This post is the second in our ongoing series following the NYISO’s compliance with FERC Order No. 2023. In today’s post, we cover the NYISO’s November 3, 2023 partial compliance filing made with FERC, as well as provide an update on the November 2 Interconnection Issues Task Force (“IITF”) Meeting.

Partial Compliance Filing 
On November 3, the NYISO made a partial compliance filing with FERC to begin to transition to the new cluster study interconnection process established by Order No. 2023 (“Filing”). The Filing is intended to allow the NYISO to wind up its current interconnection process to allow it to devote all resources to the new cluster study process. Specifically, the Filing seeks to eliminate the Detailed Optional Feasibility Study and System Reliability Impact Study (“SRIS”) currently offered by the NYISO as of November 30, 2023 as these studies will no longer be needed in the new interconnection process. For projects that are already in the interconnection queue, the Filing requests the ability for the NYISO to offer them the following options with regard to how to proceed with the studies: 

• Projects that have executed a Detailed or Limited Optional Feasibility Study Scope before December 1, 2023 can elect to: (i) complete the study; (ii) terminate the study and remain in the queue; or (iii) withdraw from the queue. These elections must be made by December 8, 2023 or the NYISO will assume that the developer has elected to terminate the study and remain in the queue. 
• Projects that have a validated interconnection request but no Optional Feasibility Study Scope as of December 1, 2023 can elect to: (i) proceed to a limited Feasibility Study; (ii) remain in the queue with no optional feasibility study; or (iii) withdraw from the queue. This election must be made within 5 business days of the project’s Scoping Meeting.
• Projects with an Operating Committee-approved SRIS Scope before December 1, 2023 can elect to: (i) complete the study; (ii) terminate the study and remain in the queue; or (iii) withdraw from the queue. These elections must be made by December 8, 2023 or the NYISO will assume that the developer has elected to terminate the study and remain in the queue. 

Where developers choose to withdraw from the queue, they will not be subject to any withdrawal penalties. For any project that chooses to terminate its study, the NYISO will perform a cost reconciliation and will refund any unused portion of the study deposit to the developer.

The Filing makes it clear that a developer’s election to proceed with an Optional Feasibility Study or SRIS would only serve the developer’s own informational or business purposes – the completion (or termination) of such studies will not play a role in affording the developer any priority in the new process. When the new interconnection process commences (anticipated Summer 2024), regardless of the election chosen by the developer, all projects in the interconnection queue that are not part of the 2023 Class Year Study process will need to submit new interconnection requests to enter the new cluster study process.

If accepted, the Filing has the potential to impact a significant number of projects.  There are currently 42 projects undergoing an Optional Feasibility Study and another 31 that could potentially satisfy the requirements to commence such study in the next few months. There are approximately 169 projects that are currently undertaking an SRIS and another 129 that could potentially satisfy the existing tariff requirements to commence an SRIS within the next 3 months.

The Filing includes a requested effective date of November 30, 2023, but the NYISO stated in the filing that it intends to begin implementing these changes regardless of whether it receives FERC approval by that date. Comments on the Filing are due November 24.

November 2 IITF Meeting
Last Thursday’s IITF meeting focused heavily on the NYISO’s proposal for the deposits and fees associated with the new interconnection process. Order No. 2023 instituted significantly higher deposit requirements than the current interconnection processes in an effort to weed out speculative projects to help improve queue efficiency. To align with the requirements of Order No. 2023, the NYISO currently plans to propose the following fees and deposits in its full compliance filing:

At the time of the interconnection request, developers will be subject to a: (i) nonrefundable $10,000 application fee; and (ii) one-time study deposit based on the size of the proposed facility.  This deposit will be between $100,000 and $250,000 (but will be only $50,000 for projects seeking CRIS-only). Importantly, the NYISO will not be drawing down on the study deposit as it completes the studies but instead will be invoicing developers monthly and will only call on the study deposit where developers fail to pay their monthly invoices or if a developer withdraws its project from the queue. The study deposit will be refunded in full at the end of Phase 2 Cluster Study Process where a developer accepts its cost allocations. Where a developer withdraws, the part of the study deposit not forfeited as a withdrawal penalty will be returned (discussed further, below).

Order No. 2023 also eliminated the RTOs and ISOs’ ability to request non-financial commercial readiness demonstrations (such as the NYISO’s current regulatory milestone requirement). Instead, developers will now be required to post commercial readiness deposits at various phases in the interconnection process (for clarity, the deposits will be cumulative, not additive). These deposits include: (i) $4,000/MW to enter Phase 1; (ii) the greater of the Phase 1 Deposit and 20% of the cost estimates determined in Phase 1 to enter Phase 2; and (iii) at the end of Phase 2, 100% of the cost estimates determined during Phase 1 and Phase 2.  

The NYISO also provided an update on its plans for withdrawal penalties, which are currently proposed to be structured as follows: 

• For those projects that withdraw at or before the decision point to enter Phase 1 of the Cluster Study: 25% of Study Deposit. 
• Withdrawal at or before the decision point at the conclusion of Phase 1: 50% of the Study Deposit and 10% of the Phase 1 Deposit. 
• Withdrawal at or before the decision point at the end of Phase 2: 100% of the Study Deposit and 20% of the Phase 2 Deposit.

The recovered withdrawal penalties will be used to offset the study costs for the projects that remain in the cluster, and if additional withdrawal penalty dollars are available, they it will be used to offset Rate Schedule 1 costs.

The NYISO will continue discussion of its anticipated full compliance filing, which is now due April 3, 2023, at its next IITF meeting on November 14.