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FERC Finds Large Load Large Load Rules Inadequate
On June 18th the Federal Energy Regulatory Commission (FERC) issued six separate show cause orders finding that the grid operator’s large load rules are not adequate.
The six RTOs and ISOs include PJM, Interconnection, LLC (PJM); Midcontinent Independent System Operator, Inc. (MISO); Southwest Power Pool, Inc. (SPP); California Independent System Operator Corporation (CAISO); ISO New England Inc. (ISO-NE); and New York Independent System Operator, Inc. (NYISO).
In a press release FERC Chairman Laura Swett states in a concurring statement with the six orders that “[w]e take historic action to push our country’s electric markets and economy into the future — a future of fair cost allocation, unprecedented transparency for the American ratepayer, respect for states’ rights, efficient markets and speed to power.”
“FERC’s action focuses on the unique operational profiles of large energy users, including those co-located with their own generation, and on the distinct challenges each regional grid operator faces in meeting soaring demand from the proliferation of large loads. Because the six grid operators are unique in their individual advancement toward large load innovation and structure, market design, stakeholder composition and geography, the Commission’s orders recognize that a one-size-fits-all solution is not the current most efficient solution for integrating large, energy-intensive loads onto the nation’s electric grid.”
FERC identifies five areas of needed reform
Under the orders, each RTO/ISO, and its transmission owners have 60 days to either justify why their current tariffs remain just and reasonable without provisions tailored to large loads, or to file tariff changes that address the issues the Commission identified. Each tailored order tees up five categories of reform for the grid operators to address:
- Developing efficient transmission service application and study processes, including consideration of alternative transmission technologies
- Preventing cost shifting and requiring transparency into transmission costs
- Accommodating co-location agreements and behind-the-meter generation
- Providing new transmission services for flexible large loads
- Developing a process to study generating facilities that serve electrically proximate large loads and co-located loads
FERC rejects a “one-size-fits all” approach
FERC directed the RTOs and ISOs to develop their own data center interconnection rules that can best meet their specific needs.
Within 30 days, each grid operator and its transmission owners must submit a detailed informational report describing how the grid operator intends to ensure that adequate generation will be available to serve existing and new large loads.
FERC acknowledges the state’s role in large load interconnection decisions
A reoccurring theme echoed from state regulators when DOE first ordered FERC to develop large load interconnection rules was that FERC must recognize the dual jurisdictional role over these matters.
FERC said, “[w]e recognize that states will continue to regulate: (1) the specific terms of retail sales to large load; (2) which entities may make retail sales within their borders, including which entities are legally permitted to provide electricity to retail large load customers; and (3) any siting decisions and construction associated with the large load project,” FERC said in its PJM order. “Nothing in this order is intended to intrude upon state authority over retail service to large loads.”
Large load customers should bear the risk and costs of transmission service
FERC raised the lack of transparency as to how RTOs and ISOs determine network upgrades and related cost assignments.
In a concurring statement, FERC Commissioner David Rosner noted that RTOs/ISOs should have “cost recovery agreements” to ensure large loads pay the associated costs to serve them.
