In Docket No. ER22-2968, on September 30, 2022, as supplemented on February 14, 2023, SPP submitted proposed revisions to Attachment V (Generator Interconnection Procedures (GIP)) of its OATT to implement a new pro forma Facilities Service Agreement (FSA). In SPP, an interconnection customer is responsible for 100% of the costs of network upgrades needed to accommodate its interconnection request. Article 11.4 in SPP’s pro forma GIA provides two options for funding the costs of network upgrades for generator interconnection. Under the first option, the interconnection customer pays for the network upgrade costs upfront during construction (Generator Upfront Funding). Under the second option, the transmission owner can unilaterally elect to provide the upfront funding for the capital cost of the network upgrades (Transmission Owner Initial Funding). SPP’s OATT did not contain provisions pertaining to how an interconnection customer would reimburse the transmission owner under the second option.
In the pro forma FSA, SPP proposed that the interconnection customer reimburse the transmission owner for a return on and of the capital costs of the network upgrades and system protection facilities needed for the interconnection customer’s interconnection service. Specifically, SPP proposes a default 20-year term over which the interconnection customer reimburses the transmission owner through a monthly network upgrade charge. The network upgrade charge is calculated using a formula rate that is based on the FSA’s term and the transmission owner’s Attachment H formula rate using data from the previous calendar year. Additionally, the pro forma FSA requires that the interconnection customer post security in the amount of the initial capital cost, which may be reduced pro rata over the FSA’s term. SPP stated that it also proposed revisions to its GIP and its pro forma GIA to effectuate certain provisions related to the pro forma FSA and the transmission owner’s election of Transmission Owner Initial Funding.
FERC found that the nonbinding notice by the transmission owner indicating it intends to fund network upgrades could lead to greater uncertainty for interconnection customers as the transmission owner could later change its election which could cause risk and uncertainty and delays for interconnection customers and could lead to late-stage withdrawals and attendant delays in administering the generator interconnection queue. SPP contended that its filing and nonbinding transmission owner elections is substantially similar to generator interconnection procedures the Commission has accepted in MISO. FERC disagreed, as MISO proposed, and FERC accepted, revisions to its tariff to add deadlines by which transmission owners must make both non-binding and binding elections of Transmission Owner Initial Funding prior to the start of the GIA negotiation phase. The SPP proposal included only the non-binding indication provision during the first phase of SPP’s DISIS process. FERC rejected the SPP OATT changes. Therefore, though the SPP OATT provides for transmission owner funding of network upgrades, it still lacks provisions pertaining to how an interconnection customer would reimburse the transmission owner.
Dr. Paul Dumais
CEO of Dumais Consulting with expertise in FERC regulatory matters, including transmission formula rates, reactive power and more.