Docket Nos. ER22-2007-000, et al.
Today’s order approves Duke Energy Progress and Duke Energy Carolina’s (collectively, Duke) proposed generator replacement process, which allows owners of an existing generating facility to retain the interconnection rights associated with that facility even after retiring it and replacing it with a new facility. I support the order, as I have done in PSCo, because it follows the precedent established in MISO, SPP, Dominion, and PSCo,[1] and because there is no record on which to base any deviation from that precedent.
I am prompted by the D.C. Circuit’s decision in Xcel,[2] as well as my continuing concern, to write separately, however, to express that this issue would benefit from more fulsome review and consideration. I am concerned that, in repeatedly approving generator replacement procedures across the country, the Commission is sleepwalking toward a fundamental reshaping of interconnection procedures without adequate consideration of the pros and cons of this policy approach, or deep inquiry into its legal validity.
The question of whether generation facility owners should have the ability to retain their interconnection rights has important policy implications. One of my concerns is whether there is a risk of undue preference for owners of existing generation facilities in interconnection rights relative to new market entrants, especially where such generation facilities are owned by the grid operator.[3] As the U.S. Court of Appeals for the D.C. Circuit recently put it, allowing the grid operator to put existing generators first in line is not akin “‘to an office-wide ice-cream social’ in which ‘the boss who pays for the event[] takes a scoop,’” but rather is more like a situation where the boss is “in line for six scoops out of every ten, each one of which might otherwise go to a would-be employee seeking to get in the door.”[4]
While it seems possible that a generator replacement process may facilitate true engineering efficiencies that provide for system-wide improvements in interconnection process speed and lower overall costs than would occur without generator replacement, this question has not been deeply examined in the proceedings to date. Nor is it clear that the policy should not be applied in a fairer manner that allows any developer of new generation to replace existing generation, rather than limiting the fast-track process solely to incumbents.[5]
Given the recent adoption of similar policies in the proceedings noted above, the Commission should engage in a comprehensive evaluation of legal and policy consequences, as well as factors that may warrant regional variation or a more uniform approach to consideration of generator replacement interconnection tariff proposals. Should another generator replacement proposal come before the Commission, I encourage stakeholders to pay close attention and file pleadings that allow the Commission to make a determination based on a more thorough examination of these issues.
For these reasons, I respectfully concur.
[1] Midcontinent Indep. Sys. Operator, Inc., 167 FERC ¶ 61,146 (2019) (MISO); Sw. Power Pool, Inc., 171 FERC ¶ 61,270 (2020) (SPP); Dominion Energy S.C., Inc., 173 FERC ¶ 61,171 (2020) (Dominion); Pub. Serv. Co. of Colo., 175 FERC ¶ 61,100 (2021) (PSCo).
[2] Xcel Energy Servs. Inc. v. FERC, 41 F.4th 548, 560 (D.C. Cir. 2022).
[3] The Commission expressed a similar concern in rejecting Public Service Company of Colorado’s initial attempt to establish a generator replacement process. Pub. Serv. Co. of Colo., 171 FERC ¶ 61,115, at PP 34-37, order on reh’g, 172 FERC ¶ 61,297 (2020).
[4] Xcel Energy Servs. Inc. v. FERC, 41 F.4th 548, 560 (D.C. Cir. 2022).
[5] I recognize that the Commission has held that owners of existing generation are not similarly situated with new developers. See MISO, 167 FERC ¶ 61,146 at PP 63-66. However, it is unclear whether the reasons given by the Commission—essentially that owners of existing generation have gone through the interconnection process and possess interconnection service— are relevant with regard to replacement generation proposed by a new developer would pose any different issues or challenges for the grid operator than replacement generation proposed by the existing owner. While the Commission stated that the grid operator could only conclusively determine that “a new entrant at another point of interconnection ultimately does not require any network upgrades to interconnect” after “that interconnection customer’s project has been subject to” a study process, MISO, 167 FERC ¶ 61,146 at P 65, I fail to see how this would not also be true of replacement generation proposed by the incumbent. Further record on this question could be illuminating.