Dive Brief:
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The Federal Energy Regulatory Commission on Monday approved the California Independent System Operator’s plan to reform its generator interconnection process, including a provision that critics say gives utilities a discriminatory role in determining which projects move forward into review clusters.
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CAISO’s plan will help “ensure that interconnection customers are able to interconnect to the transmission system in a reliable, efficient, transparent, and timely manner,” FERC said in its decision.
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“We appreciate the ruling by FERC and what it will mean for more efficient planning and onboarding of resources and we are committed to moving forward in partnership with our many stakeholders to effectively and transparently implement the reforms,” Elliot Mainzer, CAISO president and CEO, said in a press release Wednesday. “As the order requires, we will also closely monitor how well they are working.”
Dive Insight:
After conducting a stakeholder process to develop the interconnection plan, CAISO on Aug. 1 asked FERC to approve its proposed approach, which aims to clear out a massive queue by favoring projects that appear to be most likely to succeed.
When CAISO started its interconnection reform stakeholder process in May 2023, the grid operator had 185 GW in its active interconnection queue, it said in its FERC application. It has another 347 GW from “Cluster 15,” its most recent annual interconnection window, which is on hold.
Under CAISO’s approved proposal, the grid operator will determine what zones in the state have available transmission capacity to handle new interconnections. CAISO will also designate areas with less than 50 MW of available transmission capacity as “merchant” zones. The owners of projects sited in merchant zones will have to pay for any upgrades that are needed.
The plan was fully supported by Pacific Gas and Electric, Southern California Edison, the California Community Choice Association and the California Public Utilities Commission.
Groups such as the American Clean Power Association, California Energy Storage Alliance, the Electric Power Supply Association, Large-Scale Solar Association and the Solar Energy Industries Association supported most of the proposal. However, these groups and others like Vistra balked at a commercial interest criteria that CAISO will use when determining whether a project should move into the interconnection study phase.
When there isn’t enough transmission capacity to accommodate all interconnection requests in a deliverable zone, CAISO will use a weighted scoring system that emphasizes project readiness and competition for projects to determine which projects should advance.
The scoring system assigns points in three categories: project viability (up to 35 points), system need (up to 35 points) and commercial interest (up to 30 points). CAISO argued that it balanced the weights of the categories so that commercial interest aligns with procurement directed by state and local regulatory authorities, FERC said.
In its decision, FERC rejected arguments by Vistra, Calpine and the trade groups that CAISO’s plan gave self-interested utilities too much discretion by having them indicate their interest in specific projects, which could let them discriminate in favor of their affiliates.
“We find that CAISO’s proposal to account for commercial interest in its evaluation of interconnection requests will help enable CAISO to prioritize the study of the most viable and needed interconnection requests under Cluster Study Criteria,” FERC said.
FERC said the proposal strikes a “reasonable balance” of providing load-serving entities, which must comply with resource adequacy mandates, the ability to allocate commercial interest points to affiliate projects, while limiting those allocations.
“We find persuasive CAISO’s observation that interconnection requests from LSEs and their affiliates have been rare in the CAISO region,” FERC said. “Furthermore, as CAISO notes, transmission-owning LSEs have transferred operational control to CAISO, and there has been no evidence of LSE abuse of affiliated generation in CAISO.”
FERC approved CAISO’s plan to apply the zonal process to its pending Cluster 15, noting that the grid operator plans to file additional tariff revisions to set more granular processing timelines for Cluster 16 and future clusters.
The interconnection reforms are part of an agreement among CAISO, the PUC and the California Energy Commission that aims to better coordinate resource and transmission planning, interconnection processes and resource procurement.
CAISO is working with stakeholders on additional reforms to its interconnection rules. Also, FERC is reviewing the grid operator’s plan for complying with the agency’s Order 2023, which set requirements for generator interconnection processes across the United States.
