FERC last Wednesday clarified how transmission providers should respond when a transmission system’s ability to support interconnections without upgrades can only accommodate a generator or generators that hold the highest position in an interconnection queue.

In such a situation, if the lowest queued generator is ready to interconnect before the higher queued generator, the transmission provider must give the next generator in the queue the option of interconnecting “using, to the extent it can, the transmission capabilities that have been set aside for the higher queued generator,” a FERC staff member noted.

Then, if and when the higher queued generator completes its project and interconnection, the lower queued generator would have to fund the network upgrades needed for the higher queued generator’s interconnection.

The funding of network upgrades would be tied to whether the need for those upgrades is due to the lower queued generator’s use of the excess transmission capability and its decision to have its interconnection completed ahead of the higher queued generator.

The lower queued generator would also be responsible for any additional study costs. “This ensures that if the higher queued generator withdraws from the queue, the lower queued generator will not be in the position of having to fund network upgrades that turn out not to be needed,” the FERC staff member said.

However, it also ensures that if the higher queued generator’s project is constructed as planned, it will not be required to fund costs in excess of the costs applicable to its original queued position.

“As the economy picks up and the markets pick up, I think it’s important that we work out” interconnection queue-related issues, said FERC Commissioner Nora Brownell at the Commission’s agenda meeting.

She encouraged industry participants “to come forward and talk about those with us and make us aware of those because I think this is really a critical piece of the infrastructure that we need in the marketplace.”

Under the new policy, “the second person in line is not going to be worse off than what they are under the old policy,” noted FERC Chairman Pat Wood. “What this means is you might be better off because you can get online faster and if the first guy never shows up, which can happen anywhere in the country as generators decide not to go forward, then they’re actually better off because they got online maybe even faster than they thought,” Wood added.

The Commission used a docket involving Virginia Electric & Power Co. (VEPCO) as the vehicle through which it articulated its approach to interconnection queues going forward.

VEPCO previously filed a revised interconnection agreement at FERC related to a power project being developed by CPV Cunningham Creek LLC. CPV is developing a 520 MW natural gas-fired power plant in the northwestern part of Fluvanna County, VA. CPV is affiliated with Competitive Power Ventures Inc., a power plant developer. Among other things, the revised agreement includes revisions to milestone dates for CPV’s project.

However, Tenaska Virginia II Partners L.P. pointed out that CPV has repeatedly pushed back the date for commercial operation of its power plant, with the latest startup date scheduled for May 2006. “This extension is nearly three years beyond the date initially contemplated by CPV,” Tenaska noted.

Tenaska held three lower-queued requests in VEPCO’s interconnection and said that was being adversely affected by these delays. Tenaska said that CPV’s “squatting” in the queue impacted Tenaska’s ability to commence interconnection of its project by creating uncertainty with respect to the costs of connecting Tenaska’s project to the VEPCO system.

FERC in June rejected a plea by Tenaska that would have allowed the company to jump ahead of CPV’s interconnection request in VEPCO’s interconnection queue. Tenaska sought rehearing of that the decision the following month. Under last week’s action, CPV remains ahead of Tenaska in the interconnection queue.

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