[co-author: Ben Duwve]
On June 2, 2023, FERC accepted in part and rejected in part Public Service Company of Colorado’s (“PSCo”) proposed revisions to its Large Generator Interconnection Procedures (“LGIP”) and Large Generator Interconnection Agreement (“LGIA”). In largely accepting PSCo’s proposed revisions, FERC found that the reforms would either strengthen the ability of PSCo to process generator interconnection requests or provide general improvements to existing processes.
Among the various interconnection reforms proposed, PSCo proposed to replace the option for developers to pay a security payment in lieu of a commercial readiness demonstration option with a generation deployment readiness option. PSCo explained that its current tariff does not require projects to demonstrate readiness to enter or progress through the queue because it provides for the option of paying additional security in lieu of making a readiness demonstration. To reduce the number of projects that are less likely to achieve commercial operation to be studied with equal or higher priority than projects that are much more likely to reach commercial operation, PSCo proposed the generation deployment readiness option, which would require developers to have plans to “(1) secure permits; (2) plan, design, and equip the facility; and (3) finance the facility.” The generation deployment readiness option would also create milestone requirements such as plans for equipment procurement and design drawings. FERC approved a modified version of PSCo’s proposal following a deficiency response, in which, in addition to adopting the generation deployment readiness option, PSCo would maintain the security in lieu of a commercial readiness demonstration option but with a higher security amount of $7.5 million.
PSCo also proposed to raise withdrawal penalties and security amounts to a flat $5 million for interconnection customers who have executed an LGIA and opt for a commercial readiness milestone option instead of the generation deployment option. PSCo explained that the current withdrawal and security requirements are too low to ensure that only ready projects execute an LGIA, and that the withdrawal penalty would not apply to projects which fail because of changes in applicable laws or regulations. FERC accepted the proposed revisions, finding them a “reasonable deterrent to interconnection customers with speculative projects at the LGIA stage.”
PSCo also proposed revisions to its transition procedures to facilitate the implementation of its proposed interconnection reforms, and includes a generation deployment option to demonstrate readiness, increasing potential withdrawal penalties for transitional projects to $5 million, and waiving withdrawal penalties if a project withdraws within 30 days of the effective date of PSCo’s proposed tariff revisions. PSCo stated that without a transition process, studying existing interconnection requests could significantly delay using the new cluster study process and commercial readiness requirements. FERC approved PSCo’s revised transition procedures but directed PSCo to modify its transition window to 120 days in a compliance filing because it may have implications on “existing queue holders’ ability to participate in PSCo’s upcoming resource solicitation under their existing queue positions.”
PSCo also proposed, and FERC accepted, other interconnection reforms relating to the initiation of a resource solicitation cluster, provisional interconnection studies, affiliate contracts, construction sequencing, and other administrative tariff revisions aimed at more clearly outlining PSCo’s interconnection procedures for customers.
FERC Commissioner Allison Clements concurred in the decision to approve PSCo’s alternative proposal regarding increased withdrawal penalties and security requirements but wrote separately to highlight the lack of proposed LGIP language addressing the distribution of the withdrawal penalty and to suggest that further changes may therefore be appropriate.
A copy of FERC’s order can be found here.
