Commissioner Mark C. Christie Statement
December 1, 2021
Docket No. ER21-1841-001
Today’s order denies Southwest Power Pool, Inc.’s (SPP) request for rehearing of the Commission’s August 20, 2021 order granting Lookout Solar Park I, LLC (Lookout Solar) waiver of SPP’s financial security posting requirements.[1] I dissent from this order because it doubles down on the initial Waiver Order’s inappropriate application of the Commission’s four-factor waiver test and because it blatantly disregards the unequivocal harm that will result to third parties. While I continue to find that all four factors of the Commission’s waiver test are not appropriately satisfied, in this dissent I will focus on the harm—documented extensively in the record—done to third parties.
At the outset, it bears repeating what today’s order does from a practical standpoint. First, it fails to meaningfully engage with the ample record evidence submitted by SPP that the waiver will harm not only existing SPP interconnection customers but also interconnection customers in adjoining systems who are relying on SPP to conduct affected system analyses. Second, the order continues to exacerbate this harm by first failing to require Lookout Solar to immediately post its Financial Security Two (FS2) and Financial Security Three (FS3) payments and second “clarifying” that both the FS2 and FS3 payments are refundable—the consequence of which is to subject other interconnection customers to additional and unnecessary financial risk and disparate treatment. Finally, to get around the deficiencies identified above, the order inappropriately engages in a balancing of the relevant factors to find that waiver continues to be appropriate in this case.
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The Commission’s four-factor waiver test is not a balancing test.[2] Rather, it requires that each of the four factors be satisfied in order for waiver to be appropriate.[3] That is, the Commission must find that: (1) the waiver applicant acted in good faith; (2) the waiver is of limited scope; (3) the waiver addresses a concrete problem; and (4) the waiver does not have undesirable consequences, such as harming third parties. Absent a finding that each of the individual factors are satisfied, the Commission must deny the request for waiver.
On rehearing, SPP provided additional—and substantial—evidence quantifying the undesirable consequences resulting from the Commission’s initial Waiver Order, both in terms of study delays and financial harm to third parties. The majority does not dispute SPP’s quantifications. Indeed, the order “acknowledge[s] that there may be some expense and delay associated with the waiver . . .”.[4] However, the order apparently ignores this evidence in favor of other “evidence” that has no place in the fourth (i.e., harm to third parties) prong of the Commission’s waiver analysis—specifically that there were “anomalies in” and “inconsistent communications regarding” SPP’s study results for Lookout Solar.[5] In essence, rather than evaluate each waiver prong on its own, the majority engages in what can only be described as a “balancing” exercise, in which it weighs various “evidence” in the record to determine what outcome it feels is most appropriate.
The majority cannot wish away one factor of the Commission’s four-factor waiver test simply because it believes other, unrelated factors weigh in favor of granting the waiver. If the majority wishes to transition to a “balancing” or “good cause shown” test, as was previously conducted for natural gas pipeline waivers, then it should announce such policy in a generally applicable proceeding. However, it has taken no such action here. Thus, because today’s order does not explain why SPP’s evidence of harm is incorrect or otherwise irrelevant, such that the fourth prong of the Commission’s waiver test is satisfied, today’s order leaves the Commission’s test incomplete, and waiver must be denied.
I would go further, however, and find that the fourth prong cannot be met at all. I find it hard to believe there is no harm to third parties when two of our country's largest transmission providers state unequivocally that this waiver causes harm to all interconnection customers in their queues.[6] I am further perplexed and troubled by my colleagues cursory dismissal of the information provided by SPP demonstrating the significant negative impacts the waiver will have on its and other transmission providers’ queues.[7] If harm to third parties cannot be found in this instance, I question what evidence would be sufficient to satisfy this Commission.
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Next, I turn to the order’s reliance on the alleged “anomalies in” and “inconsistent communications regarding” SPP’s study results. Even if it were appropriate to consider such evidence in the Commission’s determination of harm, which it is not, I am wholly unconvinced by the majority’s reasoning.
Specifically, the majority continues to rely heavily—if not exclusively—on an email communication between SPP and Lookout Solar during DISIS Phase 1 in which SPP allegedly agreed that “apparent errors in the DISIS Phase 1 results” resulted in an inaccurate invoice to Lookout Solar.[8] Based on this “evidence” the majority concludes that “Lookout Solar had reasonable concerns about the DISIS Phase 2 results and that waiver was therefore appropriate under these particular circumstances.”[9] However, this conclusion is nonsensical. Even if SPP had provided Lookout Solar with the incorrect invoice amount during DISIS Phase 1, those prior errors do not provide Lookout Solar with a “unique” concern regarding its DISIS Phase 2 results.
Under Attachment V of the SPP Tariff, at the end of DISIS Phase 1 Lookout Solar would have been required to pay financial security—called FS2—equal to ten percent of its assigned Network Upgrade costs less its initial interconnection security deposit (FS1). Subsequently, at the end of DISIS Phase 2, Lookout Solar would have been required to pay additional financial security—called FS2—equal to 20 percent of its assigned Network Upgrades costs less its prior FS1 and FS2 payments.
In its request for rehearing SPP explains not only that Lookout Solar and SPP had numerous conversations and information exchanges regarding the accuracy of the DISIS Phase 2 results, but also that despite any “anomalies” that may have occurred during DISIS Phase 1, SPP informed Lookout Solar that no corrections were needed to Lookout Solar’s invoice for DISIS Phase 2.[10] This is undisputed by Lookout Solar. Thus, even if Lookout Solar’s FS2 payment was incorrectly calculated, any errors would be moot upon payment of FS3, which SPP discussed with Lookout Solar and confirmed was not in need of correction.[11] As a result, the majority’s conclusion that alleged “anomalies” in DISIS Phase 1, evidenced only by the email communication with SPP regarding the invoice, require waiver to “ensure that Lookout Solar has the opportunity to assess accurate study results and decide whether to proceed [past DISIS Phase 2]” is unsupported. There is no evidence in the record that the DISIS Phase 2 results continued to carry through any “anomalies” in DISIS Phase 1. In fact, record evidence demonstrates the exact opposite—that SPP met with Lookout Solar several times to address their concerns with the DISIS Phase 2 results and confirmed to Lookout Solar that “no corrections to its cost allocation in Phase [2] were needed.”[12]
Moreover, there is no evidence in the record that Lookout Solar is “unique” from its fellow cluster members and interconnection customers. The majority argues that the record suggests that there continued to be errors in the Phase 2 results because “SPP extended Decision Point 2 due to errors in its initial posting.”[13] While that may be true, that does not support the order’s conclusion that such errors were “unique” to Lookout Solar, such that waiver in this instance would not be unduly discriminatory or preferential.[14] Any errors in the Phase 2 study that required the Decision Point 2 deadline to be extended were not unique to Lookout Solar, but rather impacted all customers in the cluster. Indeed, the Decision Point 2 deadline (i.e., the deadline to post financial security) was extended for the very purpose of allowing all impacted customers, including Lookout Solar, to have additional time to review the results once such errors were corrected. Moreover, the Phase 2 restudy triggered by a late-stage withdraw likewise may impact the Phase 2 results for all cluster customers.
Yet, unlike all other customers in the cluster, the Commission has allowed Lookout Solar the “unique” opportunity to await the Phase 2 restudy results without taking on any financial risk simply because of “anomalies” it incurred during DISIS Phase 1. As I said in my dissent to the Commission’s initial Waiver Order, it is “patently unjust and unreasonable and unduly preferential to allow Lookout Solar to skirt its financial post requirements while others in the same position made the requirement payment or . . . chose to withdraw from the queue entirely.”[15]
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Finally, I address the majority’s decision not only to find a lack of harm, despite record evidence to the contrary, but to exacerbate that harm by granting Lookout Solar waiver of its obligation to cure its FS2 and FS3 payment obligations under after the results of the DISIS Phase 2 restudy are released.
In its request for rehearing, SPP requests that the Commission either (a) require Lookout Solar to immediately post its FS2 and FS3 payments to be placed back into the queue, or (b) pay its FS2 and FS3 payments if it ultimately decides to withdraw following the DISIS Phase 2 restudy results. The majority declines to address the former request because the initial Waiver Order already placed Lookout Solar back in the queue, which is a puzzling rationale given that this is a request for rehearing of that very order. The majority also dismisses the latter by, in essence, throwing up its hands and finding that the tariff does not allow it.[16]
I find this reasoning totally unsatisfactory, but also totally flawed. SPP confirmed that the alleged “anomalies” present during DISIS Phase 1 that may have resulted in an inaccurate FS2 invoice were not present in Lookout Solar’s DISIS Phase 2 results. Because (a) those alleged anomalies are the only differentiating factor between Lookout Solar and its fellow cluster members, and (b) those anomalies do not exist in Lookout Solar’s FS3 invoice (which subsumes the FS2 obligation as described above), there is no basis for the Commission to allow Lookout Solar to avoid paying its FS3 security deposit like all other interconnection customers to be placed back in the queue.
The Commission has previously granted waivers subject to condition,[17] and there is no reason it could not have done so here. As a result, at a minimum and based on the record evidence presented by SPP on rehearing, the Commission should modify Lookout Solar’s FS3 cure period to extend for a maximum of 15 days following today’s order, thereby placing Lookout Solar on the same playing field as all others still in the queue.
It is also clear that there is some confusion over the status of FS2. The Commission clarifies in the order that “section 8.5.1 was no longer applicable, and reinstatement of Lookout Solar’s queue position required only waiver of the cure period in section 3.7 of the GIP.”[18] If Lookout is indeed reinstated in the queue, as this order effectuates, they will be reinstated at a point after Decision Point 1—that is, Lookout Solar did not exercise their right to withdraw during that period and has now proceeded to DISIS Phase 2. This requires FS2 to be at risk. Therefore, the Commission’s conclusion that Lookout can use the 15 business days following SPP’s posting of the DISIS Phase 2 restudy “to assess accurate study results and decide whether to proceed to the Interconnection Facilities Study” before making “the applicable financial security payments” is inaccurate, particularly with respect to FS2, and may further harm any remaining interconnection customers if Lookout decides to withdraw from the queue. It is my belief that Lookout Solar’s FS2 is due and at risk regardless of the results from the DISIS Phase 2 restudy and whether or not Lookout Solar subsequently choses to withdraw from the queue. [19]
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One thing is evident in reading today’s order: the majority’s application of the Commission’s four-factor waiver test substantially undermines the benefits that come of a structured, criteria driven analysis. A test, the elements of which can be so easily manipulated, is no test at all. We as a Commission can and should do better to provide some semblance of regulatory certainty and ensure against the kind of arbitrary and unduly discriminatory decision-making that occurred today.
For these reasons, I respectfully dissent.
[1] Lookout Solar Park I, LLC, 176 FERC ¶ 61,100 (2021) (Waiver Order).
[2] In contrast, the Commission previously used a “good cause shown” balancing test in evaluating whether to waive natural gas tariff provisions, which the Commission described a “comparatively less structured” than the four-factor waiver test used for electric rates and services. As a result, the Commission recently transitioned away from the traditional balancing test to the four-factor waiver test for both electric utility and natural gas pipeline tariff rates and services. Proposed Policy Statement on Waiver of Tariff Requirements and Petitions or Complaints for Remedial Relief at P 18, Docket No. 20-7-000 (issued May 21, 2020).
[3] See, e.g., ANR Pipeline Co., 175 FERC ¶ 61,185 at P 17 (2021) (“Because we deny Petitioners’ requests for waiver on the basis that it does not address a concrete problem, we need not address the remaining criteria used by the Commission to evaluate waiver requests.”); South Shore Energy, LLC, 166 FERC ¶ 61,221 at P 24 (2019) (“We conclude that Applicants have not shown that the Waiver Request satisfies the fourth prong of these waiver criteria, and therefore, we deny the request for waiver.”).
[4] Order at P 23.
[5] Id. at PP 21 and 23.
[6] I acknowledge that MISO’s out-of-time intervention and comments were rejected, and thus not considered in the majority’s order.
[7] I remind my colleagues that we have asked transmission providers, like SPP, to weigh in on the impacts of interconnection waivers to assist in our decision-making. See, TGE Pennsylvania 202, LLC, 175 FERC ¶ 61,080 (2021) (Danly, Comm’r, dissenting at P 5) (“Although we rightfully bear the ultimate responsibility for deciding whether a waiver should be granted, the effect of a proposed waiver is information we need in order to make an informed decision.”); SunEnergy 1, LLC, 176 FERC ¶ 61,004 (2021) (Danly, Comm’r, dissenting at PP 2-3) (“As I have written previously, transmission providers can provide useful insights as to the validity of claims regarding interconnection queue waiver request and, more importantly, as to the effects of the waiver request on queue management. I was gratified to see that PJM provided us with its views in this case . . .. Unfortunately, the Commission gave no real weight to PJM’s position and dismissed its arguments out of hand.”). I question whether providing such comments is worth their time if the Commission continues to refuse to engage with the information they provide.
[8] Order at 21. I use the term “allegedly” because the email communication is neither directly quoted from by Lookout Solar in its waiver request nor included in the record for the Commission to review. As a result, the Commission, in its initial Waiver Order and again in today’s order, is relying solely on Lookout Solar’s characterization of the communication.
[9] Id. at P 21.
[10] Id. at P 20.
[11] While SPP later informed all interconnection customers in the DISIS-2017-001 cluster that the DISIS Phase 2 results may be inaccurate and are being restudied due to queue withdrawals, these inaccuracies were not “unique” to Lookout Solar and are shared equally by all customers in the cluster.
[12] SPP Request for Rehearing at 4.
[13] Order at P 21 n. 34.
[14] See, e.g., my dissenting statement in Invenergy 177 FERC ¶ 61,131 (2021).
[15] Lookout Solar Park 1, LLC, 176 FERC ¶ 61,100 (2021) (Christie, Comm’r, dissenting at P 6).
[16] Order at 25.
[17] See, e.g., PJM Interconnection, L.L.C., 174 FERC ¶ 61,083, at P 16 (2021).
[18] Order at P 19. It is apparent that the order makes such a “clarification” in order to avoid the waiver being deemed unlawfully retroactive.
[19] The majority makes the strange argument that because Lookout Solar proceeded past Decision Point 1 without withdrawing and is now in DISIS Phase 2, the Commission cannot require Lookout Solar to pay the requisite financial security (i.e., FS2) because “the tariff provides no mechanism for the requirement of financial security as a consequence of failing to withdraw.” Order at P 26 n. 49. But the Tariff does, unequivocally, require all interconnection customers who wish to proceed past Decision Point 1 and into DISIS Phase 2 to post the requisite FS2 security. Indeed, that is precisely what GIP Section 8.5.1 says—the very same Tariff section that the majority “clarifies” was not waived in this proceeding. I fail to see the functional difference.