On Thursday, May 9, 2024, the California Independent System Operator (CAISO) issued an addendum to its Interconnection Process Enhancements (IPE) Track 2 Final Proposal, and issued a revised version of that addendum on May 17.  Track 2 focuses on modifications to the interconnection and queue management processes to address the substantial interconnection request volumes in the CAISO balancing authority area.  CAISO’s Track 2 Final Proposal proposes to adopt a zonal approach that prioritizes project interconnection in areas with existing or planned transmission capacity, to cap the number of projects permitted to proceed into the study process at 150% of the available and planned transmission capacity in specific zones, and to adopt scoring criteria for eligibility and prioritization in the interconnection study process.^[1]

The addendum does not make substantial revisions to the Final Proposal, but rather offers responses to stakeholder comments and minor clarifications, including clarifications around implementation of the zonal approach and how available transmission capacity will be assessed for each cluster; the scoring process and recommendations to load-serving entities (LSEs) on the LSE allocation process; and rationale for the Final Proposal’s treatment of Energy Only resources.  On May 16, 2024, CAISO held a public stakeholder workshop to discuss the IPE Track 2 zonal approach and this addendum.

CAISO states that it will provide additional flexibility in the timeline for Cluster 15 for the scoring process and the first LSE allocation process.  For Cluster 15 only, CAISO proposes to allow LSEs 21 calendar days to submit their LSE allocations to CAISO.  The Track 2 Final Proposal otherwise requires LSEs to provide their elections 10 calendar days after the close of the interconnection request window.  CAISO states that it does not intend its proposal to dictate procurement rules, and instead provides recommendations and expectations regarding to the LSE allocation process.  For instance, CAISO encourages LSEs to conduct Requests for Information or Requests for Offers using open and fair competitive procurement processes and communicate clear evaluation criteria. 

CAISO also confirmed that in order to receive points in the “system need” category for energy storage in local capacity areas, there must be sufficient capacity available in the local capacity area to charge proposed energy storage facilities without needed additional transmission. The ability for a battery to charge will be based on the charging analysis published in the annual local capacity technical study, after considering all existing, and in-development storage in the most recent California Public Utilities Commission (CPUC) portfolio provided for CAISO’s transmission planning process. CAISO also clarified that long lead-time projects in zones with existing transmission capacity will be eligible for system need points, in addition to long lead-time projects in zones with approved transmission.

Lastly, CAISO provides a further explanation for its proposed treatment of Energy Only interconnection requests.  Pursuant to the Final Proposal, Energy Only projects have two methods to interconnect, a reimbursement of the cost of reliability network upgrades option that is only available when CPUC’s integrated resource plan base portfolio has identified the need for Energy Only resources in the zone, and the non-reimbursement option. CAISO acknowledges that the proposal provides a disincentive for Energy Only projects in certain areas due to the non-reimbursement of reliability network upgrades but maintains that this treatment is just and reasonable. CAISO offers support for its proposal based on the “historical disinterest in Energy Only requests, the wide-ranging availability of zones calling for Energy Only capacity in the CPUC portfolio, and the current CPUC procurement orders requiring procurement of resource adequacy eligible resources.”  CAISO contends that the proposal is aligned with the foundational framework improvements being coordinated between the CPUC, California Energy Commission, and CAISO, and that the proposal aligns with resource planning portfolios while providing open access to the CAISO-controlled grid. 

The addendum was released just over a week ahead of CAISO’s originally scheduled vote on the Final Proposal at the Board of Governors Meeting on May 23, 2024.  However, CAISO has since revised this schedule. CAISO staff will provide a briefing on the IPE Track 2 Final Proposal at the May 23, 2024, CAISO Board of Governor meeting. The IPE Track 2 Final Proposal will be a decisional item at the special Board session on June 12, 2024.  CAISO has posted an updated 2024 meeting schedule to reflect the June 12, 2024, general session virtual meeting.  The general public has the opportunity to comment on items before the ISO Board of Governors, up to one week prior to meetings.  Further information is available here.

^[1] For a summary of CAISO’s Final Proposal please see: CAISO Releases Interconnection Process Enhancements Final Proposal | Renewable + Law (lawofrenewableenergy.com). We have also provided a detailed analysis of CAISO’s proposed scoring criteria: Stakeholders Express Concern That CAISO’s Interconnection Scoring Criteria May Prioritize Load-Serving Entity Selection | Renewable + Law (lawofrenewableenergy.com).