FERC approved new changes to the CAISO tariff on February 19, 2019, with a retroactive effective date of November 27, 2018, that will impact projects in the CAISO’s generator interconnection queue. These changes are the result of a several month stakeholder initiative to enhance the interconnection process and follow a history of reforms intended to promote efficiency in the CAISO’s interconnection procedures in light of changes in the generation development marketplace.

Most significantly, the CAISO’s tariff changes include revisions to the Transmission Plan (TP) Deliverability allocation process in order to award deliverability to customers most likely to proceed towards construction. The CAISO will allocate in the following order: (1) customers with an executed power purchase agreement or customers that are load serving entities serving their own load, (2) customers actively negotiating a power purchase agreement or short listed in an RFO, (3) interconnection customers electing to proceed without a power purchase agreement.  This is a departure from the prior provisions that allocated deliverability based on a system that equally weighed three criteria related to financing status: being balance-sheet financed, having a regulator-approved power purchase agreement, and proceeding without a power purchase agreement. The CAISO believes this change better reflects the likelihood of proceeding to construction because projects without a power purchase agreement, in the CAISO’s experience, delay putting construction funds at risk and nearly always withdraw if they do not secure a power purchase agreement.  The CAISO has also changed to a similar priority system for allocating any available TP Deliverability in the Annual Full Capacity Deliverability Option process.

Other changes that will impact potential and existing interconnection customers include:

• Allowing CAISO to remove network upgrades that are no longer needed from interconnection customers’ financial security postings, even before CAISO issues the next study results;
• Requiring interconnection customers to provide copies of their power purchase agreements when demonstrating commercial viability;
• Eliminating the criteria required of withdrawing interconnection customers in order to recover their refundable portion of financial security, which should result in more timely refunds;
• Aligning the deposits required for customer-requested repowering studies and serial re-studies with current study costs by increasing deposits from $10,000 to $50,000;
• Prohibiting fuel-type modifications for interconnection customers that have remained in the interconnection queue beyond the anticipated limits of seven years for cluster process or ten years for serial process;
• Applying the commercial viability criteria to all requests for modifications beyond the anticipated tariff timelines;
• Requiring projects in the queue beyond the anticipated tariff timelines to have a regulator-approved power purchase agreement to modify their project and retain deliverability (removing the balance-sheet financed option) – this change will not apply retroactively;
• Allowing interconnection customers to convert to energy only deliverability status at any time, so long as costs are not shifted to other interconnection customers or transmission owners.

Changes also include revisions to suspension notification provisions to include a good faith estimate of anticipated time of suspension, adding project names to the CAISO’s public interconnection queue, and embedding the generator interconnection study process agreement in the interconnection request. Additionally, the CAISO has added a simple provision clarifying that interconnection customers must go through the new resource implementation process prior to synchronization and a clarification that interconnection customers that have not achieved commercial operation are subject to a material modification assessment for proposed changes, whereas online generators may modify their projects so long as they do not increase their capacity nor change electrical characteristics in a way that threatens reliability.

The CAISO has filed additional tariff changes which they have requested to be approved before the April 1, 2019 opening of the interconnection request window. These changes enumerate specific requirements for interconnection requests to be considered complete and valid. A third set of enhancements was approved by the Board of Governors earlier this month but have not yet been filed with FERC. These changes include clarifications to network upgrade cost responsibilities and framework.