FERC accepts MISO grid reforms but rejects cap on interconnection studies

Federal regulators on Jan. 19 partially accepted a Midcontinent ISO plan to manage a huge increase in grid interconnection requests but rejected a proposed cap on projects in MISO's annual interconnection study clusters.

At issue is a pair of proposals MISO filed with the Federal Energy Regulatory Commission in response to a sweeping rule the agency issued in July 2023 aimed at clearing a nationwide backlog of clean energy projects.

One of MISO's compliance filings (ER24-341) would have capped the amount of generation capacity that can be included in interconnection study clusters, with limited exceptions for certain projects. In proposing the cap, MISO noted that interconnection requests in the 15-state region have increased by about 450% since its 2017 study cycle.

However, the proposed cap drew fierce pushback from clean energy groups, who argued that it could force developers into a "mad dash" to submit interconnection requests for unready projects to avoid getting "locked out" of study clusters.

FERC rejects proposed cap on study clusters

In its Jan. 19 order, the commission outlined three main concerns with MISO's proposed cap.

For starters, FERC agreed with protesters that MISO's proposed exceptions to the cap, such as those for state-backed projects, could "diminish or erase any reductions in queue size, significantly diluting or erasing the efficiency, transparency, and other benefits MISO contends will result from imposing a cap."

FERC also found that the proposed cap on study cycles would be inconsistent with the principles set out in Order 888, a landmark rule requiring transmission owners to provide open access to their facilities.

In addition, FERC determined that MISO failed to support a proposed cap exemption for existing generators seeking to increase a resource's capacity.

FERC acknowledged that MISO's current tariff includes an expedited interconnection process for such facilities. But the commission was unpersuaded by MISO's argument that an exception from the cap is warranted because replacement generation facilities are "highly certain" to achieve commercial operation.

"In proposing a new allowance for such facilities in the instant proposal — exemption from the cap — MISO must demonstrate that the allowance does not result in undue discrimination," FERC reasoned. "MISO has failed to do so."

Commissioner Mark Christie issued a partial dissent to the Jan. 19 order, explaining that he would have accepted the proposed cap.

"Faced with a tsunami of interconnection requests from generation developers — many speculative and which will never be built — MISO seeks to ameliorate its interconnection studies process in the near term with a cap on applications," Christie said. "A cap is admittedly a blunt instrument, but it is also a logical one if the goal is to enable MISO to focus its undeniably limited resources to maintain an orderly and efficient interconnection process."

Financial milestones, automatic withdrawal penalties

FERC largely accepted a separate MISO filing (ER24-340) aimed at weeding out speculative projects by increasing the financial deposits developers must pay to have their projects included in MISO's annual interconnection study clusters. The proposal would also impose automatic penalties on developers who withdraw from MISO's interconnection queue.

"MISO has demonstrated that the existing [interconnection] requirements are not stringent enough to deter interconnection customers from submitting speculative interconnection requests into the queue, nor strong enough to prompt unready projects to exit the queue at the earliest opportunity, as underscored by the volume of submitted interconnection requests and withdrawals that MISO has experienced in recent queue cycles," FERC said.

In accepting the automatic withdrawal penalties, FERC noted that more than 70% of projects withdrawn in MISO between 2017 and 2022 were not subject to penalties.

"These statistics indicate that, under the current MISO [interconnection process], the consequences for withdrawal are not sufficient to discourage the entry of speculative interconnection requests and encourage the early withdrawal of non-viable projects," FERC said.

The commission further found that the automatic withdrawal penalties are "tied to the goal of expediting the development of generation and ensuring just and reasonable rates (by mitigating the harms associated with withdrawals)."

FERC accepted the proposed reforms effective Jan. 22, noting that MISO is free to submit a new proposed cap on study clusters under Section 205 of the Federal Power Act.

"Any future section 205 filing to propose a study cycle cap must demonstrate how the cap ensures that MISO can study new generation seeking to interconnect in a manner that appropriately accounts for its future resource adequacy needs," FERC said.