Federal regulators have rejected a plan by the Southwest Power Pool to let transmission owners decide who will pay for certain reliability equipment, saying the move could unfairly make connecting to the power grid cheaper for the transmission owners' affiliates.

But the Federal Energy Regulatory Commission left the door open for SPP to file a new proposal for mandating the installation of phasor measuring units, or PMUs, at new generator interconnections.

In March, SPP proposed to require PMUs at interconnections for new generators with capacity at or above 50 MW. Under that proposal, the PMU equipment would be installed on the transmission owner's side of the interconnection and would be funded by the interconnection customer unless the transmission owner decided to pay for the installation.

SPP chose the 50-MW threshold to capture a greater percentage of new wind and solar resources. In the past decade, wind has grown from 1% of the generation mix to about 20% of SPP's capacity, spokesman Derek Wingfield said. Solar is poised to follow a similar trend: it represents less than 1% of capacity today, but more than 16 GW of solar projects are in the interconnection queue, Wingfield said.

The proposal at issue was intended to improve system reliability, as PMU measurements allow grid operators to better address problems because they provide more frequent and precise views into the behavior of the grid, SPP said.

In the future, the technology may reveal more transmission capacity to be available than models show, which may enable delivery of more wind energy, according to SPP. And PMUs would enhance insight into the behavior of solar farm inverters, which control output and conversion from direct to alternating current, Wingfield said.

But the wind industry — which has hit record penetration levels in the region, exceeding 60% of total load at times this spring — raised concerns that SPP's plan could end up hiking interconnection costs for new generators such as wind and solar facilities. For instance, the American Wind Energy Association asserted that the proposal could allow transmission owners to exercise market power and force the interconnection customer to fund the installation before signing an interconnection agreement.

FERC on Aug. 6 decided that giving transmission owners the choice of whether to pay for the equipment could be unfair. "A transmission owner's decision to exercise its discretion to fund PMU installations only when its affiliate is the interconnection customer could result in affiliated interconnection customers having lower costs than non-affiliated interconnection customers, which could give the affiliates an undue competitive advantage," the commission said.

SPP also has not explained how the cost of PMU installations would be treated in transmission owners' rates, thereby raising concerns that unaffiliated customers could end up paying for a transmission owner's affiliates' installations through transmission rates, the commission noted. SPP's plan further does not include key details about the costs of PMUs or who would pay for ongoing PMU communication, operation and maintenance, FERC said.

However, SPP could refile its proposal after removing the language allowing transmission owners to fund PMU installations at their discretion, FERC said. Any revised plan also should address how transmission owners will treat PMU installation costs, explain responsibility for ongoing PMU costs and clarify whether a customer could use existing equipment on the generator side of the interconnection, the commission said.

SPP anticipates refiling the proposal, and the FERC order will inform the grid operators' next steps, Wingfield said. (FERC docket ER18-1078)

Kate Winston is a reporter for S&P Global Platts, which, like S&P Global Market Intelligence, is owned by S&P Global Inc.