Federal Energy Regulatory Commission Large Generator Interconnection Final Rule RM July 23, 2003

Federal Energy Regulatory Commission 2 Final Rule Requires public utilities to amend their Open Access Transmission Tariff to include standard interconnection procedures and a standard interconnection agreement for generators larger than 20 MW. Standardizes the scope of each study, deposit amount, time of completion of each study, and access to study data.

Federal Energy Regulatory Commission 3 Purpose of Final Rule Reduce overall cost of electricity to customers, including the cost of renewable energy Reduce interconnection time and costs Prevent undue discrimination in interconnections Increase energy infrastructure

Federal Energy Regulatory Commission 4 Purpose of Final Rule (cont’d) Ease entry for competitors while promoting more efficient siting decisions Clarify pricing of transmission enhancements for interconnections Preserve reliability of the transmission system

Federal Energy Regulatory Commission 5 The Rulemaking Process ANOPR issued October 2001 initiating a stakeholder negotiation process Consensus document filed January 2002 NOPR issued April 2002 largely incorporating product of stakeholder negotiation process More than 170 entities filed comments

Federal Energy Regulatory Commission 6 The Rulemaking Process (cont’d) Small generator proponents requested separate treatment Commission issued a separate small generator ANOPR August 2002 applicable to generators up to 20 MW NARUC and state views reflected in much of both rulemakings

Federal Energy Regulatory Commission 7 Advantages to Generators under the Final Rule They can interconnect without requesting transmission service Access to study data so that they can conduct their own interconnection study One set of standard interconnection procedures and a standard interconnection agreement IA clearly lays out the legal rights and obligations of the parties

Federal Energy Regulatory Commission 8 Advantages to Generators under the Final Rule (cont’d) The Final Rule gives generators two interconnection options –Energy Resource Interconnection Service which is low-cost interconnection –Network Resource Interconnection Service which is a higher-cost interconnection that allows a generator to qualify as a network resource

Federal Energy Regulatory Commission 9 Advantages to Transmission Providers under the Final Rule Standard Interconnection Procedures streamline the interconnection process and reduce regulatory burden The Final Rule gives RTOs and ISOs the flexibility to customize interconnection process during compliance phase

Federal Energy Regulatory Commission 10 Advantages to Transmission Providers under the Final Rule (cont’d) Access to data allows generators to study various points of interconnection, reducing the number of interconnection studies to be performed by the Transmission Provider

Federal Energy Regulatory Commission 11 Pricing for Non-Independent Transmission Provider Clarifies who pays for interconnection costs when the transmission provider is not independent Credits to be paid for Network Upgrades over 5 years, with interest –but Generating Facility must first achieve commercial operation

Federal Energy Regulatory Commission 12 Pricing for Independent Transmission Provider –The rule allows pricing flexibility for an RTO or ISO, including use of participant funding –In forming an RTO or ISO, an independent administrator may use participant funding for Network Upgrades for one year, subject to approval by the Commission and affected States

Federal Energy Regulatory Commission 13 The Final Rule Applies to all interconnections to facilities subject to a Transmission Provider’s Open Access Transmission Tariff at the time an interconnection request is made

Federal Energy Regulatory Commission 14 Variations from this Rule Regional variations –Utilities may propose variations that are generally used throughout a region if consistent with or superior to the Final Rule –Utilities may propose variations to comply with a regional reliability rule, subject to Commission approval RTO or ISO –The rule allows greater flexibility for an RTO or ISO, subject to Commission approval

Federal Energy Regulatory Commission 15 Compliance Filing (Amendment to OATT) Public utilities must file amendments within 60 days from the date of publication in the Federal Register