necessarily reflect those of any Duane Morris client.
On November 13, 2024, the Federal Energy Regulatory Commission (FERC) accepted an unprecedented proposal by two regional transmission grid operators, Midcontinent Independent System Operator Inc. (MISO) and Southwest Power Pool Inc. (SPP), to expedite the interconnection of new generation along their common border. The proposal, known as the Joint Targeted Interconnection Queue (JTIQ), creates a framework for the approval of a portfolio of transmission system upgrades valued at $1.7 billion, which are expected to allow MISO and SPP to interconnect between 28 and 53 gigawatts of new generation capacity. The proposal won a $464.5 million award from the U.S. Department of Energy and uses a novel portfolio-and-subscription approach, which could be used in other regions.
Under the current FERC policy, as set forth in Order Nos. 2003 and 2023, transmission network upgrades required to interconnect new generation facilities are determined by transmission providers, such as MISO and SPP, on an incremental basis, following a lengthy interconnection study process. That process requires studies both in the “host” region, i.e., where a generation facility would be located, and in neighboring “affected system” regions, i.e., where the impacts from the proposed interconnection are expected to occur. This dual study and coordination process has resulted in significant delays in many regions, particularly due to large volumes of renewable generation interconnection requests. Although FERC and individual transmission providers implemented many reforms to streamline the process, generator interconnection requests in almost all major regions often must wait several years before necessary transmission upgrades and their costs can be determined.
JTIQ is designed to solve these issues by using a proactive approach to determine and construct necessary upgrades upfront and on a portfolio basis by using a subscription methodology for participating generators. As a result, construction could begin immediately following the issuance of requisite approvals, and participating generators would have necessary cost certainty upfront. This approach contrasts with the current, incremental generation interconnection processes, which often result in long queues, lingering cost uncertainty and high network upgrade costs.
FERC approved the JTIQ proposal, finding that it is just, reasonable and not unduly discriminatory or preferential. FERC further concluded the proposal accomplishes the purposes of FERC’s final rules on generator interconnection, including Order Nos. 2003 and 2023, by helping to ensure that customers are able to interconnect to the transmission system in a reliable, efficient, transparent and timely manner. FERC rejected objections from various parties that argued that the cost allocation methodology proposed by MISO and SPP was not consistent with cost causation and also challenged a number of discrete aspects of the proposed JTIQ procedures.
By accepting the JTIQ proposal, FERC signaled its openness to similar alternative proposals in other regions that experience interconnection queue delays or inefficient study processes. Such alternative proposals would need to be justified based on unique facts and needs that may exist in each region and would have to meet all applicable legal standards under the Federal Power Act and Order No. 2023 for deviation from the FERC-approved standard generator interconnection procedures. The approval indicates, however, that FERC takes seriously its commitment in Order No. 2023 not to stifle innovative approaches and sends an encouraging signal to interconnection customers, transmission providers, state regulators and other industry participants.
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