Energy

Troutman Sanders LLP: FERC Denies Rehearing and Grants Clarification of Order No. 807 Regarding Open Access and Priority Rights on Interconnection Customer’s Interconnection Facilities

On October 15, 2015, FERC issued an order denying rehearing and granting clarification of Order No. 807, which contained regulations and policies regarding open access to and priority rights on Interconnection Customer’s Interconnection Facilities (“ICIF”). Two groups—one including the National Rural Electric Cooperative Association (“NRECA”) and the other including the American Public Power Association and the Transmission Access Policy Study Group (“APPA” and “TAPS,” respectively)—sought rehearing and clarification of Order No. 807. Order No. 807 amended FERC’s regulations to: (1) waive the Open Access Transmission Tariff, Open Access Same-Time Information System, and Standards of Conduct requirements for entities that are subject to such requirements solely because they own, control, or operate ICIF; (2) provide that a third party seeking service on ICIF may follow the procedures of sections 210, 211, and 212 of the Federal Power Act (“FPA”); and (3) establish that, for the first five years after the commercial operation date of the ICIF, FERC will apply the rebuttable presumption that the ICIF owner has definitive plans to use its facilities, and thus it is in the public interest to grant it priority rights to use the ICIF capacity.

NRECA sought rehearing on FERC’s decision to apply the safe harbor presumption that an ICIF owner has plans to use its capacity even when the third party requesting service is a load-serving entity that would need access to the capacity on the ICIF in order to serve native load efficiently. FERC denied this rehearing request. FERC reasoned that NRECA was seeking an exception in favor of load-serving entities that would undermine the rebuttable presumption in favor of ICIF owners that FERC adopted in Order No. 807. NRECA also sought clarification on two points: (1) that no FERC proceeding is necessary for a blanket waiver to be revoked if a public utility ceases to meet the qualifications espoused in Order No. 807; and (2) that non-public utility ICIF owners may also take advantage of the five-year safe harbor presumption. FERC clarified both of these points and emphasized that: (1) if an owner of ICIF no longer qualifies, the waiver would automatically be revoked; and (2) non-public utility ICIF owners may also avail themselves of the blanket waiver and safe harbor periods contained in Order No. 807.

In the other request for rehearing, APPA and TAPS raised open access concerns. They argued that Order No. 807 inappropriately moved away from open access by granting ICIF owners vertical market power over access to their facilities, permitting ICIF owners to effectively block subsequent competitive generation developers from interconnecting with ICIF for long periods of time. FERC also denied this request for rehearing, reasoning that Order No. 807 strikes the appropriate balance of reducing regulatory burdens on ICIF owners in order to incentivize development of these facilities while also providing some level of certainty to ICIF owners that constructing a generation facility in phases would not result in the loss of ICIF priority rights to capacity.

A copy of the order can be found here.

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