FERC Grants Limited Waiver to the CAISO to Immediately Interconnect Gas Turbines

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In the wake of Governor Newsom’s July 30, 2021 Emergency Proclamation intended to mitigate the strain on the California energy grid, the California Department of Water Resources (CDWR) and the California Energy Commission have been reaching out to generation owners that could accommodate the addition of 30 MW gas turbines generators, an effort now referred to as the State Power Augmentation Project.  So far, two sites have been found:  Greenleaf 1 in Yuba City and Roseville Energy Park.  Each site will accommodate two turbines.  The units were supposed to come online in mid-September.

The two turbines at Roseville Energy Park will be interconnected through the Balancing Authority of Northern California and will participate in the California ISO’s (CAISO) energy imbalance market.  The two turbines at Greenleaf 1 will interconnect to the CAISO.  Under current tariff provisions, the CAISO can interconnect 50 MWs of the 60 MW total.  The Greenleaf 1 site has cogeneration facilities that are currently mothballed but still retain existing interconnection capacity of 49.2 MWs.  Because both the cogeneration facilities and the new gas turbines are gas-fired, there will be no change to the electrical characteristics, and the CAISO can therefore interconnect the two turbines under the repowering provisions of the tariff, but only up to 49.2 MWs.

Allowing the final 10.8 MWs of generation to interconnect without going through the lengthy interconnection process, however, required a limited waiver of Section 25.1 of the CAISO tariff.  The CAISO filed a petition for a temporary tariff waiver at the Federal Energy Regulatory Commission (FERC) on August 24, asking for a shortened comment period and requesting the FERC act so that the units could be interconnected by September 15, 2021.  Under the CAISO tariff, the interconnection rights granted by the limited waiver would sunset after three years.  The waiver petition may be found here.

Comments on the waiver petition were filed by Pacific Gas and Electric Company (PG&E); Vistra Corporation and Dynegy Marketing and Trade, LLC (collectively Vistra); and CDWR.  Both PG&E and CDWR supported the filing.  Vistra asserted that granting the petition would effectively create a new process for interconnecting emergency generation, and that FERC had previously made it clear that a waiver could not create a new process not contained in the existing tariff.

On September 15, 2021, FERC granted the limited waiver for a three-year term commencing on the date the order was issued (Order).  The Order may be found here.  The Order concludes that granting the waiver would not create a new interconnection process, as Vistra contended, but instead merely allowed for the existing process to be expedited to allow temporary interconnection of two generating units. The Order also emphasized that it “is limited to the facts in the record before us regarding these two specified generating units and is not a blanket waiver that would apply to additional projects.”

Commissioner Danly filed a dissent, arguing that the waiver was retroactive and therefore illegal.  Commissioner Danly also asserted that the waiver would damage other entities seeking interconnection, created a new emergency loophole in the CAISO’s interconnection process, and was overbroad in scope as it waived nearly the entire interconnection process.  Commissioner Danly contended that instead of granting the waiver, FERC should have found, pursuant to Section 206 of the Federal Power Act, that the CAISO interconnection process is unjust and unreasonable because it does not have emergency procedures, and order the CAISO to file those procedures immediately.  Commissioner Danly noted that he would also initiate a further Section 206 investigation concerning why the CAISO’s markets have failed to procure sufficient generation to meet reliability needs.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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