On September 9, the Federal Energy Regulatory Commission (Commission or FERC) issued an electric industry order that reinforces the Commission’s policy regarding the security provisions of Generator Interconnection Agreements (GIA) as applied in the self-built generation context. In Duke Energy Indiana, LLC, 156 FERC ¶ 61,166 (2016), the Commission held that if the Transmission Provider/Transmission Owner and Interconnection Customer are one and the same legal entity, the relevant parties should obtain a waiver from the Commission and file a non-conforming GIA if the Transmission Provider/Transmission Owner is not going to require that the Interconnection Customer provide security to the Transmission Provider/Transmission Owner.
The Commission’s pro forma Large Generator Interconnection Agreement (LGIA) requires an Interconnection Customer to post security under Section 11.5 at least thirty calendar days prior to the commencement of the procurement, installation, or construction of a discrete portion of a Transmission Provider’s Interconnection Facilities, Network Upgrades, or Distribution Upgrades. (Section 6.3 of the pro forma small generator interconnection agreement (SGIA) also includes a security requirement.) Most ISO/RTO pro forma GIAs similarly include security requirements, for the benefit of the Transmission Owner. Commission policy, set forth in Pac. Gas and Elec. Co., 128 FERC ¶ 61,175 (2009), allows Interconnection Customers to obtain waivers of security obligations otherwise contained in pro forma GIAs where the Transmission Provider or Transmission Owner and the Interconnection Customer are one and the same legal entity.
What the recent Duke Indiana order reinforces is that unless the Transmission Provider’s pro forma GIA already allows for a waiver of security, a requirement exists to submit a request for waiver and file a non-conforming GIA that reflects the waiver. The MISO-suggested approach described in the Duke Indiana order – to memorialize the security even if “no actual fund transfer will take place” – was effectively rejected by the Commission.
Transmission Providers that self-build generation should consider amending their pro forma GIAs to permit waiver of security provisions whenever they are also the Interconnection Customer. Transmission Owners that self-build should consider asking their ISO/RTO to amend their pro forma GIA(s) to avoid repeated requests for waivers. The Commission has approved this “blanket” waiver approach.