Initial Order approving SGIA/SGIP

UNITED STATES OF AMERICA
FEDERAL ENERGY REGULATORY COMMISSION
18 CFR Part 35
[Docket No. RM02-12-000; Order No. 2006]
Standardization of Small Generator Interconnection Agreements and Procedures
(Issued May 12, 2005)
AGENCY: Federal Energy Regulatory Commission.
ACTION: Final Rule
SUMMARY: The Federal Energy Regulatory Commission (Commission) is amending
its regulations under the Federal Power Act to require public utilities that own, control, or
operate facilities for transmitting electric energy in interstate commerce to amend their
open access transmission tariffs to include standard generator interconnection procedures
and an agreement that the Commission is adopting in this order and to provide
interconnection service to devices used for the production of electricity having a capacity
of no more than 20 megawatts. A non-public utility that seeks voluntary compliance with
the reciprocity condition of an open access transmission tariff may satisfy this condition
by adopting these procedures and agreement.
EFFECTIVE DATE: This Final Rule will become effective [insert date that is 60 days
after publication in the FEDERAL REGISTER.]

FOR FURTHER INFORMATION CONTACT:
Kumar Agarwal (Technical Information)
Office of Market, Tariffs and Rates
Federal Energy Regulatory Commission
888 First Street, N.E.
Washington, D.C. 20426
(202) 502-8923
Bruce Poole (Technical Information)
Office of Market, Tariffs and Rates
Federal Energy Regulatory Commission
888 First Street, N.E.
Washington, D.C. 20426
(202) 502-8468
Kirk Randall (Technical Information)
Office of Market, Tariffs and Rates
Federal Energy Regulatory Commission
888 First Street, N.E.
Washington, D.C. 20426
(202) 502-8092
Patrick Rooney (Technical Information)
Office of Market, Tariffs and Rates
Federal Energy Regulatory Commission
888 First Street, N.E.
Washington, D.C. 20426
(202) 502-6205
Abraham Silverman (Legal Information)
Office of the General Counsel
Federal Energy Regulatory Commission
888 First Street, N.E.
Washington, D.C. 20426
(202) 502-6444
SUPPLEMENTARY INFORMATION:

TABLE OF CONTENTS
Page No.
I.

II.

INTRODUCTION ............................................................................................. - 1 A.

Background............................................................................................. - 6 -

B.

Need for a Standard Generator Interconnection Procedures and
Agreement ............................................................................................... - 7 -

C.

The Large and Small Generator Interconnection Rulemaking
Proceedings ............................................................................................. - 8 -

DISCUSSION .................................................................................................. - 13 A.

Descriptions of the SGIP and SGIA ................................................... - 14 -

B.

Overview of the Interconnection Process for Small Generating
Facilities................................................................................................. - 17 -

C.

Issues Related to Both the SGIP and the SGIA................................. - 19 Consistency between the Large Generator and Small Generator
Documents.............................................................................................. - 20 Definitions of Terms Used in the SGIP and SGIA ................................ - 23 Emergency Condition.................................................................. - 23 Network Upgrades....................................................................... - 24 Use of Calendar Days v. Business Days ................................................ - 24 Maximum Size of a Small Generating Facility...................................... - 25 Revising the Maximum Size of a Small Generating Facility...... - 25 Increasing the Capacity of an Existing Small Generating
Facility......................................................................................... - 27 Evaluating the Generating Facility Based on Less Than Its
Maximum Rated Capacity........................................................... - 28 Evaluating Small Generating Facilities with Multiple Points
of Interconnection ....................................................................... - 30 Dispute Resolution ................................................................................. - 31 Confidentiality........................................................................................ - 34 Keeping the Small Generator Interconnection Rules Current................ - 36 -

D.

Issues Related to the Interconnection Request .................................. - 37 Processing Fees and Study Deposits ...................................................... - 37 -i-

Receipt Confirmation and Requests for Additional Data ...................... - 40 Interconnection Products and Service Options ...................................... - 40 Ministerial Changes to the Interconnection Request.............................. - 44 E.

Issues Related to the SGIP................................................................... - 44 Using Voltage Level to Determine Which Procedures to Apply........... - 44 Certification of the Small Generating Facility (Proposed SGIP
Section 3.1)............................................................................................. - 46 Super-Expedited Procedures (Proposed SGIP Section 3) and
Expedited Procedures (Proposed SGIP Section 4.3).............................. - 48 Queuing Priority (Proposed SGIP Section 4.4)...................................... - 52 Scoping Meeting (Proposed SGIP Section 4.5) ..................................... - 54 Interconnection Studies (Proposed SGIP Sections 4.6, 4.7, and 4.8) .... - 55 Study Cost Obligations................................................................ - 55 Study Requirements .................................................................... - 55 Study Deadlines........................................................................... - 56 Post Operational Evaluation of the Interconnection ................... - 57 Execution of the SGIA ........................................................................... - 57 -

F.

Issues Related to the SGIA .................................................................. - 58 Responsibilities of the Parties (Proposed SGIA Article 2.2) ................. - 58 Metering (Proposed SGIA Article 2.4) .................................................. - 62 Equipment Testing and Inspection (Proposed SGIA Article 3.1).......... - 62 Right of Access (Proposed SGIA Article 3.3) ....................................... - 63 Term of Agreement (Proposed SGIA Article 4.2) ................................. - 64 Termination (Proposed SGIA Article 4.3) and Default (Proposed
SGIA Article 6.17) ................................................................................. - 65 Emergency Conditions (Proposed SGIA Article 4.4.1) ......................... - 67 Temporary Disconnection – Routine Maintenance, Construction, and
Repair (Proposed SGIA Article 4.4.2) and Forced Outages (Proposed
SGIA Article 4.4.3) ................................................................................ - 68 Temporary Disconnection – Adverse Operating Effects (Proposed
SGIA Article 4.4.4) ................................................................................ - 69 Temporary Disconnection – Modification of the Generating Facility
- ii -

(Proposed SGIA Article 4.4.5)............................................................... - 71 Temporary Disconnection – Reconnection (Proposed SGIA Article
4.4.6)....................................................................................................... - 71 Financial Security Arrangements (Proposed SGIA Article 5.2)............ - 72 Milestones (Proposed SGIA Article 5.3) ............................................... - 75 Billing and Payment (Proposed SGIA Article 5.4) ................................ - 76 Billing Procedure for Interconnection Facilities Construction
(Proposed SGIA Article 5.4.1) and Final Accounting (Proposed
SGIA Article 5.4.2) ................................................................................ - 77 Assignment (Proposed SGIA Article 6.5).............................................. - 78 Insurance (Proposed SGIA Article 6.16) ............................................... - 80 Reservation of Rights (Proposed SGIA Article 6.20)............................ - 88 Signatures and Parties to the SGIA (Proposed SGIA Article 9)............ - 88 Liability .................................................................................................. - 91 General Approach ....................................................................... - 92 Consequential Damages (Proposed SGIA Article 6.19)............. - 94 Indemnity (Proposed SGIA Article 6.13) ................................... - 95 Force Majeure (Proposed SGIA Article 6.14) ............................ - 98 Reactive Power....................................................................................... - 99 Generator Balancing Requirements ..................................................... - 100 Appendices to the SGIA....................................................................... - 101 G.

The 10 kW Inverter Process .............................................................. - 101 -

H.

Other Significant Issues ..................................................................... - 104 Pricing/Cost Recovery for Interconnection Facilities and Upgrades
(Proposed SGIA Article 5.1) ................................................................ - 105 Pricing Comments that the Commission Already Addressed
in the Large Generator Interconnection Proceeding ................. - 107 Applicability of the Commission's Interconnection Pricing
Policy to the Interconnection of Small Generating Facilities ... - 108 Implementation of the Interconnection Pricing Policy for
Small Generating Facilities ....................................................... - 112 Responsibility for Operation and Maintenance Costs............... - 117 - iii -

Responsibility for the Construction of Upgrades...................... - 119 Miscellaneous Pricing Issues .................................................... - 120 Commission Jurisdiction under the Federal Power Act....................... - 121 Arguments that the Commission Should Delay or Abandon the
Small Generator Interconnection Rulemaking..................................... - 129 Arguments in Favor of Deferring to the States on Small
Generator Interconnections ....................................................... - 129 Arguments that the NOPR Is Too Complex ............................. - 132 Arguments in Favor of a Non-Binding Model Rule ................. - 134 Issues Relating to Qualifying Facilities ............................................... - 134 Taxes .................................................................................................... - 136 OATT Reciprocity Requirements ........................................................ - 140 Coordination with Affected Systems ................................................... - 141 I.

Compliance Issues .............................................................................. - 142 Amendments to the Transmission Provider's OATT ........................... - 143 Variations from the Final Rule............................................................. - 143 Interconnection Requests Submitted Prior to the Effective Date of
this Final Rule and Grandfathering of Existing Interconnection
Agreements........................................................................................... - 145 Order No. 2001 and the Filing of Interconnection Agreements........... - 148 -

III.

INFORMATION COLLECTION STATEMENT..................................... - 149 -

IV.

ENVIRONMENTAL IMPACT STATEMENT ......................................... - 153 -

V.

REGULATORY FLEXIBILITY ACT ....................................................... - 154 -

VI.

DOCUMENT AVAILABILITY .................................................................. - 156 -

VII.

EFFECTIVE DATE AND CONGRESSIONAL NOTIFICATION......... - 157 -

REGULATORY TEXT
Appendix A – Commenter Acronyms
Appendix B – Flow Chart for Interconnecting a Small Generating Facility Using the
"Study Process"
- iv -

Appendix C – Flow Chart for Interconnecting a Certified Small Generating Facility No
Larger than 2 MW Using the "Fast Track Process"
Appendix D – Flow Chart for Interconnecting a Certified Inverter-Based Small
Generating Facility No Larger than 10 kW Using the "10 kW Inverter
Process"
Appendix E – Small Generator Interconnection Procedures (SGIP)
Appendix F – Small Generator Interconnection Agreement (SGIA)

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UNITED STATES OF AMERICA
FEDERAL ENERGY REGULATORY COMMISSION
Before Commissioners: Pat Wood, III, Chairman;
Nora Mead Brownell, Joseph T. Kelliher,
and Suedeen G. Kelly.
Standardization of Small Generator
Interconnection Agreements and Procedures

Docket No. RM02-12-000

ORDER NO. 2006
FINAL RULE
(Issued May 12, 2005)

I.

Introduction

1.
This Final Rule requires all public utilities1 to adopt standard rules for
interconnecting new sources of electricity no larger than 20 megawatts (MW). It
continues the process begun in Order No. 2003 of standardizing the terms and conditions
of interconnection service for Interconnection Customers of all sizes.2 It will reduce
1

For purposes of this Final Rule, a public utility is a utility that owns, controls, or
operates facilities used for transmitting electric energy in interstate commerce, as defined
by the Federal Power Act (FPA). 16 U.S.C. § 824(e) (2000). A non-public utility that
seeks voluntary compliance with the reciprocity condition of an open access transmission
tariff may satisfy that condition by adopting these procedures and agreement.
2

Standardization of Generator Interconnection Agreements and Procedures, Order
No. 2003, 68 FR 49845 (Aug. 19, 2003), FERC Stats. & Regs. ¶ 31,146 (2003) (Order
No. 2003), order on reh'g, Order No. 2003-A, 69 FR 15932 (Mar. 26, 2004), FERC Stats.
& Regs. ¶ 31,160 (2004) (Order No. 2003-A), order on reh'g, Order No. 2003-B,
70 FR 265 (Jan. 4, 2005), FERC Stats. & Regs. ¶ 31,171 (2005), reh'g pending (Order
No. 2003-B). See also Notice Clarifying Compliance Procedures, 106 FERC ¶ 61,009
(2004). We refer to the large generator interconnection rulemaking as Order No. 2003
throughout this document. The Order No. 2003 Large Generator Interconnection

(Footnote continued on next page)

Docket No. RM02-12-000

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interconnection time and costs for Interconnection Customers and Transmission
Providers,3 preserve reliability, increase energy supply, lower wholesale prices for
customers by increasing the number and types of new generation that will compete in the
wholesale electricity market, facilitate development of non-polluting alternative energy
sources, and help remedy undue discrimination, as sections 205 and 206 of the FPA
require.4 Public utilities must amend5 their open access transmission tariffs (OATTs) to
include a Small Generator Interconnection Procedures document (SGIP – Appendix E to

Agreement and Large Generator Interconnection Procedures, as amended by Order
Nos. 2003-A and 2003-B, are referred to in this Final Rule as the LGIA and the LGIP,
respectively.
3

Capitalized terms used in this Final Rule have the meanings specified in the
Glossaries of Terms or the text of the Small Generator Interconnection Procedures (SGIP)
or the Small Generator Interconnection Agreement (SGIA). Small Generating Facility
means the device for which the Interconnection Customer has requested interconnection.
The owner of the Small Generating Facility is the Interconnection Customer. The utility
entity with which the Small Generating Facility is interconnecting is the Transmission
Provider. A Small Generating Facility is a device used for the production of electricity
having a capacity of no more than 20 MW. The interconnection process formally begins
with the Interconnection Customer submitting an application for interconnection, called an
Interconnection Request, to the Transmission Provider.
We are omitting from the SGIP and SGIA glossaries terms that are defined through
their use in the documents themselves or are in such common use in the industry that a
definition is unnecessary. Many terms that were capitalized in the Small Generator
Interconnection Notice of Proposed Rulemaking are therefore not capitalized in this
Preamble, SGIP, and SGIA.
The documents put forward in the Small Generator Interconnection NOPR are
called the "Proposed SGIP" and the "Proposed SGIA" in this Preamble. The documents
that are being adopted in this Final Rule for inclusion in a Transmission Provider's OATT
are called simply the SGIP and SGIA. Provisions of the SGIP are referred to as "sections"
and provisions of the SGIA are referred to as "articles."
4

5

16 U.S.C. §§ 824d and 824e (2000).
Compliance procedures are discussed in Part II.I, below.

Docket No. RM02-12-000

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this Preamble) and a Small Generator Interconnection Agreement (SGIA – Appendix F to
this Preamble).
2.
The SGIP contains the technical procedures the Interconnection Customer and
Transmission Provider (the Parties) must follow once the Interconnection Customer
requests interconnection of its Small Generating Facility. It provides three ways to
evaluate the Interconnection Request. They are the default Study Process that could be
used by any Small Generating Facility, and two procedures that use technical screens to
evaluate proposed interconnections: (1) the Fast Track Process for a certified Small
Generating Facility no larger than 2 MW6 and (2) the 10 kW Inverter Process for a
certified inverter-based Small Generating Facility no larger than 10 kW.7 All three are
designed to ensure that the proposed interconnection will not endanger the safety and
reliability of the Transmission Provider's Transmission System.
3.
The SGIA contains contractual provisions appropriate for the interconnection of a
Small Generating Facility, including provisions for the payment for modifications made to
the Transmission Provider's Transmission System to accommodate the interconnection.
The SGIA is signed by the Parties after they have successfully completed the evaluation of
a proposed interconnection under the SGIP Study Process or Fast Track Process. The
SGIA does not apply to requests to interconnect submitted under the 10 kW Inverter
Process, however, which uses a simplified all-in-one application form/procedures/terms
and conditions document that is included in SGIP Attachment 5.

6

A Small Generating Facility equipment package is considered certified if it has
been submitted, tested, and listed by a nationally recognized testing and certification
laboratory. The Small Generator Interconnection NOPR used the term "precertified" to
describe such a facility. We adopt in this Final Rule the term "certified" to be consistent
with industry usage. To avoid further confusion, we also use "certified" when describing
the Small Generator Interconnection NOPR. See the SGIP, especially Attachments 3
and 4.
7

An inverter is a device that converts the direct current voltage and current of a DC
generator to alternating voltage and current. For example, the output of a solar panel is
direct current. The solar panel's output must be converted by an inverter to alternating
current before it can be interconnected with a utility's alternating current electric system.

Docket No. RM02-12-000

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4.
We conclude that general consistency between the Commission's interconnection
procedures document and interconnection agreement adopted in this Final Rule and those
of the states will be helpful to removing roadblocks to the interconnection of Small
Generating Facilities. To a large extent, this Final Rule harmonizes state and federal
practices by adopting many of the best practices interconnection rules recommended by
the National Association of Regulatory Utility Commissioners (NARUC). By doing so,
we hope to minimize the federal-state division and promote consistent, nationwide
interconnection rules. We hope that states that do not currently have interconnection rules
for small generators will look to the documents presented in this Final Rule and NARUC
as guides for their own. In particular, the "Fast Track Process" and the "10 kW Inverter
Process" should go a long way towards harmonizing state-federal interconnection
practices.
5.
Finally, the application of this Final Rule is the same as with Order No. 2003 for
Large Generating Facilities. Specifically, this Final Rule applies only to interconnections
with facilities that are already subject to the Transmission Provider's OATT at the time the
Interconnection Request is made.
6.
The SGIP and SGIA include separate definitions for "Transmission System" and
"Distribution System" to account for the distinct engineering and cost allocation
implications of an interconnection with a Distribution System. The SGIP and SGIA, like
Order No. 2003, define "Transmission System" as "[t]he facilities owned, controlled or
operated by the Transmission Provider or the Transmission Owner that are used to provide
transmission service under the Tariff." Any interconnection with a Transmission System
(under an OATT) by a Small Generating Facility is subject to this Final Rule.
7.
The SGIP and the SGIA, like Order No. 2003, also use the term "Distribution
System." "Distribution System" is defined as "[t]he Transmission Provider's facilities and
equipment used to transmit electricity to ultimate usage points such as homes and
industries directly from nearby generators or from interchanges with higher voltage
transmission networks which transport bulk power over longer distances. The voltage
levels at which Distribution Systems operate differ among areas." If a Small Generating
Facility proposes to interconnect with a portion of the Distribution System subject to an
OATT for the purpose of making wholesale sales, then this Final Rule would apply.8

8

See Detroit Edison v. FERC, 334 F.3d 48 (D.C. Cir. 2003) (Detroit Edison).
There, the court explained that:
(Footnote continued on next page)

Docket No. RM02-12-000

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However, an interconnection to a portion of a Distribution System that is not already
subject to an OATT would not be subject to this Final Rule.
8.
"Distribution" is a vague term, usually used to refer to non-networked, often lowervoltage facilities, that carry power in one direction. Commission-jurisdictional facilities
with these characteristics are referred to as "Distribution Systems subject to an OATT"
throughout this Final Rule. This Final Rule's use of the term "Distribution System" has
nothing to do with whether the facility is under this Commission's jurisdiction; some
"distribution" facilities are under our jurisdiction and others are "local distribution
facilities" subject to state jurisdiction.9 This Final Rule does not violate the FPA
section 201(b)(1) provision that the Commission does not have jurisdiction over local
distribution facilities “except as specifically provided. . .”10 This is because the Final Rule
applies only to interconnections to facilities that are already subject to a jurisdictional
OATT at the time the interconnection request is made and that will be used for purposes
of jurisdictional wholesale sales. Because of the limited applicability of this Final Rule,
and because the majority of small generators interconnect with facilities that are not
subject to an OATT, this Final Rule will not apply to most small generator
interconnections. Nonetheless, our hope is that states may find this rule helpful in
formulating their own interconnection rules.
When a local distribution facility is used to delivery [sic] energy to an
unbundled retail customer, FERC lacks any statutory authority, and
the state has jurisdiction over that transaction. By contrast, when a
local distribution facility is used in a wholesale transaction, FERC
has jurisdiction over that transaction pursuant to its wholesale
jurisdiction under FPA § 201(b)(1). In sum, FERC has jurisdiction
over all interstate transmission service and over all wholesale service,
but FERC has no jurisdiction over unbundled retail distribution
service – i.e., unbundled retail service over local distribution
facilities.
Id. at 51 (citations omitted).
9

See Detroit Edison, 334 F.3d at 51. ("For our purposes, the most important result
of these jurisdictional determinations is that customers can take any FERC-jurisdictional
service under a utility’s open access tariff, which the utility is required to file with FERC.
Customers must take non FERC-jurisdictional service, such as unbundled retail
distribution, under a state tariff.")
10

16 U.S.C. § 824 (2000).

Docket No. RM02-12-000
A.

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Background

9.
This Final Rule responds to business and technology changes in the electric
industry. Where the electric industry was once primarily the domain of vertically
integrated utilities generating power at large centralized plants, advances in technology
have created a burgeoning market for small power plants that may offer economic,
reliability, or environmental benefits.
10.
With these developments in mind, the Commission continues in this rulemaking to
work to encourage fully competitive bulk power markets. The effort took its first
significant step with Order No. 888,11 which required public utilities to provide other
entities comparable access to their Transmission Systems. The effort continued with
Order No. 2000,12 which began the process of developing Regional Transmission
Organizations (RTOs). Most recently, the Commission established a standard Large
Generator Interconnection Procedures document (LGIP) and a standard Large Generator
Interconnection Agreement (LGIA) for generating facilities larger than 20 MW.13
11.
The Commission, pursuant to its responsibility under sections 205 and 206 of the
FPA to remedy undue discrimination, is requiring all public utilities that own, control, or
operate facilities for transmitting electric energy in interstate commerce to append to their
OATTs the SGIP and SGIA we are adopting in this Final Rule. These documents provide
just and reasonable terms and conditions of interconnection service. They also strike a
11

Promoting Wholesale Competition Through Open Access Non-Discriminatory
Transmission Services by Public Utilities: Recovery of Stranded Costs by Public Utilities
and Transmitting Utilities, Order No. 888, 61 FR 21540 (May 10, 1996), FERC Stats. &
Regs. & 31,036 (1996), order on reh'g, Order No. 888-A, 62 FR 12274 (Mar. 14, 1997),
FERC Stats. & Regs. & 31,048 (1997), order on reh'g, Order No. 888-B, 81 FERC
& 61,248 (1997), order on reh'g, Order No. 888-C , 82 FERC & 61,046 (1998), aff'd in
part sub nom. Transmission Access Policy Study Group v. FERC, 225 F.3d 667 (D.C. Cir.
2000), aff'd sub nom. New York v. FERC, 535 U.S. 1 (2002) (TAPS v. FERC).
12

Regional Transmission Organizations, Order No. 2000, 65 FR 810 (Jan. 6, 2000),
FERC Stats. & Regs. & 31,089 (1999), order on reh'g, Order No. 2000-A, 65 FR 12088
(Mar. 8, 2000), FERC Stats. & Regs. & 31,092 (2000), aff'd sub nom. Public Util. Dist.
No. 1 v. FERC, 272 F.3d 607 (D.C. Cir. 2001).
13

See Order No. 2003 passim.

Docket No. RM02-12-000

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reasonable balance between the competing goals of uniformity and flexibility while
ensuring safety and reliability are protected.
B.

Need for a Standard Generator Interconnection Procedures and
Agreement

12.
In fulfilling its responsibilities under sections 205 and 206 of the FPA, the
Commission is required to remedy undue discrimination. The Commission must also
ensure that the rates, contracts, and practices affecting jurisdictional transmission service
do not reflect an undue preference or advantage for Transmission Providers and their
affiliates and are just and reasonable. The Commission's regulatory authority under the
FPA "clearly carries with it the responsibility to consider, in appropriate circumstances,
the anticompetitive effects of regulated aspects of interstate utility operations. . . ."14
13.
The record underlying Order No. 888 showed that public utilities owning or
controlling jurisdictional transmission facilities had the incentive to engage in, and had
engaged in, unduly discriminatory transmission practices.15 The Commission in Order
No. 888 thoroughly discussed the legislative history and case law involving sections 205
and 206, concluded that it has the authority and responsibility to remedy the undue
discrimination it found by requiring open access, and decided to do so through a
rulemaking on a generic, industry-wide basis.16 The Supreme Court affirmed the
Commission's decision to exercise this authority by requiring non-discriminatory
(comparable) open access as a remedy for undue discrimination.17 However, Order
No. 888 did not specifically address interconnection service.18
14

Gulf States Utils. Co. v. FPC, 411 U.S. 747, 758-59 (1973); see City of
Huntingburg v. FPC, 498 F.2d 778, 783-84 (D.C. Cir. 1974) (noting the Commission's
duty to consider the potential anticompetitive effects of a proposed interconnection
agreement).
15

Order No. 888 at 31,679-84; Order No. 888-A at 30,209-10.

16

Order No. 888 at 31,668-73, 31,676-79; Order No. 888-A at 30,201-12; TAPS v.
FERC at 687-88.
17
18

New York v. FERC, 535 U.S. 1 (2002).
Order No. 888-A, FERC Stats. & Regs & 31,048 at 30,230-31.

Docket No. RM02-12-000

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14.
In Tennessee Power,19 the Commission clarified that interconnection is a critical
component of open access transmission service and thus is subject to the requirement that
utilities offer comparable service under the OATT. The Commission encouraged, but did
not require, each Transmission Provider to revise its OATT to include interconnection
procedures, including a standard interconnection agreement and specific criteria,
procedures, milestones, and timelines for evaluating applications for interconnection.20
15.
As discussed in Order No. 2003, interconnection is a critical component of
transmission service, and having a standard interconnection procedures and a standard
agreement applicable to Small Generating Facilities will (1) limit opportunities for
transmitting utilities to favor their own generation, (2) remove unfair impediments to
market entry for small generators by reducing interconnection costs and time, and
(3) encourage investment in generation and transmission infrastructure, where needed.21
We expect the SGIP and SGIA adopted here will resolve most disputes, minimize
opportunities for undue discrimination, foster increased development of economic Small
Generating Facilities, and protect system reliability.
C.

The Large and Small Generator Interconnection Rulemaking
Proceedings

16.
In the Advance Notice of Proposed Rulemaking (ANOPR) issued in Docket No.
RM02-1-000, the Commission initiated a collaborative process where members of the
public, electric industry participants, and federal and state agencies (collectively,
stakeholders) were invited to draft proposed generator interconnection procedures and a
generator interconnection agreement.22 The stakeholders filed their consensus documents
in January 2002. The Commission then issued a Notice of Proposed Rulemaking (Large

19

Tennessee Power Co. (Tennessee Power), 90 FERC & 61,238 at 61,761 (2000),
reh'g denied, 91 FERC & 61,271 (2000).
20

See, e.g., Commonwealth Edison Co., 91 FERC & 61,083 (2000).
21

22

Order No. 2003 at P 10.

Standardizing Generator Interconnection Agreements and Procedures, Advance
Notice of Proposed Rulemaking, 66 FR 55140 (Nov. 1, 2001), FERC Stats. & Regs.
& 35,540 (2002).

Docket No. RM02-12-000

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Generator Interconnection NOPR)23 proposing standard interconnection procedures and a
standard interconnection agreement that generally followed the consensus documents.
The Large Generator Interconnection NOPR also proposed solutions to issues left
unresolved in the consensus documents.
17.
Although the Large Generator Interconnection NOPR provided special treatment
for Small Generating Facilities, some commenters urged the Commission to initiate a
separate proceeding to develop standard interconnection procedures and agreements that
addressed the unique concerns of Small Generating Facilities.24 They proposed one set of
simplified interconnection rules for Small Generating Facilities no larger than 2 MW, and
another for facilities larger than 2 MW but no larger than 20 MW. Persuaded that
different procedures and agreements were indeed needed, the Commission severed Small
Generating Facilities from the Large Generator Interconnection proceeding and issued a
Small Generator Interconnection Advance Notice of Proposed Rulemaking (ANOPR) in
August 2002.25 The Small Generator Interconnection ANOPR proposed two SGIPs and
two SGIAs (ANOPR SGIPs and SGIAs) using 2 MW as a breakpoint. It encouraged
stakeholders to pursue consensus on the ANOPR SGIPs and SGIAs. To that end, the
Commission convened a series of public meetings designed to enable them to discuss and
reach as much consensus as possible.

23

Standardization of Generator Interconnection Agreements and Procedures,
Notice of Proposed Rulemaking, 67 FR 22250 (May 2, 2002), FERC Stats. & Regs.
& 32,560 (2002).
24

Those commenters included the Solar Energy Industries Association, the
U.S. Fuel Cell Council, the American Solar Energy Society, the U.S. Combined Heat and
Power Association, the International District Energy Association, and the American Wind
Energy Association.
25

Standardization of Small Generator Interconnection Agreements and Procedures,
Advance Notice of Proposed Rulemaking, 67 FR 54749 (Aug. 26, 2002), FERC Stats. &
Regs. & 35,544 (2002).

Docket No. RM02-12-000

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18.
The negotiating parties, who we refer to collectively as Joint Commenters, then
filed SGIPs and SGIAs (Joint Commenters' SGIPs and SGIAs) with the Commission.26
While Joint Commenters reached consensus on some issues, many remained unresolved.
Joint Commenters' SGIPs included two procedures for evaluating whether a proposed
Small Generating Facility could be interconnected safely and without degrading
reliability. The first was a standard Study Process that used a scoping meeting and three
technical studies to evaluate a proposed interconnection. The second was a streamlined
procedure that used technical screens to identify those proposed interconnections that
clearly would not jeopardize the safety and reliability of the Transmission Provider's
electric system. Public comments on the Small Generator Interconnection ANOPR were
filed shortly thereafter.
19.
In July 2003, the Commission issued Order No. 2003, which established standard
procedures and an interconnection agreement for the interconnection of large generators
and explained the Commission's jurisdiction over interconnections. The Commission

26

This group refers to itself as the Coalition. However, in this Final Rule we shall
refer to the group as "Joint Commenters" to distinguish it from the similarly named Small
Generator Coalition. With the exception of these early references to Joint Commenters'
comments submitted in response to the ANOPR, all references in the remainder of this
Preamble to Joint Commenters are to its supplemental comments. Joint Commenters did
not file initial comments in response to the Small Generator Interconnection NOPR, only
supplemental comments. Joint Commenters is a diverse group of stakeholders that
includes:
• over 25 small generator trade groups, promoters, and equipment manufacturers,
who refer to themselves collectively as the "Small Generator Coalition,"
• state regulatory agencies represented by the National Association of Regulatory
Utility Commissioners,
• American Public Power Association (which did not participate in the filing of Joint
Commenters' supplemental comments), and
• Transmission Providers represented by Edison Electric Institute (EEI) and National
Rural Electric Cooperative Association (NRECA)
A list of commenter acronyms may be found in Appendix A.

Docket No. RM02-12-000

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simultaneously issued the Small Generator Interconnection NOPR.27 Certain provisions
in the Large Generator Interconnection Final Rule as well as Joint Commenters'
SGIPs/SGIAs influenced the Small Generator Interconnection NOPR.28 The Commission
asked commenters to address whether Small Generating Facilities should be treated
differently from Large Generating Facilities under the LGIP and LGIA adopted in Order
No. 2003.
20.
Sixty-five entities submitted initial comments in response to the Small Generator
Interconnection NOPR. The comments generally support the Commission's effort to
remove barriers to the development of Small Generating Facilities. Following the
issuance of the Small Generator Interconnection NOPR and the initial comment due date,
NARUC in October 2003 updated its own interconnection procedures and agreement,
referred to here as the NARUC Model. NARUC stated that the NARUC Model is based
on the best practices of the state regulatory agencies that have interconnection procedures
for small generators. NARUC encouraged state regulators to use the NARUC Model as a
basis for developing their interconnection procedures and suggested that the Commission's
documents reflect these "best practices." On July 7, 2004, the Commission staff added to
the record in this proceeding the latest version of the NARUC Model.29 A few
commenters favor terminating this proceeding or, in the alternative, adopting the NARUC
Model.
21.
The Commission then issued a Notice of Request for Supplemental Comments,
observing that the small generator industry had continued to evolve since the Commission
first received comments in this proceeding.30 In the notice, the Commission observed that
27

Standardization of Small Generator Interconnection Agreements and Procedures,
Notice of Proposed Rulemaking, 60 FR 49974 (Aug. 19, 2003), FERC Stats. & Regs.
& 32,572 (2003) (Small Generator Interconnection NOPR).
28

See, e.g., Proposed SGIA articles 4.1, 5.1.2, 5.1.2.1, 5.2, 6.1-6.9, 6.12-6.20, 7,

and 8.
29

NARUC members had participated in the ANOPR discussions fostered by the
Commission; there was much similarity between the provisions of the NARUC Model and
the Small Generator Interconnection NOPR.
30

See Notice of Request for Supplemental Comments, 69 FR 51024 (Aug. 17,
2004). The Commission then granted two extensions of time at the request of Joint
Commenters. See Notices issued on September 30, 2004 and November 30, 2004 in
(Footnote continued on next page)

Docket No. RM02-12-000

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several states had recently adopted new guidelines for small generator interconnections,
and that the stakeholders who participated in the Commission's ANOPR process were
continuing to work toward resolving various SGIP and SGIA issues. The Commission
invited joint supplemental comments describing new consensus positions but discouraged
resubmissions of prior positions.
22.
Joint Commenters, which as noted above represents a diverse group of small
generator interests, Transmission Providers, and state regulators who participated in the
ANOPR process, was the only group to file a consensus position. Some Joint
Commenters – Small Generator Coalition, NRECA, and NARUC – filed their own
supplemental comments as well. Ten other entities (mostly state regulatory
commissions31) submitted supplemental comments.32
23.
In its supplemental comments, Joint Commenters endorsed a single SGIP and
single SGIA for Small Generating Facilities no larger than 20 MW. Joint Commenters
recommended several revised provisions in areas where they had not been able to reach
consensus during the ANOPR process. These included dispute resolution, confidentiality,
insurance, equipment certification, and technical screens, among others. Joint
Commenters, which includes NARUC, also endorsed a greatly simplified all-in-one
application form/procedures/terms and conditions document for the interconnection of
certified inverter-based Small Generating Facilities no larger than 10 kW.
24.
In Order No. 2003-A, the Commission determined that the LGIP and LGIA were
designed around the needs of traditional synchronous technology generators and that
generators relying on non-synchronous technologies, such as wind plants, may find that a
specific requirement is inapplicable or that a different approach is needed.33 Accordingly,
the Commission added a blank Appendix G (Requirements of Generators Relying on NonSynchronous Technologies) to the LGIA as a placeholder for requirements specific to
non-synchronous technologies.34 At a September 24, 2004 technical conference on the
Docket No. RM02-12-000.
31

CT DPUC, Minnesota PUC, and Massachusetts DTE submitted copies of their
recently enacted small generator interconnection rules.
32

The supplemental commenters are listed in Appendix A.

33

Order No. 2003-A at P 407, n. 86.

34

Id.

Docket No. RM02-12-000

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interconnection requirements of non-synchronous technologies, panelists were asked
whether Appendix G type requirements should apply to Small Generating Facilities. They
responded that special capabilities, such as low voltage ride-through, simply were not
needed for any Small Generating Facility, whether wind powered or not. As a result, the
Wind NOPR issued shortly thereafter applies only to the interconnection of wind powered
generators 20 MW or larger.35 In its supplemental comments, National Grid asks the
Commission to implement standards for Small Generating Facilities that are similar to
those proposed for Large Generating Facilities in the Wind NOPR. This Final Rule does
not include such standards. The wind generating facilities that will interconnect under this
Final Rule will be small and will have minimal impact on the Transmission Provider’s
electric system. The reliability requirements proposed for wind powered Large
Generating Facilities are not needed for small wind generating facilities.
25.
In crafting this Final Rule, we considered all of the comments received throughout
the course of this proceeding, including the initial documents submitted by Joint
Commenters in response to the ANOPR, the Small Generator Interconnection NOPR and
the comments filed in response, the NARUC Model, and the supplemental comments. We
considered all comments filed in response to the Small Generator Interconnection NOPR
before April 29, 2005, and they are part of the record in this proceeding.36
II.

DISCUSSION

26.
Part A of this discussion (Descriptions of the SGIP and SGIA) describes in general
terms the interconnection procedures document (SGIP) and interconnection agreement
(SGIA) we are adopting in this Final Rule.
27.
Part B (Overview of the Interconnection Process for Small Generating Facilities)
describes the processes that the Interconnection Customer and the Transmission Provider
must follow to interconnect the Small Generating Facility with the Transmission
Provider's Transmission System.

35

Interconnection for Wind Energy and Other Alternative Technologies, Notice of
Proposed Rulemaking, 70 FR 4791 (Jan. 31, 2005) (Wind NOPR).
36

Comments addressing issues filed in other dockets (for instance, the Wind
NOPR) are not part of this proceeding even if they were cross-filed in Docket No.
RM02-12-000.

Docket No. RM02-12-000

- 14 -

28.
Part C (Issues Related to Both the SGIP and the SGIA) addresses issues that are
common to the interconnection procedures and agreement documents.
29.
Part D (Issues Related to the Interconnection Request) addresses issues related to
the Interconnection Request (application form) that the Interconnection Customer submits
to the Transmission Provider to request interconnection of its Small Generating Facility.
30.
Part E (Issues Related to the SGIP) addresses issues related only to the
interconnection procedures document.
31.
Part F (Issues Related to the SGIA) addresses issues related only to the
interconnection agreement.
32.
Part G (The 10kW Inverter Process) describes the simplified all-in-one application
form/procedures/terms and conditions document for the interconnection of certified
inverter-based Small Generating Facilities no larger than 10 kW.
33.
Part H (Other Significant Issues) addresses the pricing of Interconnection Facilities
and Upgrades, jurisdictional issues, variations from the Final Rule, the availability of
waivers for small entities, the effect of this Final Rule on the OATT reciprocity
provisions, and others.
34.
Finally, Part I (Compliance Issues) addresses issues pertaining to the requirement
that a Transmission Provider file conforming amendments to its existing OATT, the
treatment to be accorded to existing interconnection agreements (grandfathering), and how
a Transmission Provider is to file executed and unexecuted interconnection agreements.
A.

Descriptions of the SGIP and SGIA

35.
In Order No. 2003, the Commission adopted two documents that are to be used for
the interconnection of Large Generating Facilities – the Large Generator Interconnection
Procedures document and the Large Generator Interconnection Agreement. The LGIP
describes how the Interconnection Customer's Interconnection Request (i.e., application)
is to be evaluated from an engineering perspective using a four-step process. These are
the scoping meeting, the feasibility study, the system impact study, and the facilities
study. The purpose of the evaluation is to determine the impact the proposed
interconnection will have on the Transmission Provider's electric system and identify new
equipment and modifications needed to accommodate the interconnection. The LGIA,
which is signed after the proposed interconnection has been successfully evaluated using

Docket No. RM02-12-000

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the provisions contained in the LGIP, describes the legal relationships of the Parties,
including who pays for equipment modifications to the Transmission Provider's electric
system.
36.
The SGIP and SGIA we adopt in this Final Rule serve the same purposes as the
LGIP and LGIA. The SGIP includes the same four-step process for evaluating an
Interconnection Request as does the LGIP, except that it is simplified in several aspects
and includes timelines to accelerate the interconnection of Small Generating Facilities. In
the SGIP, this procedure is termed the "Study Process." The SGIP also includes special
procedures for evaluating two subgroups of Small Generating Facilities, (1) a "Fast Track
Process" that uses technical screens to evaluate a certified Small Generating Facility no
larger than 2 MW, and (2) a "10 kW Inverter Process" that uses the same technical screens
to evaluate a certified inverter-based Small Generating Facility no larger than 10 kW. The
SGIA serves the same purpose for the interconnection of a Small Generating Facility as
the LGIA does for a Large Generating Facility. It describes the legal relationships of the
Parties, including who will pay for equipment modifications to the Transmission
Provider's electric system.
37.
The Commission received many comments proposing modifications to the
Proposed SGIP and Proposed SGIA, which helped greatly to shape this Final Rule.
NARUC argued that the Commission should adopt portions of its Model to harmonize
federal interconnection rules with those found in states with interconnection rules. Small
Generator Coalition recommended that the Commission in this proceeding adopt the
NARUC Model instead of the Proposed SGIP and Proposed SGIA. Some of the
provisions proposed by Joint Commenters (which includes NARUC representation) in its
supplemental comments also followed the NARUC Model. We are adopting in this Final
Rule many of these consensus provisions as well as those proposed by NARUC because
they are just and reasonable and serve the twin goals of removing barriers to the
development of small generation while preserving the safety and reliability of the nation's
electric system.
38.
The SGIP, while relying heavily on NARUC's and Joint Commenters' proposals, is
not a significant departure from the Proposed SGIP. Both use nearly identical
interconnection study processes ("Study Process") to evaluate Interconnection Requests
that do not qualify for special handling. Regarding special handling, both use technical
screens to identify Small Generating Facilities no larger than 2 MW that can be
interconnected with no adverse impact on safety or reliability. The SGIP we adopt in this
Final Rule, however, includes two such special procedures, the Fast Track Process and the
10 kW Process. The choice of which one the Interconnection Customer may use depends
on the size and technology of the Small Generating Facility. The SGIP also includes the

Docket No. RM02-12-000

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Interconnection Request (application form) that is to be used by all Interconnection
Customers except those eligible to use the 10 kW Process, and feasibility study, system
impact study, and facilities study agreements that are to be used in the Study Process.37
39.
The SGIA is to be used for the interconnection of all Small Generating Facilities
subject to this Final Rule, with the exception of certain very small inverter-based
generators that use an all-in-one application form/procedures/terms and conditions
document (the 10 kW Inverter Process document). The Proposed SGIA included several
provisions that were similar to those contained in the LGIA that was issued concurrent
with the Small Generator Interconnection NOPR. Some commenters complained that the
Proposed SGIA was too long and complex for owners of Small Generating Facilities, who
may be small businesses or operators of small farms, for example. We are streamlining
and simplifying the SGIA in many ways to address these concerns. We are adopting Joint
Commenters' proposals submitted in its supplemental comments where appropriate and
have given consideration to the recommendations contained in the NARUC Model and
those suggested by other commenters. In particular, the SGIA does away with the
requirement that Interconnection Customers maintain multiple kinds of insurance, instead
requiring only that they maintain a reasonable amount based on the specific characteristics
of the interconnection. We also adopt a streamlined dispute resolution provision designed
to resolve disputes as quickly and inexpensively as possible. We have also shortened the
contract termination provisions and the various liability related provisions.
40.
We adopt in the SGIA the same pricing policy for Network Upgrades to the
Transmission Provider's Transmission System as in Order No. 2003. For a Small
Generating Facility interconnecting with a non-independent entity such as a vertically
integrated utility, the Interconnection Customer initially funds the cost of any required
Network Upgrades (i.e., Upgrades to the Transmission System at or beyond the Point of
Interconnection) and it is then subsequently reimbursed for this upfront payment by the
Transmission Provider. However, we expect that, for most interconnections of Small
Generating Facilities, there will be no Network Upgrades. We also allow more pricing
flexibility for a Transmission System that is operated by an independent entity such as an
RTO or Independent System Operator (ISO). The costs of Distribution Upgrades are
directly assigned to the Interconnection Customer.

37

Note that the scope and payment provisions of the feasibility, system impact, and
facilities studies are contained in the actual study agreements which are included as
Attachments 6, 7, and 8 to the SGIP, not section 3 of the SGIP.

Docket No. RM02-12-000

- 17 -

41.
In conclusion, we encourage the standardization of interconnection practices across
the nation, using as a starting point the SGIP and SGIA found in this Final Rule. We hope
to foster seamless interconnection procedures for Interconnection Customers and
Transmission Providers. Equipment manufacturers will have compatible technical
specifications to meet. New generation will be located on the basis of what works best for
the Interconnection Customer and the Transmission Provider, not jurisdictional
differences in interconnection rules.
B.

Overview of the Interconnection Process for Small Generating Facilities

42.
Before submitting its Interconnection Request, the Interconnection Customer may
informally discuss the proposed interconnection with the Transmission Provider.38 The
Interconnection Customer then submits an Interconnection Request to the Transmission
Provider and the Transmission Provider assigns the Interconnection Customer's project a
Queue Position based on the date and time the Interconnection Request is received by the
Transmission Provider. The Interconnection Request must be accompanied by a deposit
that goes toward the cost of the feasibility study, unless it is submitted under the Fast
Track Process or the 10 kW Inverter Process, which have small processing fees.
43.
As noted above, an Interconnection Request can be evaluated in one of three ways.
The Study Process is the default method; it relies on the scoping meeting and standard
feasibility, system impact, and facilities studies to evaluate the safety and reliability of the
proposed interconnection. It is identical in concept to the evaluation procedure that is
used for the interconnection of Large Generating Facilities. Two optional methods are
available to Interconnection Customers whose Small Generating Facilities are certified
and no larger than 2 MW. The 10 kW Inverter Process is available for owners of inverterbased Small Generating Facilities no larger than 10 kW and the Fast Track Process is
available for owners of any kind of Small Generating Facility no larger than 2 MW.
44.
The Study Process normally consists of a scoping meeting, a feasibility study, a
system impact study, and a facilities study. At the scoping meeting, the Parties discuss the
proposed interconnection and review any existing studies that could aid in the evaluation
of the proposed interconnection. The feasibility study is a preliminary technical
assessment of the proposed interconnection. The system impact study is a more detailed
assessment of the effect the interconnection would have on the Transmission Provider's
38

Flowcharts depicting interconnection procedures are presented in Appendices B
(Study Process), C (Fast Track Process), and D (10 kW Inverter Process).

Docket No. RM02-12-000

- 18 -

electric system and Affected Systems. The facilities study determines what modifications
to the Transmission Provider's electric system are needed, including the detailed costs and
scheduled completion dates for these modifications. These studies identify adverse
system impacts39 that need to be addressed before the Small Generating Facility may be
interconnected and any equipment modifications required to accommodate the
interconnection. The Interconnection Customer pays the Transmission Provider's actual
cost of performing the studies. Once the Interconnection Customer agrees to fund any
needed Upgrades, the Parties execute an SGIA that, among other things, formalizes
responsibility for construction and payment for Interconnection Facilities and Upgrades.40
45.
A Fast Track Process is available for certified Small Generating Facilities no larger
than 2 MW. Under this process, in place of the scoping meeting and three interconnection
studies, technical screens are used to quickly identify reliability or safety issues. If the
proposed interconnection passes the screens, the Transmission Provider offers the
Interconnection Customer an SGIA. If the proposed interconnection fails the screens, but
the Transmission Provider determines that the Small Generating Facility may nevertheless
be interconnected without affecting safety and reliability, the Transmission Provider also
offers the Interconnection Customer an SGIA. However, if the Transmission Provider is
concerned that the interconnection could degrade the safety and reliability of its electric
system, the Parties may conduct a customer options meeting to discuss how to proceed. In
that meeting, the Transmission Provider must offer to perform a supplemental review of
the proposed interconnection, paid for by the Interconnection Customer, to identify
Upgrades needed to accommodate the interconnection. Once the Interconnection
Customer agrees to pay for any Upgrades called for in the supplemental review, the
Parties execute an SGIA. If, after the supplemental review, the Transmission Provider
still is unsure whether the proposed interconnection will degrade the safety and reliability
of the its electric system, the Interconnection Request is evaluated using the Study Process
described above; i.e., scoping meeting, feasibility, system impact, and facilities studies,
followed by the execution of an SGIA.

39

An adverse system impact means that technical or operational limits on
conductors or equipment are exceeded under the interconnection, which may compromise
the safety or reliability of the electric system.
40

The Study Process is similar to the LGIP. However, we expect that the
interconnection of a Small Generating Facility will take substantially less time and cost
substantially less than a Large Generating Facility.

Docket No. RM02-12-000

- 19 -

46.
Finally, the 10 kW Inverter Process is available for the interconnection of certified
inverter-based generators no larger than 10 kW. The all-in-one 10 kW Inverter Process
document includes a simplified application form, interconnection procedures, and a brief
set of terms and conditions (akin to an interconnection agreement). The 10 kW Inverter
Process uses the same technical screens to evaluate the safety and reliability of the
proposed interconnection as the Fast Track Process. Unless the Transmission Provider
demonstrates that the Small Generating Facility cannot be interconnected safely and
reliably based on the results of an analysis using the screens, the Transmission Provider
approves the application. Once the Interconnection Customer certifies that equipment
installation is complete and upon a satisfactory inspection by the Transmission Provider,
the Transmission Provider authorizes the interconnection. To further simplify the
interconnection process, what would normally be considered a separate interconnection
agreement has been distilled into a terms and conditions document that the
Interconnection Customer agrees to at time the Interconnection Request is submitted to the
Transmission Provider. The all-in-one 10 kW Process document is included in
Attachment 5 to the SGIP.
C.

Issues Related to Both the SGIP and the SGIA

47.
This discussion, and those that follow, addresses the evolution of the SGIP and
SGIA from the Proposed SGIP and Proposed SGIA. As is the custom in most
Commission rulemakings, we use the Small Generator Interconnection NOPR as our point
of reference, discussing each issue in turn, describing the comments addressed to the
topic, and closing with the Commission conclusion. There are differences between the
Proposed SGIP and SGIA and the documents we adopt in this Final Rule that reflect the
helpful comments filed in this rulemaking. For example, we have in some instances
adopted terminology more compatible with that used in state interconnection documents.
This should make for simpler, more easily understood documents for small generators that
are compatible across jurisdictions for both Interconnection Customers and Transmission
Providers. However, the SGIP and SGIA also need to be interpreted in the broader
context of the entire collection of generator interconnection documents that will appear in
a Transmission Provider's OATT, including the LGIP and LGIA. Thus, there are some
instances where consistency among generator interconnection documents within a single
tariff makes it necessary to adopt Large Generator Interconnection terminology or policy.
The Commission asked for comments in the Small Generator Interconnection NOPR
addressing this topic, and it is the first to be addressed in the discussion that follows.

Docket No. RM02-12-000

- 20 -

48.
Many of the issues in this rulemaking also arose in the Large Generator
Interconnecting rulemaking and we will not address them again here at any great length.
Where there is no compelling reason to depart from prior precedent, we affirm the
Commission's prior decisions without detailed discussion. Therefore, this order focuses
on those issues needing a small-generator-specific resolution.
49.
Finally, we note that the 10 kW Inverter Process for certified inverter-based Small
Generating Facilities is an all-in-one application form/procedures/terms and conditions
document that does not lend itself easily to the separate discussions of the Proposed
SGIP/SGIA and the SGIP and SGIA discussions that follow. We will address it in the
separate Part G discussion, below. We emphasize, however, that the intent of this Final
Rule is that the 10 kW Inverter Process fits within the framework of the SGIP and SGIA,
and it is for that reason that we encourage Interconnection Customers and Transmission
Providers to use this Preamble, the SGIP, and the SGIA for assistance in interpreting the
10 kW Inverter Process should a dispute arise.
Consistency between the Large Generator and Small Generator
Documents
50.
In the Small Generator Interconnection NOPR, the Commission asked commenters
to address the need for consistency between the provisions of the LGIP/LGIA and the
SGIP/SGIA.
Comments
51.
NARUC argued that the Small Generator Interconnection NOPR was too
complicated for most small generator interconnections. Instead, the Commission should
adopt portions of the NARUC Model or otherwise simplify the interconnection process.
NARUC pointed out that many Small Generating Facilities (including most inverter-based
generators) will interconnect with low voltage facilities, whether Commissionjurisdictional or state-jurisdictional. Thus, this Final Rule should be as consistent with
state interconnection rules as possible to encourage national consistency and discourage
forum-shopping. Joint Commenters also supports this outcome.
52.
AEP supports consistency between the large and small generator documents.
However, it notes that Joint Commenters developed consensus positions on many issues
during the ANOPR process. Where such agreement was reached, AEP proposes that the
Commission adopt that position.

Docket No. RM02-12-000

- 21 -

53.
Midwest ISO argues that the Commission should ensure consistency between the
large and small generator documents, wherever possible, because all stakeholders will
benefit from a consistent approach to the interconnection of generation facilities.
54.
PJM, on the other hand, proposes that the Commission simply use the LGIA for all
interconnections, arguing that having different rules for large and small generator
interconnections would be overly burdensome. PJM also states that its own
interconnection rules take this approach and are hailed as being very successful.
55.
Baltimore G&E argues that the Commission should require the same terms for all
generators, regardless of size, unless there is a specific reason not to do so. Therefore, it
requests that the Commission provide a clear explanation wherever these Final Rule
provisions differ from those in Order No. 2003. Southern Company agrees, arguing that
Large and Small Generating Facilities should be treated similarly "because both can have .
. . significant impacts upon the Transmission Provider's electric system."41
56.
BPA argues that the procedures and technical requirements applicable to large
generators "should not apply to the interconnection of small generators that have minimal
impacts on a transmission grid."42 However, where the Commission does use
"substantially similar or consistent procedures, contract terms, and other requirements" for
both Large and Small Generating Facilities, "the Commission should strive to provide
consistency between its large and small generator rules."43
57.
Nevada Power also supports the concept of having the provisions applicable to
Small Generating Facilities similar to those in Order No. 2003. According to Nevada
Power, "[t]hese commonalities will avoid the confusion of differing terminologies,
facilitate consistent and fair implementation, and minimize the need for separate, parallel
administrative processes to administer the agreements."44 However, Nevada Power also
argues that consistency should not compromise the goals of simplifying and expediting the
interconnection of Small Generating Facilities. Instead, this Final Rule should be
designed to "enable a common language and common administrative procedures to be
41

Southern Company at 19.

42

BPA at 3.

43

Id.

44

Nevada Power at 4.

Docket No. RM02-12-000

- 22 -

implemented and still maintain appropriate distinctions between the small generators and
the large generators."45 Nevada Power argues that the benefits of consistency are
illustrated by Proposed SGIA article 5.1.2.1, which specifies the refund process for
advances made by the Interconnection Customer for Network Upgrades. By having the
same refund process for the amounts advanced for Network Upgrades in the SGIA and the
LGIA, the Transmission Provider can set up one system, instead of two separate systems,
to track and make any such refunds.
58.
In their supplemental comments, NARUC and the other Joint Commenters
proposed SGIP and SGIA provisions that balance the need for simplicity with the need of
Transmission Providers to ensure the safety and reliability of the Transmission Provider's
electric system. In addition, Joint Commenters also proposed a process for certified
inverter-based Small Generating Facilities no larger than 10 kW that can also be used as a
model for the states.
Commission Conclusion
59.
Unless expressly changed in this Final Rule, the Commission's existing
interconnection precedent and Order No. 2003 are relevant to this Final Rule and should
be used as guidance for interpretation and implementation. We have tried to be consistent
between the rules for Large and Small Generating Facilities, unless there is a specific
reason to do otherwise, while considering NARUC's call for federal-state consistency and
the recommendations of other commenters.
60.
We note Joint Commenters' proposal of much simpler interconnection procedures
and agreement for inverter-based generators no larger than 10 kW.46 Taking these
extremely small units out of the mix has allowed us to adopt standard rules for larger
Small Generating Facilities. According to NARUC, the process of interconnecting with a
state-jurisdictional facility should not be substantially different from the process for
interconnecting with a Commission-jurisdictional facility. Standard interconnection
procedures are especially important for Interconnection Customers and manufacturers of
off-the-shelf generating equipment.

45
46

Nevada Power at 4-5.

The 10 kW Inverter Process is largely based on the work of the Massachusetts
DTE and its stakeholders group.

Docket No. RM02-12-000

- 23 -

61.
In general, we are including standard contractual provisions in the SGIA that are
consistent with their counterparts in the LGIA. However, in many cases commenters
stressed the need to simplify those provisions to avoid burdening Small Generating
Facilities. Many commenters offered ways to shorten and simplify those provisions.
Where possible, we accept those proposals. These streamlined provisions adequately
protect the Parties while lowering the transaction costs of entering into an interconnection
agreement. The SGIP closely tracks the revised NARUC Model but adopts the single
screen that NARUC and the other Joint Commenters later proposed in supplemental
comments. Last, we have ensured that provisions common to the SGIP and SGIA (such
as dispute resolution and confidentiality) are consistent.
62.
Definitions of Terms Used in the SGIP and SGIA – NARUC and others propose
that the Commission use the defined terms in the NARUC Model instead of those found in
the Small Generator Interconnection NOPR. We conclude that several of the terms
defined in the Proposed SGIP and SGIA are either unnecessary or add complexity to the
interconnection process. We are simplifying the SGIP and SGIA by deleting those
definitions. Comments on specific terms are discussed below.
63.
Emergency Condition – The Proposed SGIA defined Emergency Condition as a
situation that, in the judgment of the Party making the claim, is imminently likely to
(1) endanger life or property, (2) have an adverse impact on the safety or reliability of the
Transmission Provider's or an affected third party's electric system (Affected System), or
(3) have a material adverse effect on the safety or operation of the Interconnection
Customer's facilities. If there is an Emergency Condition, the Transmission Provider may
take necessary and appropriate actions to protect the safety and reliability of its electric
system, including interrupting, suspending, or curtailing interconnection service. While
system restoration and black start are considered Emergency Conditions, the Small
Generating Facility is not obligated to have black start capability.
Comment
64.
Bureau of Reclamation objects to the provision that the Small Generating Facility
is not obligated by the SGIA to have black start capability. Black start capability is an
issue best handled by the control area rather than the Transmission Provider and that
mentioning black start here raises the question of by whom and when black start capability
could be required of the Small Generating Facility. In addition, Bureau of Reclamation
proposes that the definition of Emergency Condition also include a "threat or danger to the
environment."

Docket No. RM02-12-000

- 24 -

Commission Conclusion
65.
We see no need to modify the definition of Emergency Condition. The SGIA does
not interfere with the control area's ability to establish a voluntary restoration plan,
including black start. The SGIA requires the Parties to adhere to all Applicable Laws and
Regulations relating to pollution and protection of the environment or natural resources.
Therefore, Bureau of Reclamations' proposed revision is not necessary.
66.
Network Upgrades – Comments concerning the definition of Network Upgrades
are addressed in Part II.H (Pricing/Cost Recovery for Interconnection Facilities and
Upgrades).
67.
Use of Calendar Days v. Business Days – The Proposed SGIP and Proposed
SGIA used both calendar days and Business Days to establish deadlines for particular
activities.
Comments
68.
Ameren, EEI, and NYTO request that all references to calendar day be changed to
"Business Day." Ameren and EEI state that doing so would make the SGIP and SGIA
consistent. They also state that this is particularly important for the three and five day
time limits, especially where the Transmission Provider may not have sufficient staff to
respond within the required time. Ameren and NYTO argue that using both calendar days
and Business Days is confusing. NYTO further notes that using Business Days rather
than calendar days gives the Parties more time to meet deadlines. In addition, NYTO
states that using calendar days does not account for normal business delays, including
those caused by storm emergencies.
Commission Conclusion
69.
We agree that references to the passage of time should be consistent. Accordingly,
we are changing calendar days to Business Days throughout the SGIP and SGIA, with
two exceptions. First, using calendar days is proper in the SGIA's billing and payment
provisions because these activities are traditionally tied to calendar days. Second, SGIA
article 7.6.1 Default provisions are stated in terms of calendar days to be consistent with
the Commission's regulations that require at least 60 calendar days notice of a proposed
cancellation or termination of a contract. Where we have replaced calendar days with
Business Days, we have adjusted the number of days to reflect about the same passage of
time. Arguments relating to the amount of time a Party has to complete an action are
discussed below.

Docket No. RM02-12-000

- 25 -

70.
Maximum Size of a Small Generating Facility – In the Small Generator
Interconnection NOPR, the maximum size of a Small Generating Facility is 20 MW.
Where there is more than one unit generating power at a particular site, the Commission
proposed to aggregate the total capacity of all generation units using the same Point of
Interconnection. The Commission sought comments on a circumstance when the
Interconnection Customer desires to increase the capacity of an existing generating
facility. The Commission proposed that the total size of the facility would be determined
by the sum of the existing and the incremental capacity. Thus, a 10 MW addition to an
existing 15 MW facility would be treated as a 25 MW facility. The Commission also
sought comments on how to evaluate an Interconnection Request that specifies a level of
capacity below the maximum rating of the Small Generating Facility. Finally, the
Commission invited comments on whether Small Generating Facilities with multiple
Points of Interconnection should be treated separately for queuing and interconnection
study purposes.
Comments
Revising the Maximum Size of a Small Generating Facility
71.
Ameren, EEI, and NRECA ask the Commission to reduce the maximum size of a
Small Generating Facility from 20 MW to 10 MW. They argue that the lower size limit
would help ensure safety and reliability of the Transmission Provider's electric system.
They also note that it would also be consistent with IEEE Standard 1547,47 and argue that
the 20 MW size limit is particularly challenging for Transmission Providers because of the
types of analyses required to evaluate their interconnection and the restrictive time limits
placed on performing them.
72.
EEI similarly argues that many states have adopted 10 MW as the maximum size of
a Small Generating Facility and that the Commission should follow suit. It argues that a
10 MW size limit is better suited to the Small Generating Facility configurations most
likely to be proposed under the Final Rule. While reducing the size limit to 10 MW

47

IEEE Standard 1547, approved in June 2003, is the Institute of Electrical and
Electronics Engineers' standard for interconnecting distributed resources with electric
power systems. The standard applies only to generating equipment no larger than 10 MW.

Docket No. RM02-12-000

- 26 -

creates a gap between the Large and Small Generating Facility interconnection provisions,
that gap can be easily remedied by making the LGIP and LGIA applicable to generating
facilities larger than 10 MW.
73.
NRECA notes in its initial comments that 10 MW is the upper limit for small
generators in Texas, California, New York, and Ohio, and that no state currently has rules
that apply to the interconnection of generators larger than 10 MW. According to NRECA,
the Commission's statement in the Small Generator Interconnection NOPR that the
20 MW maximum size would "encourage the development of a greater number of small
generators and promote the development of innovative small generation technologies" is
not supported by engineering reality and industry practice. NRECA participated with
Joint Commenters in developing consensus provisions for the SGIP and SGIA that were
submitted in Joint Commenters' supplemental comments. Based on those provisions, and
in particular the technical screens contained in the SGIP, NRECA states that, "while it still
believes that 20 MW is too large a generator to be considered 'small,' …. [Joint
Commenters'] SGIA and SGIP will work for all generators up to that size."48
74.
Cummins argues that the 20 MW size limit would result in more widespread use of
on-site Small Generating Facilities.
Commission Conclusion
75.
We agree with commenters that generator size does matter when evaluating the
effect of the Small Generating Facility on the Transmission Provider's electric system.
However, we are keeping the 20 MW size limit for Small Generating Facilities because
the interconnection studies and screens will identify any safety and reliability problems.
In particular, the screens we adopt in the SGIP are supported by small generators, state
regulators, and Transmission Provider representatives such as EEI and NRECA, as being
appropriate to evaluate the safety and reliability of interconnections of Small Generating
Facilities that are eligible for screening. We believe the higher threshold will remove
barriers to the development of a greater number of Small Generating Facilities and
promote the development of innovative small generation technologies.

48

NRECA Supplemental Comments at 5. NRECA also "believes that the screens
adopted for review of generators up to 2 MW in capacity reasonably consider the impact
that generators of those sizes will have on distribution systems." Id. The technical
screens of which NRECA speaks are the same screens adopted in this Final Rule.

Docket No. RM02-12-000

- 27 -

Increasing the Capacity of an Existing Small Generating Facility
76.
The Small Generator Interconnection NOPR proposed to evaluate increases in
capacity to existing Small Generating Facilities using the total capacity of the modified
facility, and the Commission invited comments on whether the proposal was reasonable.
Comments
77.
Several Transmission Providers49 support the NOPR's proposal. They add that if,
for example, the capacity of an existing 18 MW Small Generating Facility were to be
increased by 5 MW, the resulting 23 MW facility should be evaluated under the LGIP.
This would keep the Interconnection Customer from gaming the system by incrementally
increasing the size of an existing Small Generating Facility so that the capacity addition
does not exceed the 20 MW maximum, even though the ultimate capacity of the facility
does. BPA and ISO New England state that processing the Interconnection Request for
such an expansion on the basis of the total capacity would better protect the safety and
reliability of the Transmission Provider's electric system. Tangibl, on the other hand,
argues that evaluating the Interconnection Request based on the total increased capacity of
the Small Generating Facility would discourage such increases and hinder the increased
entry of generators into the energy markets.
Commission Conclusion
78.
We are persuaded by BPA and ISO New England that when an existing Small
Generating Facility is expanded, the Interconnection Request should be evaluated based
on the total capacity of the facility as opposed to the incremental amount of the expansion.
Similarly, an existing Large Generator seeking to increase its capacity by less than
20 MW would also have to follow the Large Generator rule, because the total capacity of
the expanded facility would be more than 20 MW. Section 4.10.1 of the SGIP reflects this
conclusion.

49

E.g., BPA, ISO-New England, NRECA, NYTO, PG&E, and Western.

Docket No. RM02-12-000

- 28 -

Evaluating the Generating Facility Based on Less Than Its Maximum
Rated Capacity
79.
In the Small Generator Interconnection NOPR, the Commission sought comments
on whether the maximum capacity of the Small Generating Facility should be used to
evaluate the Interconnection Request when the Interconnection Customer specified an
output level below the facility's maximum capability. For example, the Commission
asked whether an Interconnection Request for a generating facility with a maximum
capacity of 22 MW but seeking an interconnection for only 20 MW (and agreeing to
restrict delivery to the Transmission Provider's Transmission System to that level) should
be evaluated under the SGIP or the LGIP.
Comments
80.
Several Transmission Providers50 argue that the Interconnection Request should be
evaluated on the basis of the maximum capacity of the Small Generating Facility to ensure
that safety and reliability are not jeopardized. They argue that the Commission should not
allow a 22 MW generator to be treated as a 20 MW generator based on a promise by the
Interconnection Customer that it will never generate more than 20 MW. This would result
in an additional administrative burden on the Commission or market monitors. They also
argue that evaluating the Small Generating Facility at less than its maximum rated
capacity would not ensure that Interconnection Facilities and Upgrades are properly
designed and installed.
81.
BPA argues that evaluating a Small Generating Facility on the basis of maximum
rated capacity would prevent gaming by an Interconnection Customer and would prevent
it from submitting a request to interconnect its Small Generating Facility at a lower
capacity when it really intend to operate the facility at a higher capacity. Further,
evaluating a Small Generating Facility based on its maximum operational capacity would
avoid the need to perform a reevaluation each time the Interconnection Customer seeks to
operate at a higher output level.
82.
Likewise, NYTO claims that even if a Small Generating Facility supplies local load
and delivers only half of its output, it still contributes its full fault current to the electric
system if there is an electrical fault. Also, stability analysis is based on the full physical
50

E.g., AEP, Ameren, Avista, BPA, CA ISO, Central Maine, MidAmerican, MISO,
NYTO, PG&E, SoCal Edison, and Western.

Docket No. RM02-12-000

- 29 -

characteristics of the facility, such as maximum power capability and rotation inertia. It
further argues that if the Commission adopts a value other than the maximum capability of
the Small Generating Facility, the Interconnection Customer could "forum shop" between
the Large and Small Generating Facility interconnection provisions to get the "best deal."
83.
On the other hand, Allegheny states that if the Interconnection Customer is willing
to accept the economic risks of its decision to limit the output of its generating facility, the
Interconnection Request should be evaluated at the lower capacity.
84.
American Forest, Cummins, Nevada Power, NRECA, and Tangibl also state that
the Interconnection Request should be evaluated on the basis of requested capacity, not
the maximum capability of the generator, if the Interconnection Customer commits to
restrict the output. American Forest says that this is important for generators that
consume most of their electrical output on-site in various manufacturing processes and
export only a small fraction of their output. In its supplemental comments, Small
Generator Coalition proposes a special set of tests that could be used to determine whether
these kinds of configurations jeopardize safety and reliability.
Commission Conclusion
85.
We are persuaded that the Interconnection Request should be evaluated based on
the Small Generating Facility's maximum rated capacity. We agree with commenters that
evaluating the proposed interconnection at less than the maximum rated capacity of the
generating facility does not ensure that proper protective equipment is designed and
installed and the safety and reliability of the Transmission Provider's electric system can
be maintained.
86.
Nevada Power and other commenters propose that the Interconnection Request be
evaluated on the basis of requested capacity if the Interconnection Customer agrees to
restrict the output of its facility. We agree with NYTO, however, that even if the Small
Generating Facility delivers only a portion of its capability, it still contributes its full fault
current to the Transmission Provider's electric system if there is an electrical fault.
Therefore, the maximum capacity of the Small Generating Facility should be used to
evaluate the Interconnection Request (See section 4.10.3 of the SGIP).

Docket No. RM02-12-000

- 30 -

Evaluating Small Generating Facilities with Multiple Points of
Interconnection
87.
The Small Generator Interconnection NOPR invited comments on whether Small
Generating Facilities with multiple Points of Interconnection (such as for a wind farm or
an industrial cogeneration project serving multiple facilities) should be treated as separate
projects or as a single project for queuing and interconnection study purposes.
Comments
88.
BPA, CA ISO, ISO New England, and Tangibl argue that Small Generating
Facilities with multiple Points of Interconnection should be treated as a single project for
queuing and interconnection study purposes. BPA states that this promotes greater
efficiency and accuracy because the effects of all the generators can be evaluated in one
study. According to commenters, evaluating each Point of Interconnection as a discrete
facility may not account for the aggregate effects when multiple generation resources are
interconnected.
89.
Tangibl recommends adopting PJM's approach of one Interconnection Request for
each Point of Interconnection. Tangibl states that the Interconnection Customer should
aggregate the capacity of the multiple wind or solar projects that lie in close proximity to
one another. However, for geographically dispersed wind or solar projects, it
recommends that the project developer be able to ask the Transmission Provider to treat
each project individually for interconnection study purposes.
90.
Central Maine, Idaho Power, and others argue that evaluating Interconnection
Requests based upon a single Point of Interconnection may produce flawed results
because it may identify Upgrades incorrectly.
91.
NYTO recommends that the Transmission Provider have the option, subject to
Good Utility Practice, to either treat such projects separately for queuing and
interconnection study purposes, or as a single Point of Interconnection. This is because
each proposed Point of Interconnection presents numerous technical, operational, and
reliability issues.

Docket No. RM02-12-000

- 31 -

Commission Conclusion
92.
We adopt NYTO's proposal for the reasons cited by NYTO. The Transmission
Provider's evaluation of a project with multiple Points of Interconnection should be
performed, using Good Utility Practice, based on the project’s unique engineering and
geographic needs.
93.
Dispute Resolution (Proposed SGIA Article 8 and Proposed SGIP Section
51
2.11) – The Commission proposed adopting the same dispute resolution procedures
contained in the LGIA and LGIP. This was a departure from Joint Commenters' proposal
submitted in response to the ANOPR which obliged the Commission to supply technical
experts to resolve disputes between the Parties.
Comments
94.
Commenters were split as to which type of dispute resolution procedures should be
adopted by the Commission. Small generator proponents generally support allowing
either Party to require binding arbitration, while Transmission Providers generally oppose
such provisions. However, all commenters stress the need for quick and cost-effective
dispute resolution.
95.
CT DPUC argues that the procedures in the Small Generator Interconnection
NOPR are too cumbersome and that state commissions are best positioned to resolve
disputes in a fair manner, especially disputes over dual use facilities.
96.
NRECA and BPA support adopting the dispute resolution procedures in the LGIA.
However, BPA opposes binding arbitration and asserts that the Parties should keep
whatever appeal rights they have.
97.
Small Generator Coalition argues that most Interconnection Customers that own
Small Generating Facilities do not have the resources to enter into protracted dispute
resolution procedures with the larger Transmission Provider. It argues that complex
dispute resolution procedures may discourage Small Generating Facilities from seeking to
51

In the remainder of this Preamble, "Proposed SGIA Article xxx" refers to a
numbered article in the Small Generator Interconnection NOPR, not the SGIA adopted in
this Final Rule. The same follows for references to the Proposed SGIP. This is because
the numbering of the SGIP and SGIA does not follow the Proposed SGIP and SGIA.

Docket No. RM02-12-000

- 32 -

interconnect with Commission-jurisdictional facilities. Small Generator Coalition
questions why the Commission would propose retreating from the ANOPR consensus
result. It fears that Transmission Providers will simply refuse to submit to arbitration,
forcing an Interconnection Customer to engage in expensive and undefined litigation.
This is particularly true for owners of Small Generating Facilities no larger than 2 MW.
98.
AEP proposes that either Party be able to require binding arbitration. It states that
this approach is consistent with the consensus reached during the ANOPR process.
Cummins agrees, asserting that otherwise one Party can obstruct the process. It points out
that Interconnection Customers often lack the financial resources to pursue their rights
before the Commission or in court, and need access to low-cost, binding dispute resolution
procedures.
99.
American Forest proposes allowing the Parties to agree on other arbitration
procedures if they want to further tailor the procedures to the needs of the specific Parties.
It claims that this is the approach common in the industry.
100. Midwest ISO recommends that where an RTO has Commission-approved dispute
resolution procedures, it be allowed to apply those procedures to interconnection disputes.
101. NARUC requests that the Commission adopt the dispute resolution provisions
found in its Model. It argues that "[e]ach State already has in place a variety of avenues
for dispute resolution oriented to protect the interests of the retail customer, ranging from
a simple phone call to a State commission or consumer advocate 'consumer hotline' to a
full-blown complaint proceeding conducted by the State Commission."52 Specifically, the
NARUC Model states that "[i]f a dispute arises at any time during these procedures [the
Parties] may seek immediate resolution through complaint procedures available" through
the state regulatory commission.53 The Model (1) states that the Interconnection
Customer's Queue Position is not to be affected by its decision to pursue dispute
resolution, (2) allows either Party to require binding arbitration, (3) allows the Parties to
request that the state regulatory agency appoint a "technical master" to conduct the dispute

52

NARUC at 12-13.

53

NARUC Model at F.

Docket No. RM02-12-000

- 33 -

resolution process, and (4) states that "where possible, dispute resolution will be
conducted in an informal, expeditious manner in order to reach resolution with minimal
costs and delay. When appropriate and available, the dispute resolution may be conducted
by phone or through Internet communications."54
102. Joint Commenters, in its supplemental comments, proposes that the Commission's
Dispute Resolution Service (FERC DRS) assist Parties in resolving their disputes. Under
Joint Commenters' proposal, one Party would give the other Party written notice that they
have reached an impasse. As soon as two days afterwards, either Party may consult with
FERC DRS for guidance on how best to resolve the dispute. FERC DRS may provide the
Parties with a neutral venue to work out their dispute or may recommend alternative
avenues of dispute resolution including, but not limited to, mediation, settlement judge
talks, early neutral evaluation, or arbitration. The Parties could agree to make such
outcomes binding, but would not be required to so agree, or even to participate in
alternative dispute resolution procedures before FERC DRS.
Commission Conclusion
103. We are adopting a dispute resolution provision for both the SGIP and SGIA that
closely resembles the consensus recommendation of Joint Commenters. As the widely
disparate recommendations show, different types of interconnection disputes require
different types of dispute resolution procedures. Small Generator Coalition and others
emphasize the need to avoid expensive and time consuming arbitration provisions.
According to these commenters, if a project is forced to go to arbitration, it will likely
never be built. Instead, Joint Commenters reached consensus on a set of principles
designed to encourage the Transmission Provider and the Interconnection Customer to use
fast and low cost alternative dispute resolution procedures to work through their
differences.
104. Because the nature of the disputes that may arise are so varied, this approach will
allow FERC DRS to make specific recommendations to the Parties designed to resolve the
dispute quickly and inexpensively. In some cases, FERC DRS may simply provide the
Parties a neutral venue to discuss their differences. In other cases, FERC DRS may
recommend that the Parties put their case before a settlement judge or technical master for
either mediation or arbitration. The Parties are free to specify whether the outcome of this
alternative dispute resolution is binding.
54

Id.

Docket No. RM02-12-000

- 34 -

105. As recommended by Joint Commenters, we will not mandate that the Parties use
the FERC DRS' resources. Alternative dispute resolution is, by its nature, a collaborative
and voluntary process. However, both Parties must work in good faith to resolve their
disputes. Additionally, the provision specifies that each Party is responsible for paying
one-half of the cost of a neutral third-party employed to assist in settling the dispute.
106. We agree with CT DPUC, NARUC, and Joint Commenters (in its supplemental
comments) that a state regulatory agency may often be the best place to quickly resolve a
dispute. As mentioned above, the FERC DRS is well-equipped to recommend to Parties
the best avenue for resolving a dispute. In many cases, that may be a state regulatory
agency, if that body is willing to mediate or arbitrate the dispute.55
107. While we are allowing Parties to select a dispute resolution process, we count on
FERC DRS to ensure that both Parties are treated fairly. Thus, we disagree with
American Forest that the Parties should be able to deviate from the established dispute
resolution procedures without Commission guidance or oversight. While flexibility is
important, as many commenters have pointed out, the Parties are rarely on an equal
footing. Thus, we will scrutinize the process to ensure that Interconnection Customers are
treated fairly, especially by non-independent Transmission Providers.
108. In response to Midwest ISO's request to include ISO-specific dispute resolution
rules, under the independent entity variation, it and other independent Transmission
Providers may propose such a plan in their compliance filings.
109. Confidentiality (Proposed SGIA Article 7 and Proposed SGIP Section 2.11) –
These provisions detailed the rights and responsibilities of each Party to keep any
Confidential Information shared during the interconnection process.

55

The Commission does not require states to serve a dispute resolution function; it
lacks the statutory authority to do so. However, because commenters argue that state
participation could be beneficial, we encourage states that have the expertise, resources,
and interest to help resolve these disputes as they arise.

Docket No. RM02-12-000

- 35 -

Comments
110. Avista and Idaho Power assert that the confidentiality provisions should give state
regulators conducting an investigation the same access to confidential information as is
provided to the Commission when it conducts an investigation. Avista also requests that
the Commission address recent rulings by the Internal Revenue Service applicable to
confidential transactions. Similarly, NARUC is concerned that the proposed
confidentiality provisions might prevent state regulators from getting the information they
need in the course of conducting an investigation. The NARUC Model SGIP includes a
confidentiality provision that is similar to that proposed in the Small Generator
Interconnection NOPR. The NARUC Model SGIA simply leaves a place holder to be
filled in by the Parties.
111. Southern Company argues that Proposed SGIA article 7.1 should specify that
information supplied "as part of this [interconnection] agreement" be confidential rather
than information supplied "prior to execution of this agreement." It also says that
Proposed SGIA article 7.12 allows a broader class of information to qualify for
confidential treatment than does article 7.1, and proposes deleting article 7.12. Finally,
article 7.4 should be revised to prohibit the Interconnection Customer from sharing
Confidential Information with "potential purchasers or assignees of the Interconnection
Customer."
112. In its supplemental comments, Joint Commenters propose the following provision
in lieu of the proposal:
Confidential Information is as defined in this Agreement but does not
include information previously in the public domain, required to be
publicly submitted or divulged by Governmental Authorities (after
notice to the other party and after exhausting any opportunity to
oppose such publication or release), or necessary to be divulged in an
action to enforce this agreement. Each party receiving Confidential
Information shall hold such information in confidence and shall not
disclose it to any third party nor to the public without the prior
written authorization from the party providing that information,
except to fulfill obligations under this agreement, or to fulfill legal or
regulatory requirements. Each party shall employ at least the same
standard of care to protect Confidential Information obtained from
the other party as it employs to protect its own Confidential
Information. Each party is entitled to equitable relief, by injunction
or otherwise, to enforce its rights under this provision to prevent the

Docket No. RM02-12-000

- 36 -

release of Confidential Information without bond or proof of
damages, and may seek other remedies available at law or in equity
for breach of this provision.
Commission Conclusion
113. We are adopting confidentiality provisions in both the SGIP and SGIA that closely
resemble those proposed by Joint Commenters. While the provisions we adopt here are
shorter than those in the LGIP and LGIA, they are similar in content.
114. To clarify the Commission's right to otherwise Confidential Information during an
investigation, we include an SGIA provision similar to LGIA article 22.1.10.56 This
addition also clarifies that a Party is not prohibited from disclosing Confidential
Information to a state regulatory body where the state regulatory body has the authority to
request the information.
115. We deny Southern Company's request to remove proposed language allowing the
Interconnection Customer to share Confidential Information with potential assignees and
financers. The Interconnection Customer must be able to share such information to secure
financing and remain competitive. However, we are modifying the provision to specify
that any such person receiving Confidential Information agree to abide by the same
confidentiality rules as the Parties.57 We agree with Southern Company that
confidentiality should apply to all information shared between the Parties; however, its
proposal is obviated by the new language.
116. Keeping the Small Generator Interconnection Rules Current – The Small
Generator Interconnection NOPR did not envision that the SGIP and SGIA would be
periodically revised.

56

See Order No. 2003-A at P 486.

57

Id. at P 490.

Docket No. RM02-12-000

- 37 -

Comment
117. In its supplemental comments, Small Generator Coalition asks the Commission to
adopt a mechanism to allow periodic revisiting of its interconnection rules as the industry
evolves. It proposes that the Commission encourage or charter a stakeholder committee to
meet periodically to consider and recommend consensus proposals for changes.
Commission Conclusion
118. We commend the persistence of the Joint Commenters who met on numerous
occasions over the duration of this proceeding to aid the Commission in its decisionmaking. As one can see in the contents of this Final Rule, those negotiations have been
very successful. We believe Small Generator Coalition's proposal has merit. We ask the
Joint Commenters to take the lead in this process, and encourage interested entities to
continue to work together on small generator interconnection issues. We are asking this
informal group to meet biennially, beginning two years from the issuance of this order, to
consider and recommend consensus proposals for changes in the Commission’s rules for
small generator interconnection. The Commission will provide appropriate resources to
facilitate the process. To the extent that this group identifies needed changes, they may
file a petition to amend the Commission's regulations. The Commission will review the
petition and, if appropriate, notice that petition for public comment.
D.

Issues Related to the Interconnection Request

119. The Interconnection Request is the application form that the Interconnection
Customer uses to start the process of interconnecting its Small Generating Facility with
the Transmission Provider's Transmission System. The issues discussed below either did
not arise in the Large Generator Interconnection proceeding or we conclude that a
different conclusion should apply to Small Generating Facilities.
120. Processing Fees and Study Deposits – The Proposed SGIP set out a fixed
processing fee schedule for processing all Interconnection Requests. The amount of the
fee was to be tied to the size of the Small Generating Facility. Small Generating Facilities
no larger than 2 MW in size would be charged the greater of (1) $0.50/KVA rating, or
$100 for single phase generators no larger than 25 kVA or (2) $500 for generators larger
than 25 kVA. The fee for a Small Generating Facility larger than 2 MW but no larger
than 10 MW would be $1,000, and the fee for one larger than 10 MW would be $2,000.
In addition, if the Small Generating Facility was to be evaluated using the interconnection
studies, the Interconnection Customer would pay a deposit prior to each study that would
be applied to the Transmission Provider's actual costs of performing the study.

Docket No. RM02-12-000

- 38 -

Comments
121. NARUC urges that the processing fee be cost-based so that there is no
subsidization by either the Transmission Provider or the Interconnection Customer.
122. NRECA generally supports a fixed processing fee approach, but says that the
proposed fees are unrelated to the actual cost of conducting the analysis under the screens.
It asks the Commission to let each Transmission Provider file fees that are designed to
recover the actual cost of conducting the analysis under the screens.
123. NYTO asks the Commission to clarify that the proposed fee covers administrative
and engineering costs not covered by other fees. PacifiCorp states that it does not appear
that the owner of a Small Generating Facility no larger than 2 MW would pay any fee
other than the fee to conduct the analysis under the screens. It asks the Commission to
require the owner of such a generator to pay the actual cost of interconnection, if any,
beyond the processing fee.
124. Southern Company states that the proposed processing fee schedule conflicts with
the deposit provisions of the proposed interconnection study agreements. It argues that a
Small Generating Facility interconnecting at the transmission level should submit an
interconnection feasibility study deposit rather than the application fee because it appears
that the processing fee is a charge for conducting the analysis under the screens. Southern
Company also states that evaluating an Interconnection Request for a non-certified Small
Generating Facility requires time and effort, and the Interconnection Customer should pay
twice the processing fee assessed to the owner of a certified Small Generating Facility.
Commission Conclusion
125. Under this Final Rule, the Interconnection Customer shall submit with its
Interconnection Request a processing fee or feasibility study deposit, but not both,
depending on how the Interconnection Request is to be evaluated. If it is to be evaluated
using the Study Process, which usually includes a scoping meeting and feasibility, system
impact, and facilities studies, the Interconnection Customer shall make a deposit towards
the cost of the feasibility study at the time the Interconnection Request is submitted to the
Transmission Provider. The amount of the deposit is the lesser of 50 percent of the good
faith estimated feasibility study costs or $1,000. If the Interconnection Request is to be
evaluated using the Fast Track Process, it is to be accompanied by a $500 processing fee.
If the Interconnection Request is to be evaluated using the 10 kW Inverter Process, it is to
be accompanied by a $100 processing fee.

Docket No. RM02-12-000

- 39 -

126. The purpose of the $100 and $500 processing fees is to recover the Transmission
Provider's costs of evaluating Interconnection Requests under the 10 kW Inverter Process
and Fast Track Process, respectively. This approach to fees is simple, easy to administer,
and gives many Interconnection Customers the cost certainty they need to move forward
with their projects. However, because administratively fixed fees will sometimes either
under- or over-recover a particular Transmission Provider's costs, we will allow the
Transmission Provider to charge a cost-based fee for processing Interconnection Requests
if it has first made an appropriate rate filing with appropriate detailed cost justification
under FPA section 205.58 If the Transmission Provider decides to revise its processing fee
schedule through a rate filing, the revised fees would, of course, apply prospectively to all
new Interconnection Requests under the Fast Track Process or the 10 kW Inverter Process.
Otherwise, the processing fees in the SGIP will serve as a default.
127. Given our concerns about the need for many Interconnection Customers to know
beforehand the costs they will incur for the evaluation of their Interconnection Request
under the screens, we will disallow formula rates or true up provisions in any rate
submission. The cost support for the filed fixed processing fee schedule (designed in a
manner similar to the processing fees in the SGIP) shall reflect the Transmission
Provider's costs for processing Interconnection Requests under the Fast Track and the
10 kW Inverter Processes, as it would for the embedded cost based pricing of any other
jurisdictional service.
128. Southern Company's first comment highlights an unintended inconsistency in the
NOPR. To clarify, the fixed processing fee schedule delineated above is only for
submissions under the10 kW Inverter Process and the Fast Track Process which use the
technical screens. A submission under the Study Process instead will include a deposit
towards the Transmission Provider's cost of performing the feasibility study, not both a
deposit and a processing fee. However, an Interconnection Customer whose proposed
interconnection fails the Fast Track Process or the 10 kW Inverter Process and is then
evaluated under the Study Process would pay both the fixed processing fee with the initial
submission and then a feasibility study deposit before the Study Process begins.

58

16 U.S.C. § 824d (2000); see also 18 CFR § 35.12 (2004).

Docket No. RM02-12-000

- 40 -

129. Receipt Confirmation and Requests for Additional Data – Proposed SGIP
sections 3.2 and 4.2 govern the submission and receipt of the Interconnection Customer's
Interconnection Request.
Comments
130. Central Maine argues that the Transmission Provider should be able to use
alternative methods to mail, such as fax and overnight delivery services, to tell the
Interconnection Customer that it has received the Interconnection Request. It also asks
that the Commission increase the Transmission Provider's notification time period from
ten to fifteen Business Days. Central Maine and EEI note that the Interconnection
Customer does not have a deadline to supply missing information. They recommend that
the Commission establish ten Business Days as the deadline and to state that failure to
provide such information within that time will result in the Interconnection Request being
deemed withdrawn.

Commission Conclusion
131. We agree that the Transmission Provider may use alternate methods of confirming
receipt of the Interconnection Request. The notification requirement is needed because it
provides a date certain for affirming that the Transmission Provider has received the
Interconnection Request. We also decline to increase the time by which the
Interconnection Customer must be told whether the Interconnection Request is complete.
Ten Business Days is sufficient time for the Transmission Provider to make an initial
assessment as to whether the requisite information has been provided; an in-depth
evaluation of the project is not required during this period. However, we agree with
Central Maine and EEI that the Proposed SGIP does not address when the Interconnection
Customer must furnish the missing information. Accordingly, the SGIP provides that the
Interconnection Customer has ten Business Days after receipt of the notice to submit the
missing information or to provide an explanation as to why extension of time is needed to
provide such information. If the Interconnection Customer does not provide the missing
information or a request for an extension of time within the deadline, the Interconnection
Request shall be deemed withdrawn.
132. Interconnection Products and Service Options – The Proposed Interconnection
Request would have directed the Interconnection Customer to state whether it intends to
participate as a "Network Resource," "Energy-Only Resource," "Non-Exporting Resource
Participating in a Wholesale Market," or "Other."

Docket No. RM02-12-000

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Comments
133. Alabama PSC, EEI, Mississippi PSC, Southern Company, and others are concerned
that the Interconnection Request could be construed to mean that a Small Generating
Facility is eligible for the same Network Resource Interconnection Service that Order
No. 2003 makes available to Large Generating Facilities. They argue that this service
should not be provided to a Small Generating Facility. For example, Alabama PSC and
Mississippi PSC argue that a Small Generating Facility does not meet the basic
prerequisites to receive a "network" type of service. They state that Small Generating
Facilities almost universally interconnect with either "distribution" or sub-transmission
facilities that are not "networked" but are radial in nature. The costs to make such
facilities networked to provide such a service would be prohibitive. Southern Company
asks that the references to resource options be deleted. TAPS states that the Small
Generator Interconnection NOPR correctly dispenses with Order No. 2003's Network
Resource Interconnection Service, which TAPS claims is incompatible with Network
Integration Transmission Service under the OATT.
134. Taking the opposite view, National Grid states that the Commission should
establish two interconnection products for Small Generating Facilities, arguing that
Energy Resource Interconnection Service and Network Resource Interconnection Service
are just as important for a Small Generating Facility as they are for a Large Generating
Facility. National Grid states that Network Resource Interconnection Service has
important market implications for new resources, because only generating facilities that
meet this interconnection standard should qualify for installed capacity credits. It argues
that Small Generating Facilities should have the option of being studied as deliverable
network resources so that they may be eligible for such credits. If the Commission does
not mandate two separate interconnection products for Small Generating Facilities,
National Grid requests that, at a minimum, the single interconnection product ensure
deliverability of generating facility output, consistent with the Commission’s ruling in
New England with respect to large generator interconnections.59
135. NARUC asks the Commission to remove the category "non-exporting resource
participating in a wholesale market" from the Interconnection Request. It notes that the
Interconnection Request instructs the Interconnection Customer to declare its intention to
sell electricity at wholesale in interstate commerce. However, the phrase "non-exporting
59

(2004).

New England Power Pool (New England), 109 FERC ¶ 61,155 at P 43-44

Docket No. RM02-12-000

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resource participating in a wholesale market," which is used nowhere else in the Small
Generator Interconnection NOPR, raises unnecessary questions and extends its reach far
beyond its stated intention.
136. PacifiCorp states that none of these service categories is defined in the Proposed
SGIP and that the significance of each designation is unknown. It argues that the different
service options must be defined in the SGIP and that the additional information needed to
permit a Transmission Provider to conduct studies must be provided. PacifiCorp asks the
Commission to explain the significance of "Non-Exporting Resource Participating in a
Wholesale Market" and "Other." It adds that there should be an opportunity for comment
on the workability of these proposals and on what information a Transmission Provider
may need to provide this kind of interconnection service.
137. SoCal Edison seeks clarification that, to interconnect a Small Generating Facility
with a Distribution System, the Transmission Provider must study deliverability60 on the
system, even if no delivery service is sought on either the Transmission or Distribution
System. In studying distribution-level interconnections, the Small Generating Facility is
assumed to be running at maximum output and the power is flowing onto the directly
attached distribution facility. SoCal Edison argues that there is no way to study an
interconnection with the Distribution System without assuming power flows on that
Distribution System.
138. SoCal Edison further argues that, unlike an energy resource on a Transmission
System, the generator cannot for safety and reliability reasons opt to generate only when
distribution "capacity" is available because the characteristics of a Distribution System
(i.e., radial) differ from those of a Transmission System (i.e., network). Given how a
Distribution System operates, the provision of distribution interconnection service in the
absence of a wholesale distribution service request is a meaningless exercise, and there are
considerable efficiencies in requesting and studying the two services at the same time.
Also, SoCal Edison is concerned that some Interconnection Customers may not realize
that a separate rate may be charged to use the Distribution System in addition to the
Transmission System. It states that the Commission should clarify that both
interconnection and wholesale delivery service may be required. Although SoCal Edison

60

Deliverability refers to the ability of the electric system to accept the Small
Generating Facility's output without regard to the ultimate point of delivery.

Docket No. RM02-12-000

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does not believe that the Commission needs to require that wholesale distribution service
and distribution-level interconnection service be provided only on a bundled basis, it asks
the Commission to permit "bundled" applications like those under SoCal Edison's
Wholesale Distribution Access Tariff.
Commission Conclusion
139. We clarify that the resource options listed in the Small Generator Interconnection
NOPR's Interconnection Request are not interconnection service options. Rather, they are
merely the possible ways the Interconnection Customer may use its Small Generating
Facility once delivery service begins. The purpose of this information is to give the
Transmission Provider an early indication of how the Small Generating Facility is likely
to operate. The one interconnection service that the Commission proposed to make
available to the Small Generating Facility is similar to the Energy Resource
Interconnection Service that is offered under the LGIA. Nevertheless, based on the
comments, we are concerned that requesting service-related information in the
Interconnection Request could lead to misunderstanding. Because the information is
related to the delivery component of transmission service, not interconnection service, it is
not needed in the SGIP's Interconnection Request form. Therefore, we are removing this
information from the Interconnection Request. This should address the concerns of most
commenters.
140. In response to National Grid, we note that the LGIA's more expansive Network
Resource Interconnection Service is intended to give the Interconnection Customer broad
access to the backbone of the Transmission Provider's Transmission System. In essence,
it allows the generating facility to pre-qualify as a Network Resource for any Network
Customer on the Transmission System and, as National Grid notes, may make it eligible
for installed capacity credits. Because Network Resource Interconnection Service entails
high technical standards, we expect that an Interconnection Customer, particularly one
interconnecting at a lower voltage, would rarely find this service to be efficient or
practical. Nevertheless, we do not want to preclude it from choosing this option. If it
wishes to interconnect its Small Generating Facility using Network Resource
Interconnection Service, it may do so. However, it must request interconnection under the
LGIP and execute the LGIA.
141. In response to SoCal Edison's request for clarification, we note that the SGIP lets
the Transmission Provider study the potential impacts of the proposed interconnection on
the Distribution System. Also, we clarify that nothing in this Final Rule (which concerns
interconnection service only) prevents the Transmission Provider from evaluating the
Interconnection Request and requests for wholesale distribution service and transmission

Docket No. RM02-12-000

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delivery service simultaneously. However, the Transmission Provider may not require the
Interconnection Customer to request wholesale distribution service or transmission
delivery service as a condition for granting a request for interconnection service. We
expect the Transmission Provider to explain to the Interconnection Customer what
delivery services may be needed to meet its needs.
142. Ministerial Changes to the Interconnection Request – The Proposed
Interconnection Request was crafted largely by Joint Commenters in response to the
ANOPR. It is similar in many respects to the NARUC Model. Joint Commenters in its
supplemental comments submitted ministerial changes to the Proposed Interconnection
Request. Other commenters61 also seek changes to the Interconnection Request, most
reflecting misplaced or missing technical information. The Interconnection Request we
adopt in this Final Rule largely tracks the NARUC Model version and also reflects many
of the changes proposed by the commenters.
E.

Issues Related to the SGIP

143. Using Voltage Level to Determine Which Procedures Apply – The Proposed
SGIP divided Interconnection Requests into two groups for initial processing based on the
voltage level of the interconnection. Interconnections to High-Voltage (at or above 69
kV) would be evaluated using the interconnection studies. Interconnection to LowVoltage (below 69 kV) would be processed differently depending upon the size and the
certification status of the Small Generating Facility as explained below. An
Interconnection Request for a certified Small Generating Facility no larger than 2 MW
interconnecting at Low-Voltage would be evaluated using super-expedited screening
criteria; an Interconnection Request for a Small Generating Facility no larger than 10 MW
interconnecting at Low-Voltage would be evaluated using expedited screening criteria;
and an Interconnection Request for a Small Generating Facility larger than 10 MW but no
larger than 20 MW interconnecting at Low-Voltage would be evaluated using the
interconnection studies. If an Interconnection Request did not pass the super-expedited
screening criteria or expedited screening criteria, it would be evaluated using
interconnection studies.

61

E.g., Bureau of Reclamation, Central Maine, Cummins, EEI, Joint Commenters,
Northwestern Energy, NYTO, PacifiCorp, PG&E, and Small Generator Coalition.

Docket No. RM02-12-000

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Comments
144. Several commenters62 object to using voltage level to distinguish which review
process initially applies to an Interconnection Request. They argue that the distinction
should be based on whether the Small Generating Facility is being interconnected with
distribution or transmission facilities. The decision should be consistent with the physical
facilities and operational realities of the electric system. They also contend that electric
system configurations vary widely in terms of voltage levels and that the effect of an
interconnection is not necessarily determined by voltage, but also by location and size of
the Small Generating Facility. In addition, they state that this distinction was not a part of
the ANOPR proposal and that using voltage to distinguish which set of procedures applies
is confusing.
145. In its supplemental comments, Joint Commenters propose using whether the
proposed interconnection is with a transmission line (i.e., interconnections with
transmission lines may not be evaluated using the technical screens) to determine whether
screens may be used to evaluate the proposed interconnection.
Commission Conclusion
146. For the reasons given above, we agree with commenters that interconnection
voltage should not be used as a determinative factor for whether the Interconnection
Request may be evaluated using the technical screens. Instead, we are adopting the
technical screens proposed by Joint Commenters in its supplemental comments. The
SGIP specifies that an Interconnection Request for a certified Small Generating Facility
no larger than 2 MW shall be evaluated using the technical screens, either under the Fast
Track Process or the 10 kW Inverter Process, whichever applies. Under the first provision
of the screens, SGIP section 2.2.1.1, the proposed Small Generating Facility’s Point of
Interconnection must be on a portion of the Transmission Provider’s Distribution System
that is subject to the Tariff.63
62

E.g., CA ISO, EEI, Idaho Power, PG&E, PSE&G, SoCal Edison, and Southern
Company.
63

As noted above, "transmission" is both an engineering term of art and a term
used in the FPA. As used in the technical screens, "transmission" is used in the
engineering sense, not in a jurisdictional sense. Likewise, references in other technical
screens to "radial distribution circuits," "3-phase primary distribution lines," and other
uses of the word distribution are used in an engineering sense, not in a jurisdictional sense.
(Footnote continued on next page)

Docket No. RM02-12-000

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147. Certification of the Small Generating Facility (Proposed SGIP Section 3.1) – In
the Small Generator Interconnection NOPR, the Commission proposed that
Interconnection Requests for certified generators no larger than 2 MW would be reviewed
using the super-expedited screening criteria that employed technical screens. The
Commission also noted that Joint Commenters (in its response to the ANOPR) preferred
that the Commission itself implement a single, uniform, nationwide process for the
certification of Small Generating Facility equipment packages no larger than 2 MW.64
The Commission proposed, however, that this function instead be performed by an
industry-recognized testing organization. In addition, the Commission requested
comments as to whether IEEE 1547 (Standard for Interconnecting Distributed Resources
with Electric Power Systems), together with other technical industry documents, could be
the basis for a national certification standard.
Comments
148. Commenters generally agree with the value of having a certification process for
Small Generating Facilities. They believe that such a process can speed interconnection
and eliminate the need to "reinvent the wheel" each time an interconnection is made. In
general, commenters agree that IEEE 1547, in conjunction with other standards, could be
the basis for a certification standard.
149. NYTO requests that the Commission adopt the process and registry proposal
described in the November 12, 2002 Joint Commenters filing. That would have the
Commission maintain a list of certified equipment and to centralize the registry function.
It claims that this would provide certainty to the industry as to which equipment has been
certified and would avoid the development of competing and potentially inconsistent lists
of certified equipment, which could lead to disputes and slow down the interconnection
process.

In no case do we intend that this Final Rule applies to non-Commission-jurisdictional
facilities.
64

A "certified" Small Generating Facility is one that has been certified by a
nationally recognized laboratory before the Interconnection Request is submitted to the
Transmission Provider. Such a facility is said to be "certified" for purposes of the
interconnection process.

Docket No. RM02-12-000

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150. The NARUC Model certification provision relies on Nationally Recognized
Testing Laboratories (NRTL) to test and certify the safety of electrical equipment used for
the production of electricity. That provision, which was developed for use by state
regulators, requires that the NRTL be used by the state regulatory authority or approved
by the U.S. Department of Energy.
151. American Forest and others state that if the Commission chooses not to certify and
maintain a registry of equipment, it should establish and oversee a stakeholder process for
the development of certification criteria. Without the Commission's involvement, the
process of establishing certification standards will languish.
152. Cummins and others, however, argue that a nationally recognized testing laboratory
and agencies like the Department of Energy should oversee the certification process.
They also note that a national testing laboratory, such as Underwriter Laboratories,
typically not only tests and verifies the performance of prototype equipment, but also
provides follow-up services to verify that production equipment is designed and
manufactured to the same standards as the tested equipment.
153. Ameren and others complain that the NOPR does not explain what industry
operational and safety standards are applicable. Likewise, the NOPR does not specify
what is needed to qualify as a national testing laboratory. They claim that leaving these
issues open could lead to unnecessary or improper testing. They recommend that the
Commission (1) adopt a specific set of standards for operation and safety requirements
that are continually updated to meet current safety and reliability requirements set forth by
NERC or the regional reliability councils, and (2) maintain a list of qualified national
testing laboratories.
154. Allegheny Energy argues that certification guarantees the safety and reliability of
the equipment in a stand-alone mode only, but not safety and reliability when the
equipment becomes part of an integrated system.
155. Joint Commenters, in its supplemental comments, proposes a consensus equipment
certification provision that it states was developed under a stakeholder process convened
by the U.S. Department of Energy's Office of Electric Transmission and Distribution. The
participants in the process included Joint Commenter members representing small
generator interests, state regulators, and Transmission Providers, as well as experts from
the electrical equipment manufacturing industry and testing laboratories. Joint
Commenters' proposed certification provision provides that Small Generating Facility
equipment shall be considered certified if (1) it has been tested in accordance with
industry standards for continuous utility interactive operation in compliance with the

Docket No. RM02-12-000

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appropriate codes and standards by any NRTL recognized by the United States
Occupational Safety and Health Administration to test and certify interconnection
equipment pursuant to the relevant codes and standards, (2) it has been labeled and is
publicly listed by such NRTL at the time the Interconnection Request is made, and
(3) such NRTL makes readily available for verification all test standards and procedures it
utilized in performing such equipment certification and, with consumer approval, the test
data itself.
Commission Conclusion
156. We agree with Cummins that nationally recognized laboratories should oversee the
certification process and maintain registries of certified equipment. A NRTL not only
tests and verifies the performance of prototypes, but it provides follow-up services to
verify that production equipment is designed and manufactured to the same standards as
the tested equipment. In this Final Rule, we are adopting Joint Commenters' proposal.
This certification provision was vetted by a diverse group of stakeholders and is
fundamentally consistent with the Proposed SGIP as well as the provision contained in the
NARUC Model. We are especially encouraged by the report from Joint Commenters that
one well-known NRTL intends to begin the certification of equipment as soon as the
summer of 2005. This should hasten the development of certified Small Generating
Facilities no larger than 2 MW under the Fast Track and 10 kW Inverter Processes. The
certification provision we adopt in this Final Rule is contained in Attachments 3 and 4 of
the SGIP.
157. Finally, we acknowledge Allegheny Energy's concerns. Electric system safety and
reliability issues are to be addressed when the proposed interconnection of the certified
equipment is evaluated under the Fast Track Process or the 10 kW Inverter Process.
158. Super-Expedited Procedures (Proposed SGIP Section 3) and Expedited
Procedures (Proposed SGIP Section 4.3)65 – In the NOPR, proposed SGIP section 3
stated that if the proposed Small Generating Facility is certified, no larger than 2 MW, and
the interconnection is with Low-Voltage facilities, the interconnection would be evaluated
65

In the Small Generator Interconnection NOPR, the term Super-Expedited
Procedure referred to the process that used the super-expedited screens and Expedited
Procedure referred to the process that used the expedited screens. In this Final Rule, we
are adopting only one set of screens, which are used in both the Fast Track Process and the
10 kW Inverter Process.

Docket No. RM02-12-000

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using super-expedited screens. Proposed SGIP section 4.3 stated that if the proposed
Small Generating Facility is no larger than 10 MW and the interconnection is with LowVoltage facilities, the interconnection would be evaluated using expedited screens.
Proposed SGIP section 4.3 also provided that the expedited screens would be used to
evaluate proposed interconnections that failed the super-expedited screens.
159. The NOPR proposed that if the Transmission Provider determines that the
proposed interconnection fails the super-expedited screens and is not satisfied that the
Small Generating Facility can be interconnected safely and reliably, the Interconnection
Customer can pay for an additional review. The review would not exceed six hours and
would determine whether minor modifications to the Transmission Provider's electric
system (e.g., changing meters, fuses, relay settings) could enable the interconnection to be
made safely and reliably. If the results of the review were positive and the
Interconnection Customer agreed to pay for these minor modifications, the Transmission
Provider would tender an executable SGIA to the Interconnection Customer.
Comments
160. Joint Commenters, Small Generator Coalition, and NARUC recommend that the
Commission require the use of screens to evaluate Interconnection Requests. NARUC
and Small Generator Coalition initially proposed using two sets of screens. However,
Joint Commenters (which includes both NARUC and Small Generator Coalition) now
recommends adopting a single set of screens that serves the same purpose as the two
initially proposed.
161. Several commenters66 asked that the screens be clarified, modified, or eliminated.
EEI recommended that the screens be available only for interconnection with radial
facilities.
162. Cinergy, EEI, Idaho Power, NYTO, and others maintain that even if the Small
Generating Facility is certified and passes the screens, there is no assurance that safety and
reliability or the quality of service is not degraded as a result of the interconnection.
Cinergy and EEI argue the rule should require a showing that the interconnection does not
degrade safety and reliability.

66

E.g., Ameren, BPA, Bureau of Reclamation, Central Maine, Cinergy, EEI,
Exelon, MISO, NRECA, NYPSC, NYTO, PG&E, PJM, and Southern Company.

Docket No. RM02-12-000

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163. BPA and Central Maine oppose limiting the additional review to six hours, arguing
that each interconnection is unique.
164. PJM argues that the Final Rule should not allow screens to be used in lieu of the
feasibility study. It claims that while screens allow a project to be expedited, they do not
necessarily provide the type of information needed by the Interconnection Customer to
determine whether the project is viable (e.g., information concerning the estimated cost of
interconnection or the effects on other projects).
165. BPA claims that it is unreasonable to hold the Transmission Provider to stringent
deadlines without establishing corresponding deadlines for the Interconnection Customer.
MISO and BPA contend that the timelines do not give the Transmission Provider
sufficient time to review the Interconnection Request. MISO proposes that the
Transmission Provider be permitted to notify the Interconnection Customer if it is unable
to meet the target date, along with the reasons for delay.
166. NRECA and others ask the Commission to reduce the maximum size of a facility
that may be evaluated under the screens to as small as 3 kW. In its supplemental
comments, Small Generator Coalition argues against imposing any size limits.
167. Southern Company argues that certain base case assumptions are necessary for an
accurate representation of the electric system when an Interconnection Request is
evaluated under screens. It would like the evaluation to include all pending higher-queued
Interconnection Requests because only then could the effect of an Interconnection Request
be truly determined.
Commission Conclusion
168. In SGIP section 2.2.1, we are adopting a single set of screens submitted by Joint
Commenters in its supplemental comments, with minor editorial changes. These are the
screens that would be applied in the Fast Track and the 10 kW Inverter Processes. We are
adopting only one set of screens rather than the two in the NARUC Model and the Small
Generator Interconnection NOPR. The individual screening criteria in this set are very
similar to those in the NARUC Model and closely track both those contained in the Small
Generator Interconnection NOPR and those proposed by Joint Commenters in the
ANOPR process.

Docket No. RM02-12-000

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169. The NOPR did not contain a screen that would permit interconnection with a
secondary network67 and Joint Commenters were unable to agree on one. We are also not
adopting any additional screen that would permit interconnection with a secondary
network in this Final Rule.
170. We are deleting "and must comply with all requirements of approved industry
standards for interconnection technical specifications and requirements" from one of Joint
Commenters' proposed screens because this language is redundant; a Small Generating
Facility that is being evaluated under the Fast Track Process or 10 kW Inverter Process
must meet the codes, standards, and certification requirements of Attachments 3 and 4 of
the SGIP.
171. Concerns raised by commenters that screens do not accurately reflect the true effect
of the interconnection on safety and reliability are unfounded. We believe the thresholds
used in the screens to be conservative and that there is negligible chance that a proposed
interconnection could pass the screens and actually impact the safety and reliability of the
Transmission Provider's electric system. These thresholds have been vetted by
Transmission Providers, small generator developers, and representatives of state
regulators alike.
172. We reject Small Generator Coalition's argument that there should be no size
restrictions for Small Generating Facilities whose interconnections may be evaluated
using the screens. We are retaining the proposed 2 MW threshold for certified generators
as a critical eligibility criterion for using the screens. It helps ensure the safety and
reliability of the Transmission Provider's electric system. Small Generator Coalition,
together with a number of Transmission Providers and representatives of state regulatory
agencies, vetted the threshold when submitting the package of screens through Joint
Commenters' supplemental comments.
173. In response to objections to the NOPR's expedited screening procedures, the Final
Rule SGIP does not include any screens for Small Generating Facilities larger than 2 MW.
Accordingly, only a request to interconnect a certified Small Generating Facility no larger
than 2 MW shall be evaluated using the screens. A request to interconnect a Small
67

A secondary network is a type of distribution system that is generally used in
large metropolitan areas that are densely populated in order to provide high reliability of
service to multiple customers. (Source: Standard Handbook for Electrical Engineers, 11th
edition, Donald Fink, McGraw Hill Book Company)

Docket No. RM02-12-000

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Generating Facility larger than 2 MW or a Small Generating Facility of any size that is not
certified shall be evaluated using the Study Process.
174. BPA and others oppose limiting the additional review to six hours. We are
eliminating this restriction.68 The SGIP includes a customer options meeting where the
Transmission Provider may propose modifications to the proposed interconnection or the
Small Generating Facility itself, or perform a supplemental review if the Interconnection
Customer agrees to pay for it. This allows the Transmission Provider to determine the
modifications needed to accommodate the interconnection without the need for detailed
and more costly interconnection studies.
175. Southern Company and Joint Commenters (in its supplemental comments) argue
that the Transmission Provider should be allowed to consider the effects of all pending
higher-queued Interconnection Requests when evaluating the Interconnection Request
under the screens. We agree.
176. Queuing Priority (Proposed SGIP Section 4.4) – In the NOPR, the Commission
proposed that each Transmission Provider maintain a single queue per geographic area. A
queue lists Interconnection Requests in the order in which they are received. The Queue
Position determines the order of performing interconnection studies, if required, and the
Interconnection Customer's cost responsibility for any Upgrades to the Transmission
Provider's electric system. In Order No. 2003, the Commission decided that the
Transmission Provider should maintain a single integrated queue per geographic region.
However, RTOs and ISOs have flexibility to propose queues and queuing rules designed
to meet their regional needs.69 We are adopting the same provision here, for the same
reasons. Accordingly, there is no need to separately address again the same comments
raised in this proceeding on that issue.
Comments
177. Small Generator Coalition requests that the Commission establish separate queues
for Large and Small Generating Facilities. Failing that, the Commission should clarify
that the interconnection study periods identified in the SGIP are binding without regard to
68

In the Proposed SGIP, the Commission termed this "additional review." In the
SGIP, we adopt the NARUC Model's term "supplemental review."
69

Order No. 2003 at P 147.

Docket No. RM02-12-000

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the Queue Position of other generating facilities. Alternatively, Small Generating
Facilities should be clustered for study purposes within a given time frame (e.g., 90 days).
It states that requiring a single queue for all generating facilities undercuts whatever
progress has been made in interconnecting Small Generator Facilities. Small Generator
Coalition, Solar Turbines, and others state that, in light of their relatively simple
interconnection requirements, use of off-the-shelf equipment, and minimal effects on the
Transmission Provider's electric system, Small Generating Facilities should be able to be
interconnected quickly. They complain that the interconnection can be delayed by higherqueued Large Generating Facilities that require longer, more frequent, and more
expensive interconnection studies and restudies.
Commission Conclusion
178. We disagree with Small Generator Coalition that a single queue is unfavorable to
Small Generating Facilities. Although Queue Position determines the order of the
interconnection studies and the cost responsibility for the Network Upgrades necessary to
accommodate the interconnection, it does not determine the order in which the
interconnections are completed.
179. For many Transmission Providers, the requirement to maintain two queues could
actually delay, rather than speed up, the interconnection process. Thus, we are requiring a
Transmission Provider to use a single queue for all Generating Facilities, regardless of
size. Also, the SGIP allows Small Generating Facilities to be interconnected without
going through the Study Process if they pass the screens. However, under the independent
entity variation available to RTOs and ISOs under this Final Rule, such entities may
propose multiple queues in their compliance filings.70
180. Small Generator Coalition is correct that a non-clustering Transmission Provider
must meet all deadlines established in the SGIP without regard to queue position or queuerelated delays.
181. We reiterate that clustering is the Commission's preferred method for conducting
interconnection studies, and should be seriously considered by all Transmission
Providers.71 Clustering of studies allows the Transmission Provider to study multiple
70

See Order No. 2003 at P 185.

71

Id. at P 155.

Docket No. RM02-12-000

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Interconnection Requests simultaneously, thereby maximizing the effectiveness of its
staff. Clustering may also reduce interconnection study and Upgrade costs; for example,
multiple Interconnection Customers can share the cost of Upgrades.
182. Scoping Meeting (Proposed SGIP Section 4.5) – Proposed SGIP section 4.5
would require the Parties to hold a scoping meeting within ten Business Days after the
Interconnection Request is deemed complete by the Transmission Provider. The purpose
of the meeting is to review the characteristics of the Transmission Provider's electric
system, discuss the technical aspects of the proposed interconnection, and review existing
studies and the results of the application of the technical screens, if applicable. If the
Parties agree that a feasibility study is needed, the Transmission Provider would provide
the Interconnection Customer with a feasibility study agreement.
Comments
183. Central Maine asks that the Transmission Owner also be included in the scoping
meeting. Small Generator Coalition asks that the provision be revised to allow the Parties
to conduct the scoping meeting by telephone.
Commission Conclusion
184. In the SGIP, Transmission Provider is defined to include both the Transmission
Provider and Transmission Owner, when they are separate entities. Accordingly, the
Transmission Owner may attend the scoping meeting. Also, there was nothing in the
Proposed SGIP that mandates that the scoping meeting be held face-to-face. We
encourage the Parties to conduct the interconnection process in the most expeditious
manner possible and to take advantage of telephone, fax, and e-mail. Finally, as in Order
No. 2003-A, we are requiring that any scoping meeting between the Transmission
Provider and an affiliate be announced publicly and transcribed, with the transcripts made
available upon request for a period of three years.72 While the Transmission Provider may
redact portions of the transcripts deemed to be commercially sensitive or containing
Critical Energy Infrastructure Information, the Commission will decide which redacted
portions are to be made public.

72

Order No. 2003-A at P 101-107.

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185. Interconnection Studies (Proposed SGIP Sections 4.6, 4.7, and 4.8) – Proposed
SGIP sections 4.6, 4.7, and 4.8 and the associated study agreements described the
feasibility, system impact, and facilities studies (collectively, interconnection studies) and
the Interconnection Customer's cost responsibility for each study. For a Small Generating
Facility larger than 2 MW but no larger than 10 MW interconnecting at Low-Voltage, the
Proposed SGIP would first evaluate the proposed interconnection using expedited screens.
However, if the Transmission Provider believed that the interconnection would undermine
safety and reliability even though the proposed interconnection passed the screens, the
Transmission Provider would pay for the feasibility study if that study subsequently
identified no adverse system impact. The cost of the system impact and facilities studies,
however, would always be paid by the Interconnection Customer.
Comments – Study Cost Obligations
186. Central Maine, Exelon, and PacifiCorp argue that the Interconnection Customer
should always pay for interconnection studies, regardless of the conclusions reached.
Small Generator Coalition maintains that the Transmission Provider should pay for the
feasibility study only if it shows no adverse impact.
Commission Conclusion
187. The Interconnection Customer should pay for all of the interconnection studies,
regardless of the conclusions reached, because it is unreasonable to shift this cost to other
transmission customers that do not benefit from the studies, which is what would occur if
the Transmission Provider were to pay for them. The Transmission Provider should, of
course, use existing studies instead of performing additional analyses to reduce costs for
the Interconnection Customer, whenever possible. The Interconnection Customer is not to
be charged for such existing studies; however, it is responsible for costs associated with
any new study and any modification to an existing study that is reasonably necessary to
evaluate the proposed interconnection.
Comments – Study Requirements
188. PJM and Southern Company argue that a system impact study should always be
performed to detect adverse impacts that may not have been detected in the feasibility
study. Small Generator Coalition argues that in many situations only a feasibility study or
a system impact study is needed, but not both; Parties should be able to agree to skip the
feasibility study. PacifiCorp states that, for a small project, the feasibility study is not
much different from the system impact study and recommends that the former be
eliminated. SoCal Edison argues that the provisions of the SGIP dealing with

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interconnection studies should refer to the distribution provider, if applicable, and the
Transmission Provider. Bureau of Reclamation asks the Commission to clarify that the
Transmission Provider should perform flicker and voltage drop studies.
Commission Conclusion
189. We agree that, on occasion, there may be some overlap between the feasibility
study and the system impact study. For a small project, the distinction may not be enough
to require that both studies be performed. In such cases, it may be reasonable to skip the
feasibility study entirely. Therefore, as the Commission did for Large Generating
Facilities in Order No. 2003-A, we are allowing the Parties to skip the feasibility study
upon mutual agreement. As to SoCal Edison's comment, we do not see any need to
include the term "distribution provider" when referring to SGIP provisions.
Transmission Provider is already defined as "[t]he public utility (or its designated agent)
that owns, controls, or operates transmission or distribution facilities used for the
transmission of electricity in interstate commerce and provides transmission service under
the Tariff." As to Bureau of Reclamation's request for clarification, voltage drop, voltage
limit violation, and grounding studies are indeed included in the study process.
Comments – Study Deadlines and Restudy
190. Southern Company, PG&E, and others contend that the proposed interconnection
study deadlines are too short. NARUC proposes giving the Transmission Provider
30 Business Days to complete the feasibility study, 30 Business Days to complete the
distribution system impact study, 45 Business Days to complete the transmission system
impact study, 30 Business Days to complete the facilities study when no Upgrades are
required, and 45 Business Days to complete the facilities study when Upgrades are
required.
191. PacifiCorp states that a restudy provision should be included in the SGIP so that the
Interconnection Request could be restudied if a higher-queued Interconnection Customer
drops out. It argues that the LGIP included a restudy provision for each of the three
studies.
Commission Conclusion
192. We are adopting the deadlines proposed by NARUC and incorporating them in the
interconnection study agreements. They strike a good balance, allowing sufficient time to
complete the studies while ensuring that Small Generating Facilities can be interconnected
within a reasonable time. Also, as noted above, with the exception of payment provisions,

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we are replacing "calendar days" with "Business Days" in the SGIP and SGIA. However,
where appropriate, we are revising the number of days to correspond to the actual passage
of time.
193. We disagree that a restudy provision is needed in the SGIP. The very purpose of
the Small Generator Final Rule is to expedite interconnections of Small Generating
Facilities by removing unnecessary delays. While a restudy provision in the LGIP context
is meaningful because system conditions may change between completion of a particular
study and the Parties' signing the LGIA, it is unlikely that any significant change in
system conditions will occur that was not foreseen by the Transmission Provider at the
time of study because the SGIP has a much shorter timeline.
Comments – Post-Operational Evaluation of the Interconnection
194. PacifiCorp argues that, after the Small Generating Facility is operational, an
interconnection may cause problems that were unforeseen when the project was initially
evaluated. For example, wind generators may need to fine tune their reactive power
output. Also, because the certification and screening processes are new, the Transmission
Provider should be permitted to perform post-interconnection reviews and adjustments,
including additional Upgrades, if necessary, to be paid for by the Interconnection
Customer.
Commission Conclusion
195. The purpose of the evaluation processes in the SGIP is to determine the effect the
interconnection will have on the Transmission Provider's electric system. Such
evaluations are also performed to ascertain the Interconnection Customer's cost
responsibility for Interconnection Facilities and Upgrades. We reject PacifiCorp's
proposal because accepting it would make determination of cost responsibility open-ended
and create uncertainty for the Interconnection Customer. Should unforeseen problems
arise, the Parties may make a filing with the Commission and request expedited
consideration.
196. Execution of the SGIA – Although the Proposed SGIP required the Transmission
Provider to deliver an executable SGIA to the Interconnection Customer within a time
certain, the Interconnection Customer had no deadline to sign and return the document to
the Transmission Provider.

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Comment
197. In its supplemental comments, Joint Commenters propose that the Interconnection
Customer have 30 Business Days to sign and return the SGIA.
Commission Conclusion
198. We adopt Joint Commenters' proposal. The Transmission Provider needs to know
whether the proposed project will go forward. Giving the Interconnection Customer a
deadline within which to act gives the Transmission Provider the certainty it needs for
system planning purposes. The SGIP states that, after receiving an interconnection
agreement from the Transmission Provider, the Interconnection Customer shall have
30 Business Days or another mutually agreeable timeframe to sign and return the SGIA,
or request that the Transmission Provider file an unexecuted SGIA with the Commission.
If that is not done, the Interconnection Request shall be deemed withdrawn.
F.

Issues Related to the SGIA

199. Responsibilities of the Parties (Proposed SGIA Article 2.2) – Article 2.2 of the
Proposed SGIA set out each Party's responsibilities under the SGIA. It included the
obligation of the Interconnection Customer to interconnect, operate, and construct its
facilities in a safe manner and to follow Good Utility Practice. It would similarly require
the Transmission Provider to operate its electric system in a safe and reliable manner.
Comments
200. BPA asserts that Proposed SGIA article 2.2 should require the Interconnection
Customer to abide by national and regional reliability rules, such as those developed by
NERC and the Western Electricity Coordinating Council, that are generally applicable to
all generators in a control area or geographic region. Furthermore, according to BPA, the
interconnection agreement should require the Interconnection Customer to abide by any
technical requirements established by the Transmission Provider to govern the safe
interconnection of generating facilities.
201. NARUC offers alternative language laying out the responsibilities of the Parties,
consistent with its Model. Specifically, NARUC proposes replacing article 2.2 with the
following:
Each Party will, at its own cost and expense, operate, maintain,
repair, and inspect, and shall be fully responsible for the facility or

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facilities which it now or hereafter may own or lease unless otherwise
specified in Exhibit A. Maintenance of Interconnection Customer's
Small Resource and interconnection facilities shall be performed in
accordance with the applicable manufacturer's recommended
maintenance schedule.
The Parties agree to cause their facilities or systems to be constructed
in accordance with specifications provided by the National Electrical
Safety Code, the National Electric Code, and as approved by the
American National Standards Institute, and interconnected in
accordance with the Institute of Electrical and Electronics Engineers
standards where applicable.
Interconnection Provider and Interconnection Customer shall each be
responsible for the safe installation, maintenance, repair and
condition of their respective lines and appurtenances on their
respective sides of the Point Of Common Coupling. The
Interconnection Provider or the Interconnection Customer, as
appropriate, shall provide interconnection facilities that adequately
protect the Interconnection Provider's distribution system, personnel,
and other persons from damage and injury. The allocation of
responsibility for the design, installation, operation, maintenance and
ownership of the Interconnection Facilities shall be made part of this
agreement as Exhibit C.
202. Avista states that "the Interconnection Customer should be required not only to
construct its generating facility in accordance with operating requirements to be set forth
in Appendix 4 to the Proposed SGIA, but also to maintain and operate its [Small
Generating Facility] in accordance with such operating requirements."73
203. Nevada Power asserts that the IEEE 1547 standards referred to in Proposed SGIA
article 2.2.4 were never designed to be applied to generating facilities larger than 10 MW
and that in fact "there is no extant national standard that can be reasonably applied to
govern the Interconnection Facilities for Generating Facilities greater than ten

73

Avista at 14.

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megawatts."74 Instead, Nevada Power proposes that until a national standard is developed
to address this 10-20 megawatt gap, the Commission modify article 2.2.4 to read:
Interconnection Customer agrees to cause its facilities or systems to
be constructed in accordance with applicable specifications that meet
or exceed those provided by the National Electrical Safety Code, the
American National Standards Institute, IEEE, Underwriter's
Laboratory, Operating Requirements, and, where the Generating
Facility will have a capacity greater than ten megawatts, the
Transmission Provider's applicable Interconnection Facility standards
in effect at the time of construction . . . .[75]
204. PacifiCorp notes that the Proposed SGIA assumes that the Interconnection
Customer and the Transmission Provider are each responsible for the maintenance of
equipment on its side of the point of change of ownership. But as a practical matter, more
flexibility is needed because non-utility companies cannot usually maintain certain
equipment, such as communications equipment, that is critical to the protection of the
Transmission Provider's electric system. Moreover, the Transmission Provider often owns
and maintains revenue meters on the customer's side of the point of change of ownership.
Therefore, argues PacifiCorp, the SGIA should clarify that unless provided otherwise in
an attachment, each Party is responsible for the equipment on its side of the point of
change of ownership.
205. Small Generator Coalition requests that the Commission restrict the ability of the
Transmission Provider to impose additional technical requirements on the Small
Generating Facility. Otherwise, it fears that Interconnection Customers will be subjected
to additional requirements under the guise of reliability rules that make it difficult to
interconnect in a cost-effective manner. On the other hand, Southern Company contends
that the standards for operating in parallel should be codified in the SGIA. This way, the
Transmission Provider can then confirm that all the requirements are met before granting
the authorization to operate.

74

Nevada Power at 15.

75

Id. (Emphasis added to show the new language proposed by Nevada Power.)

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206. In its supplemental comments, Joint Commenters recommends several changes to
Proposed SGIA article 2.2. Specifically, Joint Commenters recommend clarifying that the
Transmission Provider must coordinate with an Affected System operator to complete the
interconnection, but need not negotiate on behalf of the Interconnection Customer. Joint
Commenters also propose changing the last sentence of proposed article 2.2.4 to read:
Interconnection Customer agrees to design, install, maintain, and
operate, or cause the design, installation, maintenance, and operation
of the Generating Facility and Interconnection Customer
Interconnection Facility so as to reasonably minimize the likelihood
of a disturbance, originating on such equipment affecting or
impairing the system or equipment of Transmission Provider, or
Affected Systems.[76]
Commission Conclusion
207. We are adopting a version of this provision that is based on the NARUC Model and
Joint Commenters' proposals. Redrafting article 2.2 as requested by commenters clarifies
the rights and responsibilities of the Parties and aids them in better understanding their
roles in the interconnection process.
208. Several commenters also ask the Commission to clarify the right of the
Transmission Provider to include supplemental "Interconnection Guidelines," either in the
SGIA or as an attachment to it. As the Commission stated in Order No. 2003-A, the
Transmission Provider may include supplemental interconnection requirements if (1) they
are authorized by the applicable reliability council and (2) the Transmission Provider
imposes such requirements on itself and all other Interconnection Customers, including its
affiliates.77 We see no reason to depart from this standard. The Commission has
consistently held that an Interconnection Customer must adhere to established reliability
practices within the control area with which it is interconnecting.78 The same would be
true for including supplemental guidelines for generators larger than 10 MW, as requested
by Nevada Power.
76

Emphasis added to show the language proposed by the Joint Commenters.

77

Order No. 2003-A at P 399.

78

See, e.g., Order No. 2003-A at P 44, Order No. 2003 at P 823, and Order No. 888
at 31,770.

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209. In response to Nevada Power's comments about the applicability of the IEEE 1547
standard to generating facilities no larger than 10 MW, we note that the SGIA states that
this standard is required only "where applicable."
210. The SGIA also addresses PacifiCorp's concerns over using the point of change of
ownership as the basis for establishing the Parties' respective roles and allows the Parties
to specify their respective roles in SGIA Attachment 2.
211. Metering (Proposed SGIA Article 2.4) – Proposed SGIA article 2.4 would
specify that the Interconnection Customer is responsible for the Transmission Provider's
reasonable cost for the purchase, installation, operation, maintenance, testing, repair, and
replacement of any metering and data acquisition equipment. It also would require that
the Interconnection Customer's metering equipment conform to applicable industry rules
and operating requirements.
Comment
212. CA ISO argues that Proposed SGIA article 2.4 should require any Small
Generating Facility larger than 1 MW to provide real-time telemetry to the Transmission
Provider to better maintain reliability and meet regional requirements.
Commission Conclusion
213. We are not requiring Small Generating Facilities to provide real-time telemetry
because doing so may hamper their development and we are not convinced that it is
necessary in every instance. However, if regional reliability requirements dictate realtime telemetry for Small Generating Facilities, we expect the Interconnection Customer to
meet such requirements.
214. Equipment Testing and Inspection (Proposed SGIA Article 3.1) – Proposed
SGIA article 3.1 described the pre-operational testing and inspection requirements for the
Small Generating Facility.
Comments
215. Central Maine argues that the Interconnection Customer should periodically test the
Small Generating Facility and Interconnection Facilities after they achieve commercial
operation and that the Transmission Provider should be allowed to witness such testing.
The purpose of such testing is to ensure that the Interconnection Customer's equipment is

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operating properly. Southern Company argues that the Interconnection Customer should
pay the Transmission Provider's expenses for such pre-operational testing.
Commission Conclusion
216. We decline to expand the provisions of this article to require generically that every
Interconnection Customer perform periodic testing of its Small Generating Facility,
regardless of circumstances. To so do would be burdensome on the Interconnection
Customer, costly, and potentially allow a self-interested Transmission Provider to impose
multiple rounds of costly testing on competing generators. However, should the
Transmission Provider believe in good faith that the Small Generating Facility or the
Interconnection Facilities is affecting safety and reliability, the Transmission Provider
may, upon advance written notice, require the Interconnection Customer to perform
reasonable additional post-operational testing. The Transmission Provider may witness
such testing. The Transmission Provider and the Interconnection Customer shall be
responsible for their own staff, equipment, and other costs associated with the testing and
inspection.
217. Right of Access (Proposed SGIA Article 3.3) – The Proposed SGIA would give
the Transmission Provider access to land owned or controlled by the Interconnection
Customer to construct Interconnection Facilities or for other specified purposes.
Comment
218. NARUC urges the Commission to adopt the following right of access provision
from its Model:
Upon reasonable notice, the Interconnection Provider may send a
qualified person to the premises of the Interconnection Customer at
or immediately before the time the Small Resource first produces
energy to inspect the interconnection, and observe the commissioning
of the Small Resource (including any required testing), startup, and
operation for a period of up to no more than three days after initial
start-up of the unit. In addition, the Interconnection Customer shall
notify the Interconnection Provider at least seven days before
conducting any on-site Verification Testing of the Small Resource.
Following the initial inspection process described above, at
reasonable hours, and upon reasonable notice, or at any time without
notice in the event of an emergency or hazardous condition,

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Interconnection Provider shall have access to Interconnection
Customer's premises for any reasonable purpose in connection with
the performance of the obligations imposed on it by this Agreement
or if necessary to meet its legal obligation to provide service to its
[customers].
Commission Conclusion
219. We largely adopt NARUC's proposal. It uses the concepts found in the Small
Generator Interconnection NOPR, but shortens and simplifies the provisions. However,
we are adding that each Party is responsible for its own staff, equipment, and other costs
in carrying out this provision.
220. Term of Agreement (Proposed SGIA Article 4.2) – Proposed SGIA article 4.2
would require that the interconnection agreement remain in effect for ten years, or longer
by request, and that it can be automatically renewed for each successive one year period
thereafter.
Comments
221. BPA argues that the interconnection agreement should remain in effect as long as
the Small Generating Facility remains interconnected, subject to the termination provision
of the SGIA or as agreed to by the Parties. The article unnecessarily requires the Parties
to negotiate a follow-on agreement after ten years.
222. Central Maine requests that the SGIA terminate after a set number of years agreed
to by the Parties. It states that the provision is unacceptable because it allows the
Interconnection Customer to unilaterally select the term of the interconnection agreement.
Commission Conclusion
223. We deny BPA's and Central Maine's requests to revise the term of the
interconnection agreement. These issues were addressed in Order No. 2003, and neither
commenter raises any new arguments here.79

79

Order No. 2003 at P 302-304.

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224. Termination (Proposed SGIA Article 4.3) and Default (Proposed SGIA Article
6.17) – Proposed article 4.3.1 would grant the Interconnection Customer the right to
terminate the SGIA at any time by giving 30 days written notice. Proposed article 4.3.2
would allow the Transmission Provider to terminate the interconnection agreement if a
material change in law or regulations would either prevent performance of the
interconnection agreement or impose on the Transmission Provider substantial additional
costs that are not reimbursed by another entity. Proposed article 6.17 described when a
Default takes place and the Parties' right to cure upon notice of a Default. Because these
provisions are closely related, we discuss them together.
Comments
225. Several commenters ask the Commission to grant the Transmission Provider
termination rights comparable to those given the Interconnection Customer.80 PG&E and
Southern Company request that the Transmission Provider have the right to terminate the
interconnection agreement if the Small Generating Facility is either shut down or
abandoned. Southern Company asks that the Transmission Provider be allowed to
terminate the agreement if the Small Generating Facility either does not begin commercial
operation or is inactive for three years. Absent changes to this provision, the only remedy
available to the Transmission Provider is to file an application to terminate with the
Commission.
226. Central Maine, Joint Commenters, and PacifiCorp ask that if the Interconnection
Customer terminates the SGIA, neither the Transmission Provider nor its customers
should have to pay the costs of termination, including the cost of site restoration. Central
Maine says these costs should be paid by the Interconnection Customer if it defaults on
the interconnection agreement. PacifiCorp requests that the SGIA require the
Interconnection Customer to pay any outstanding costs under the SGIP or SGIA during
the 30 day notice period, or else termination shall not become effective. Joint
Commenters also propose including a provision specifying that a Party remains liable for
expenses incurred under the SGIA even after it has terminated. Central Maine states that
certain critical provisions, such as access, confidentiality, invoicing, limitation of liability,
and indemnification, should survive any expiration or earlier termination of an agreement.

80

See, e.g., BPA, Central Maine, PG&E, and Southern Company.

Docket No. RM02-12-000

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227. NARUC urges the Commission to adopt its Model interconnection agreement,
which allows the Interconnection Customer to terminate the agreement for any reason,
including default, provided 60 days' written notice is given. Alternatively, the
Transmission Provider may terminate the agreement if the Small Generating Facility does
not generate energy in parallel with the Transmission Provider's Transmission System by
the later of two years from the date of the agreement or 12 months after interconnection is
completed.
228. NARUC also requests clarification that the Transmission Provider may terminate
the interconnection agreement for Default. Both NARUC and Joint Commenters propose
adding a provision specifying that a Transmission Provider may terminate the SGIA if
there is a material change in a rule or statute concerning interconnection and parallel
operation of the Small Generating Facility that would impose additional costs on the
Transmission Provider. Finally, the NARUC Model clarifies that termination does not
relieve either Party of its obligations to the other Party.
229. Central Maine and NYTO ask the Commission to clarify the difference between
"Default" and "Breach," as it did in the LGIA. Specifically, Central Maine states that a
Breach, if uncured, becomes a Default and may result in termination.
Commission Conclusion
230. As Order No. 2003 stated, there is no reason to allow the Transmission Provider to
terminate the interconnection agreement if the Interconnection Customer has met all its
obligations.81 As we have noted elsewhere in this Final Rule, the interests of a
Transmission Provider may be adverse to those of the Interconnection Customer, and it
has an incentive to discriminate against the Interconnection Customer. The
Interconnection Customer's business decision not to operate its Small Generating Facility
for an extended period of time should not result in the loss of its rights under the SGIA.
231. We adopt NARUC's proposal that a Party be given 60 calendar days in which to
cure a Default once notified that it is in Default. If at the end of the 60 calendar days, the
Default continues to exist, the non-defaulting Party may terminate the interconnection
agreement. This is consistent with the Commission's regulations that require an entity to
notify the Commission of the proposed cancellation or termination of a contract at least
60 calendar days before the cancellation or termination is proposed to take effect.
81

Order No. 2003 at P 313.

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However, to allow for situations where 60 calendar days are not sufficient time to cure the
default, the SGIA allows up to six months in which to cure the Default so long as the
Party "continuously and diligently" works towards curing the Default.
232. Joint Commenters and Central Maine propose provisions that address the cost
responsibility of the Parties if the SGIA is terminated. Both the Termination and Default
provisions now clarify that the Parties' financial obligations and other responsibilities
survive the termination of the SGIA. The SGIA also addresses PacifiCorp's concern that
the Interconnection Customer would be able to terminate the interconnection agreement
and escape financial responsibility for costs it has already incurred.
233. The Proposed SGIA included a provision allowing the Transmission Provider to
terminate the SGIA should there be a regulatory change that would impose additional
costs on the Transmission Provider. Consistent with the LGIA, we are not including such
a provision in the SGIA Should a significant regulatory change take place, the
Transmission Provider may request termination of the interconnection agreement under
section 205 of the FPA.
234. Central Maine and NYTO are correct that the term "breach" does not appear in the
SGIA. Upon discovering a Default, the non-defaulting Party gives notice of the Default to
the defaulting Party. The defaulting Party then has time to cure the Default. If it does not
do so, the SGIA may then be terminated. We are revising the SGIA accordingly.
235. Emergency Conditions (Proposed SGIA Article 4.4.1) – Proposed SGIA article
4.4.1 would give the Transmission Provider the right to immediately suspend
interconnection service and temporarily disconnect the Small Generating Facility under
Emergency Conditions.
Comment
236. SoCal Edison proposes adding the term "Distribution Provider's Distribution
System" to each place where the definition of Emergency Condition says "Transmission
Provider's Transmission System."82

82

SoCal Edison does not give any rationale for its proposed change, only modified
tariff sheets.

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Commission Conclusion
237. The owner of the Commission-jurisdictional facility with which the
Interconnection Customer interconnects is the "Transmission Provider" regardless of how
the facility may be classified by the Transmission Provider. As defined by this Final Rule,
"Transmission Provider" means "the public utility . . . that owns, controls, or operates
transmission or distribution facilities used for the transmission of electricity in interstate
commerce and provides transmission service under the Tariff" (emphasis added). The
change suggested by SoCal Edison would be redundant.83
238. Temporary Disconnection – Routine Maintenance, Construction, and Repair
(Proposed SGIA Article 4.4.2) and Forced Outages (Proposed SGIA Article 4.4.3) –
Proposed SGIA article 4.4.2 would require that the Transmission Provider give five
Business Days' notice before interrupting interconnection service, curtailing the output of
the Small Generating Facility, or temporarily disconnecting the Small Generating Facility
for routine maintenance, construction, and repairs. Proposed SGIA article 4.4.3 would
give the Transmission Provider the right to suspend interconnection service to make
repairs during forced outages. It would also require the Transmission Provider to give the
Interconnection Customer written documentation to explain the circumstances of the
disconnection if prior notice was not given. Both provisions would require the
Transmission Provider to use its best efforts to coordinate disconnections, curtailments,
and forced outages with the Interconnection Customer.
Comments
239. PG&E states that it has thousands of small solar projects interconnected with its
"Distribution System" and requests that the five Business Day notice requirement be
waived for distribution level generators because it would interfere with a Distribution
System owner's ability to work on its facilities.
240. Empire District argues that it should not take five days to shut down a Small
Generating Facility. If some minimum notice is required, it should apply only to Small
Generating Facilities larger than 2 MW. Empire District also questions the need for an
83

If the Small Generating Facility is interconnected with nonjurisdictional lines,
then this Final Rule does not reach the issue of whether a jurisdictional Transmission
Provider may disconnect the Small Generating Facility in an emergency. The
Transmission Provider would have to deal with the non-jurisdictional utility.

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"individual notice" to every generator and whether it is really necessary to notify the
operators of small certified units under 100 kW in size. If individual notifications are
required, the Interconnection Customer should have a method in place whereby "nearly
instantaneous, two-way communication" (notification and verification of receipt of notice)
can be made within 24 hours.
241. EEI, PacifiCorp, and Southern Company ask that the term "reasonable efforts" be
used instead of "best efforts" in Proposed SGIA articles 4.4.2 and 4.4.3, noting that
"reasonable efforts" was used in the ANOPR consensus document.
242. EEI and PacifiCorp ask the Commission to clarify that the Transmission Provider
must provide written documentation to the Interconnection Customer only when the latter
requests it.
Commission Conclusion
243. We are not convinced that a five Business Day notice is unduly burdensome to the
Transmission Provider or that it should apply only to Small Generating Facilities larger
than 2 MW. Even if PG&E has thousands of small solar projects interconnected with its
Distribution System subject to an OATT, as it states, it is highly unlikely that it will ever
have to provide notice to all of them simultaneously.
244. We agree that the term "reasonable efforts" should be used instead of "best efforts"
in the SGIA. We are making this change throughout the SGIA.
245. Finally, we are persuaded that written documentation need be provided only upon
request by the Interconnection Customer, and the SGIA reflects this change.
246. Temporary Disconnection – Adverse Operating Effects (Proposed SGIA
Article 4.4.4) – Proposed SGIA article 4.4.4 said that after being notified that its Small
Generating Facility may degrade the reliability of the Transmission Provider's electric
system, the Interconnection Customer must be given reasonable time to make necessary
corrections. If it does not make the corrections within that time, the Transmission
Provider must provide a second notice to the Interconnection Customer stating that the
Small Generating Facility may be disconnected in five Business Days.

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Comments
247. Several commenters84 contend that the five day notice period is unreasonable,
restricts the Transmission Provider's ability to respond to reliability concerns, and could
be misinterpreted to mean that an Interconnection Customer whose Small Generating
Facility is causing adverse operating conditions has priority over other customers.
248. EEI recommends that the last sentence of Proposed SGIA article 4.4.4 be revised to
read: "Transmission Provider shall provide Interconnection Customer notice of such
disconnection within a reasonable time period, unless the provisions of article 4.4.1
[Emergency Conditions] apply."
249. National Grid states that some form of advance notice and the ability to cure is
generally reasonable before disconnection; however, such steps cannot be mandated all
the time. It proposes language giving the Transmission Provider the right to take
unilateral action to avoid service disruptions to other customers or damage to facilities
caused by the Small Generating Facility.
250. According to Small Generator Coalition, the Transmission Provider should notify
the Interconnection Customer if, based on sound engineering judgment, it concludes that
adverse operating conditions exist.
Commission Conclusion
251. This article applies only if the Transmission Provider determines that the Small
Generating Facility may adversely affect its electric system and the Interconnection
Customer has failed to take the necessary remedial action within the time specified by the
Transmission Provider. We are not convinced that the notice period is too long, could
endanger reliability or safety, or unnecessarily expose the Transmission Provider to
liability claims when damage and disruption to its electric system is imminent. There
could be legitimate reasons for the Interconnection Customer not to make the necessary
corrections within the allotted time (e.g., replacement parts are on back order). SGIA
article 3.4.1 provides that the Transmission Provider may declare an emergency and
disconnect the Small Generating Facility if there is an imminent threat to its electric
system, which provides the Interconnection Customer with ample incentive to promptly

84

E.g., Ameren, EEI, National Grid, PacifiCorp, PG&E, and Southern Company.

Docket No. RM02-12-000

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resolve any adverse operating effects. Accordingly, we reject the request to eliminate the
notification period from this article. However, we are revising this provision to specify
that no notice is necessary in order to resolve an Emergency Condition.
252. We agree with Small Generator Coalition that the Transmission Provider should
immediately notify the Interconnection Customer when operation of the Small Generating
Facility may cause disruption or deterioration of service to other customers and that this
finding must be based on and supported by sound engineering principles. We also stress
that all documentation supporting the problem must be provided to the Interconnection
Customer upon request.
253. Temporary Disconnection – Modification of the Generating Facility (Proposed
SGIA Article 4.4.5) – Proposed SGIA article 4.4.5 would require the Interconnection
Customer to secure written authorization from the Transmission Provider before making
any material modification to the Small Generating Facility, or it can be disconnected.
Comment
254. EEI recommends that the phrase "material modification" be replaced with
"modification." This revised language is used in LGIA article 5.19.2.
Commission Conclusion
255. We agree with EEI that the term "material modification" could be ambiguous.
Accordingly, we are revising this article to provide that Transmission Provider written
approval is required before the Interconnection Customer may modify its Small
Generating Facility in such a way that could materially impact the safety or reliability of
the Transmission Provider's electric system. We are also requiring that any modifications
be done according to Good Utility Practice.
256. Temporary Disconnection – Reconnection (Proposed SGIA Article 4.4.6) –
Proposed SGIA article 4.4.6 would require the Parties to cooperate with each other to
restore the Small Generating Facility, the Interconnection Facilities, and the Transmission
Provider's electric system to their normal operating state as soon as reasonably practicable
following any temporary disconnection.

Docket No. RM02-12-000

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Comments
257. Southern Company contends that this article should state that restoration is required
only when the events causing the temporary disconnection are over. Small Generator
Coalition asks that the provision use "interruption and curtailment" instead of "reduction."
258. In its supplemental comments, Joint Commenters propose the following alternative
language: "the Parties shall cooperate with each other to restore the Generating Facility,
Interconnection Facilities, and Transmission Provider's Transmission System to their
normal operating state as soon as reasonably practicable following a temporary
disconnection."
Commission Conclusion
259. We are adopting the proposed language submitted by Joint Commenters because it
removes unnecessary jargon and simply requires that the Parties work to restore normal
interconnection service as quickly as possible. This language addresses Southern
Company's and Small Generator Coalition's concerns as well.
260. Financial Security Arrangements (Proposed SGIA Article 5.2) – Proposed
SGIA article 5.2 provided that the Interconnection Customer provide financial security to
the Transmission Provider for the construction of Interconnection Facilities or Upgrades
through a guarantee, surety bond, letter of credit, or other form of credit that meets certain
standards. The type of financial security arrangement and issuing entity would have to be
reasonably acceptable to the Transmission Provider and have (1) terms and conditions that
guarantee payment up to an agreed upon amount, (2) a reasonable date of expiration,
(3) be issued at least 20 days before construction, and (4) be consistent with the Uniform
Commercial Code of the jurisdiction where the Point of Interconnection is located.
Comments
261. PacifiCorp argues that this article does not refer to design costs. It asserts that this
could lead to unnecessary confusion over whether design costs should be included with
procurement, resulting in the burden of design costs falling on the Transmission Provider
and its customers.
262. Southern Company offers proposed changes to provide protection for the
Transmission Owner and the Transmission Provider. It asks the Commission to delete any
references to surety bonds as an acceptable form of payment on the grounds that they are
not specifically mentioned in the OATT and are not generally accepted as a form of

Docket No. RM02-12-000

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payment. It also requests that the SGIA state clearly that the terms of any letter of credit,
guarantee or other security must be reasonably acceptable to the Transmission Provider.
263. In an effort to avoid fraudulent conveyance issues or problems with the
enforcement of any guarantee through bankruptcy procedures, Southern Company
proposes that the parent of the Interconnection Customer (if any) serve as the source of
any guarantee, specifically excluding affiliates from proposing any guarantee.
Additionally, any proposed guarantor should have a credit rating of BBB+ to protect
against rapid credit downgrades.
264. Southern Company also argues that the dollar-for-dollar reduction of security as
payments are made to the Transmission Provider is arbitrary and capricious and imposes
risks under bankruptcy and fraudulent conveyance law upon the Transmission Provider.
At a minimum, the Commission should not require that security be reduced until the
expiration of any potential bankruptcy preference period. Southern Company also asks
the Commission to clarify that credit support is not to be reduced by payments made to the
Transmission Provider that are unrelated to the actions designated in this article. It also
proposes the expansion of credit to cover all other obligations of the Interconnection
Customer under the interconnection agreement.
265. Finally, NYTO proposes that the Interconnection Customer demonstrate its
creditworthiness in its Interconnection Request.
Commission Conclusion
266. We agree with PacifiCorp that design costs are a part of the development process
that should be covered and are including such a provision in the SGIA.
267. While Southern Company opposes using surety bonds as an acceptable form of
payment, we are following in this Final Rule the same approach taken in the LGIA, which
states that the Interconnection Customer has the right to select a form of security that is
acceptable to the Transmission Provider and consistent with commercial practices.85
Because SGIA article 6.3 grants the Transmission Provider the discretion to reject a form
of security (if it is reasonable to do so), we reject Southern Company's proposal to
eliminate the surety bond as an acceptable form of credit. Giving the Interconnection

85

Order No. 2003 at P 597.

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Customer a choice of security is not unreasonable.86 Furthermore, granting the
Transmission Provider absolute discretion on what forms of security to allow would
provide too great an opportunity to erect hurdles to new small generation.87
268. For the same reasons, we reject Southern Company's proposals to (1) limit the
source of any guarantee to a parent of the Interconnection Customer and (2) require any
proposed guarantor to have a credit rating of BBB+. These are hurdles that could be
exploited to discourage Small Generating Facilities. The SGIA grants the Transmission
Provider the discretion to reject a form, source, or issuing entity of security only if doing
so is reasonable. Giving the Transmission Provider absolute discretion on these choices
would create too great an opportunity for exploitation.
269. We are requiring the reduction of the security amount on a dollar-for-dollar basis as
payments are made because this protects the Interconnection Customer against providing
too much security while ensuring that the Transmission Provider is sufficiently protected
against its real cost exposure.88 We recognize that reducing the security as the
Interconnection Customer pays its bills may cause a small increase in risk to the
Transmission Provider, but the chilling effect of requiring the Interconnection Customer to
maintain the full security during the length of the interconnection process would seriously
discourage new small generation.
270. We clarify that credit support is not to be reduced by payments made to the
Transmission Provider that are unrelated to the actions listed in this article. In response to
NYTO, we note that the Interconnection Customer is already required to give appropriate
financial guarantees before the Transmission Provider begins construction. Thus, the
Interconnection Customer need not demonstrate its creditworthiness when it submits its
Interconnection Request.

86

See Florida Power & Light Company, 98 FERC ¶ 61, 226 at 61,893-94, reh'g
granted in part on other grounds, 99 FERC ¶ 61,318 (2002); Florida Power & Light
Company, 98 FERC ¶ 61,324 at 62,358-59 (noting that the Transmission Provider's
practice of limiting interconnection customers to a letter of credit is unreasonable), reh'g
rejected as moot, 100 FERC ¶ 61,094 (2002).
87

Southwest Power Pool, Inc., 100 FERC ¶ 61,096 at P 12 (2002).

88

See Order No. 2003 at P 264.

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271. Milestones (Proposed SGIA Article 5.3) – Proposed SGIA article 5.3 stated that
the Parties are to agree on milestones that each Party is responsible for meeting. These
milestones are part of the interconnection agreement. Article 5.3 further specified that if
either Party does not meet a milestone, it must compensate the other Party for its losses
(i.e., pay liquidated damages).
Comments
272. Several commenters ask the Commission to remove references to liquidated
damages from the SGIA. Others claim that the Commission lacks the legal authority to
impose liquidated damages.
273. EEI seeks the elimination of this article entirely. The provision is vague and
confusing because conflicting milestone requirements appear in other areas of the
Proposed SGIA and Proposed SGIP. NYTO contends that Appendix 3 of the Proposed
SGIA, which requires the Parties to list agreed upon milestones, is unnecessary.
274. Midwest ISO requests that the Commission adopt the same liquidated damages
clause as in the LGIA. It states that this will make the large and small generator tariff
provisions consistent.
275. PacifiCorp requests that Proposed SGIA articles 5.3.1 and 5.3.2 be deleted. It
contends that the accomplishment of milestones should be subject to a "reasonable efforts"
or "good faith efforts" standard rather than liquidated damages being applied. As a matter
of policy, good faith efforts should not be penalized, since the Transmission Provider does
not profit from interconnections.
276. In its supplemental comments, Joint Commenters suggest replacing this provision
in its entirety. The proposed replacement requires the Parties to agree to extend milestone
deadlines if the milestone was missed in "reasonable good faith." However, the Party
affected by the failure to meet a milestone is not required to agree to an extension if:
(1) it will suffer significant uncompensated economic or operational
harm from the delay and believes that the delay is not or was not
unavoidable, (2) attainment of the same milestone has previously
been delayed, or (3) it has reason to believe that the delay in meeting
the milestone is intentional or unwarranted notwithstanding the
circumstances explained by the party proposing the amendment.

Docket No. RM02-12-000

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277. Joint Commenters also suggest making the provision bilateral and removing the
monetary penalty for missing a milestone. Additionally, Joint Commenters would require
the Party missing the milestone to fully explain to the other Party why the milestone was
missed. Finally, Joint Commenters propose adding a statement that any dispute as to this
provision should be resolved according to the dispute resolution portions of the SGIA.
Commission Conclusion
278. This Final Rule adopts many concepts proposed by Joint Commenters, including
the notice provisions and the preference that the Parties agree to extend deadlines instead
of declaring that the other Party has defaulted on the SGIA.
279. Regarding Joint Commenters' proposal to add a statement regarding dispute
resolution, such a statement is not needed because the SGIA's dispute resolution provision
applies to the entire document.
280. We reject PacifiCorp's proposal to delete SGIA milestone provisions. These
provisions provide a single reference to the relevant milestones. They will assist the
Parties and will minimize disagreements. Removing them would create uncertainty for
the Parties.
281. Because we are not imposing in this Final Rule a financial penalty on the
Transmission Provider for missing milestones, there is no need to discuss commenters'
arguments on that issue.
282. Billing and Payment (Proposed SGIA Article 5.4) – Proposed SGIA article 5.4
would provide that billing and payment obligations are to be performed under the terms of
the SGIA.
Comments
283. PacifiCorp requests that this article be revised to include billing and payment
requirements for Distribution Upgrades or Network Upgrades. It also states that billing
and payment for miscellaneous costs, such as restudy costs, should be addressed.
Commission Conclusion
284. We agree with PacifiCorp in part and are revising this article to clarify that billing
and payment requirements are for Distribution Upgrades and Network Upgrades.

Docket No. RM02-12-000

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However, we see no need to identify specific miscellaneous costs because the obligations
listed in SGIA article 6.1 are for services rendered, which already includes such costs.
285. Billing Procedure for Interconnection Facilities Construction (Proposed SGIA
Article 5.4.1) and Final Accounting (Proposed SGIA Article 5.4.2) – Under Proposed
SGIA article 5.4.1, the Transmission Provider would bill monthly for expenditures for the
design, engineering and construction of, or for other charges related to, Interconnection
Facilities. The Interconnection Customer would remit payment within 30 calendar days
after receipt of the bill.
286. Proposed SGIA article 5.4.2 would require that the Transmission Provider submit a
final accounting report to the Interconnection Customer within 45 calendar days after
installing the Transmission Provider's Interconnection Facilities.
Comments
287. PacifiCorp suggests that Proposed SGIA article 5.4.1 also include procurement
costs. Small Generator Coalition argues that alternative arrangements for payment of the
bill should be allowed if the Parties agree. With respect to Proposed SGIA article 5.4.2,
numerous commenters89 argue that 45 calendar days is not enough time for the
Transmission Provider to prepare a final accounting report. They offer an array of
alternative deadlines ranging from 60 Business Days to 90 days after the Small Generating
Facility begins commercial operation. BPA complains that there is not a similar deadline
for any additional payments owed by the Interconnection Customer. It proposes that any
unpaid bill must be paid within 30 days after the bill is submitted by the Transmission
Provider.
Commission Conclusion
288. We agree with PacifiCorp that procurement costs should be included. We are also
revising the provision to allow the Parties to make other reasonable payment arrangements
should they agree to do so, as requested by Small Generator Coalition.
289. While we agree with commenters that the proposed deadline for submitting the
final accounting report may be too short, tying it to commercial operation of the Small
Generating Facility is unrealistic because that event may happen long after construction is
89

E.g., BPA, Central Maine, NYTO, PGE, and Southern Company.

Docket No. RM02-12-000

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complete. A more realistic deadline, and one that provides sufficient time for the
Transmission Provider to compile the expenditures and process the final accounting
report, is three months from the date construction of the facilities is completed. We are so
revising this provision.
290. BPA is correct that proposed SGIA article 5.4.2 did not include a deadline for the
Interconnection Customer to pay its final accounting bill. We are including in the SGIA
30 calendar days for the Interconnection Customer to make payment to the Transmission
Provider.
291. Finally, we are consolidating Proposed LGIA articles 5.2, 5.3, and 5.4 because they
are so closely related. The new article is entitled "Billing, Payment, Milestones, and
Financial Security."
292. Assignment (Proposed SGIA Article 6.5) – Proposed SGIA article 6.5 would
allow the Parties to assign their rights under the interconnection agreement to others under
certain circumstances.
Comments
293. Southern Company contends that the proposed assignment provision unreasonably
allows one Party to freely assign its rights to an affiliate without consent from the other
Party. It argues that this subjects the Transmission Provider to unnecessary risk from
which it cannot protect itself by requiring that the assignee have a credit rating equivalent
to that of the assignor; Transmission Providers typically rely on guarantees or letters of
credit, which are personal to the obligor and would likely not cover the assignee. Bureau
of Reclamation emphasizes that its policies allow assignment of an interconnection
agreement only if both Parties agree to the assignment and the assignor agrees to remain
bound by the original terms of the SGIA.
294. Southern Company also argues that it is unreasonable to make the Transmission
Provider get the Interconnection Customer's agreement before it can assign the
interconnection agreement as collateral, while at the same time allowing the
Interconnection Customer to assign the interconnection agreement as collateral without
the Transmission Provider's permission. Southern Company contends that such
assignments could unfairly deprive the Transmission Provider of the right to require the
assignee or purchaser in foreclosure to assume the obligations of the assignor and to fulfill
performance. In addition, the Transmission Provider could lose the right to require
collateral assignees to cure Defaults of the assignor, thereby allowing assignees or
purchasers in foreclosure to gain greater rights under the interconnection agreement than

Docket No. RM02-12-000

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would have been permitted to the original Interconnection Customer. The requirement
that notice of collateral assignment be provided by the secured party, trustee, or mortgagee
is unworkable, as there would be no enforceable penalties for breach of this obligation.
Not only do these parties lack contractual privity with the Transmission Provider, but they
are also not typically subject to Commission jurisdiction.
295. Southern Company contends that this article should provide Transmission
Providers and Transmission Owners indemnification rights for any losses, costs, and
expenses they may incur in connection with assignments or foreclosures. In addition,
Southern Company seeks clarification of the conditions under which the Transmission
Provider must recognize foreclosure rights and assignments. The provision as written
could expose the Transmission Provider to uncompensated risks, forcing its native load to
bear the costs.
296. Small Generator Coalition requests that this article allow the Interconnection
Customer to assign its rights and obligations under the interconnection agreement without
consent of the Transmission Provider if the Interconnection Customer sells or transfers the
Small Generating Facility and the real property on which it is located.
297. NARUC urges adoption of its Model interconnection agreement language, which
allows assignment by the Interconnection Customer in two situations. First, assignment
may be made to a corporation or other limited liability entity upon the consent of the
Transmission Provider. Such consent is not to be withheld unless the Transmission
Provider "can demonstrate that the corporate entity is not reasonably capable of
performing the obligations of the assigning Interconnection Customer." Second, the
Interconnection Customer may assign the interconnection agreement to a person who is
either the "owner, lessee, or is otherwise responsible for the Small [Generating Facility]."
298. In its supplemental comments, Joint Commenters recommend two changes to the
Proposed SGIA: (1) deleting the sentence requiring the assignee to notify the other Party
before exercising its assignment rights and (2) requiring the assigning Party to give the
other Party 15 days to object to an assignment.
Commission Conclusion
299. The assignment provision proposed by Joint Commenters is similar to the provision
in the Small Generator NOPR. However, Joint Commenters propose two minor changes
that we will adopt. First, Joint Commenters propose to remove a very technical sentence
relating to financing from the provision that is not well suited to smaller projects. Second,
Joint Commenters require that a Party seeking to assign the SGIA merely inform the other

Docket No. RM02-12-000

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Party of the pending assignment. Should the Party not object, the assignment may go
forward. If the Party does object, then the remainder of the provision will apply. Making
these changes to the assignment provision should reduce the administrative burden on the
Parties without diminishing their substantive rights.
300. In Order No. 2003-A,90 the Commission modified the assignment provision of the
LGIA in order to address Southern Company's concerns relating to protecting native load
customers. We make corresponding changes here, clarifying that (1) an Interconnection
Customer assigning its rights under the SGIA is required to notify the Transmission
Provider of the assignment and (2) an assignee is responsible for meeting the same
insurance and financial security obligations as a normal Interconnection Customer upon
exercising its right of assignment.91 This is in addition to a sentence specifying that "an
assignment under this provision shall not relieve a Party of its obligations . . . ." We also
make various editorial changes that make the provision easier to read. Southern also
requests that a Transmission Provider be allowed to assign the interconnection agreement
as collateral. We reject that request for the same reasons discussed in Order
No. 2003-A.92
301. Insurance (Proposed SGIA Article 6.16) – In the Small Generator
Interconnection NOPR, the Commission asked whether insurance should be required for
Small Generating Facility interconnections and if so, how much. While the Proposed
SGIA itself contained insurance provisions, the Commission did not specify dollar
amounts and requested proposals from commenters. The Commission also requested
comments on three specific issues. First, should insurance coverage vary with the size of
the facility? Should, for example, a 20 MW Small Generating Facility be subject to
higher coverage amounts than a 10 MW facility, which itself would be subject to higher
coverage amounts than a 5 MW facility? Second, should coverage types and amounts
vary according to the type of generator so that, for example, solar or wind facilities would
require different insurance coverage than gas-fired facilities? Third, should there be a size
cutoff that would exempt certain facilities from some insurance requirements?

90

See Order No. 2003-A at P 470.

91

See Id. P 471.

92

See Id. P 475.

Docket No. RM02-12-000

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Comments
302. The NARUC Model, while not requiring insurance, proposes that state regulators
recommend that every Interconnection Customer "protect itself with insurance or other
suitable financial instrument sufficient to meet its construction, operating and liability
responsibilities. . . ."93
303. NARUC argues that the Commission's proposal to require seven different types of
insurance is excessive and makes federal interconnection rules incompatible with state
rules. The very act of requiring insurance would drive up prices because insurance
companies would then have a captive market that must have insurance. Workers'
compensation and automobile insurance are already required by state law; accordingly,
they should not be mandated by the federal government. NARUC also asserts that state
regulators will have more flexibility to assure low insurance rates if this Final Rule does
not require insurance. Finally, NARUC reports that while California requires insurance
for most projects, the majority of other states (including New York, Texas, and Ohio) do
not. Therefore, requiring insurance would be inconsistent with the practice in most states.
304. NYPSC reports that its own efforts to establish minimum insurance requirements
were unsuccessful. While it recognizes the risk Small Generating Facilities pose to the
Transmission Provider, mandatory insurance "created a substantial barrier to the
proliferation of distributed generation units."94 The biggest barrier to entry is not the cost
of insurance (though that is a factor), but the fact that insurance is unavailable at any price
in many situations. Insurance companies are not yet familiar with the risks posed by the
interconnection of Small Generating Facilities and often will not insure them. NYPSC
instead proposes allowing the market to determine insurance requirements. It reports that
the market has at least partially responded to this need, creating insurance pools to spread
the risk to multiple entities. It also notes that manufacturers sometimes bundle insurance
coverage along with the equipment.
305. ISO New England recognizes that smaller generators generally pose less risk than
larger ones, but argues that the level of risk should be evaluated on a case-by-case basis.
This Final Rule should let an independent Transmission Provider waive the insurance
requirement if it determines that the project poses little risk to its electric system. For
many smaller facilities, the liability, indemnity, and insurance requirements typically
93

NARUC Model – Interconnection Agreement at article 7.

94

NYPSC at 9.

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required of larger facilities may cost too much. Likewise, MISO supports making the
amount of insurance required a function of the risk of the particular interconnection.
However, MISO also supports establishing minimum standard insurance requirements
(although it does not offer specific amounts).
306. Some Transmission Providers95 want the Commission to keep the proposed
insurance limits. Central Maine and NYTO, among others, point out that most small
projects would not have the financial resources to pay any judgment against them and
argue that insurance is necessary to protect the interests of the Transmission Provider, and
ultimately, its customers. EEI favors using the same insurance limits as the LGIA.
307. AEP also argues that there is no reason why standard insurance provisions should
be different for a 1 MW facility than for a 20 MW facility. Likewise, Allegheny Energy,
Central Maine, NYTO, and others argue that even a very small generating facility can
damage the Transmission Provider's electric system.
308. Empire District, Nevada Power, NRECA, and PG&E assert that the amount of
insurance required should vary with generator size. As NRECA puts it, "a residential
consumer installing a 3 kW Small Generating Facility should not have to acquire
$1 million in insurance . . . ."96 Even so, NRECA states that it would oppose any attempt
to create a minimum megawatt threshold below which insurance would not be required.
309. PG&E states that California has long required insurance for all projects larger than
10 kW and that this requirement has not noticeably dampened the market for on-site Small
Generating Facilities.
310. While Nevada Power agrees that solar and wind projects present less risk than does
a traditional gas-fired generator, it opposes insurance requirements that differ by fuel type.
The market already recognizes these reduced risks by charging proportionately less for
some types of insurance than others. NRECA also opposes distinguishing between
different fuel types, arguing that this is only one of many factors that determine a project's
risk.

95

E.g., AEP, Allegheny Energy, Avista, BPA, Central Maine, Cinergy, EEI,
NRECA, NYTO, and Southern Company.
96

NRECA at 34.

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311. In contrast, Tangibl supports basing the required amount of insurance on the type
of generator being interconnected. It argues that the risks posed by Small Generating
Facilities are largely environmental, such as fuel spills. Tangibl also argues that Small
Generating Facilities pose less risk than do large generators because the former need
smaller amounts of fuel to be stored on site. This risk is even less for renewable sources
such as wind or solar.
312. Nevada Power says that knowing how much insurance is going to be required at the
outset of the project is important to its success.
313. While AEP supports including standard insurance terms in this Final Rule, the
Parties should be able to negotiate additional terms if warranted by the physical
characteristics of the project. NRECA argues for permitting the Transmission Provider to
determine the necessary level of insurance on a case-by-case basis.
314. Cinergy also argues for increased flexibility. It would let the Transmission
Provider reduce or eliminate the required insurance provisions on a case-by-case basis if it
believes in good faith that the full amount of insurance is not required to safeguard its
interests. Cinergy also argues that this Final Rule should provide a mechanism for dealing
with insurance requirements that simply do not apply to a given generator, such as
requiring workers' compensation insurance for a generator that does not have any on-site
employees.
315. National Grid proposes that the Commission not set required levels of insurance,
and instead leave it to the Transmission Provider and state law. It points out that several
states have, or are in the process of developing, specific insurance requirements for Small
Generating Facilities. The Commission should not second-guess the attempt of various
states to encourage on-site Small Generating Facilities. Specifically, National Grid points
to a proposal developed by a working group of the Massachusetts Public Utilities
Commission that proposes varying levels of insurance depending on the capacity of the
project.97
97

The proposal requires no insurance for projects smaller than 10 kW; $500,000
for projects between 10 kW and 100 kW ($500,000 aggregate); $1 million for projects
between 100 kW and 1 MW ($1 million aggregate); $2 million for projects larger than 1
MW and no larger than 5 MW ($5 million aggregate); and $5 million for projects larger
than 5 MW ($5 million aggregate). See National Grid Comments, Appendix A (citing
Tariff to Accompany Proposed Uniform Standards for Interconnecting Distributed
Generation in Massachusetts, Submitted by the Distributed Generation Interconnection
(Footnote continued on next page)

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316. NYTO makes a similar request, arguing that the Transmission Provider should be
allowed to fill in specific insurance amounts based on state law, established local practice
or, absent those, its own business judgment.
317. Avista states that the Parties should be allowed to negotiate alternative mechanisms
such as self-insurance. It argues that even a Transmission Provider facing financial
difficulty can always raise rates to cover any potential liability. Southern Company also
proposes revisions to clarify the meaning of this article.
318. NRECA, while it supports the Commission's insurance proposal, opposes making
the provision bilateral. It argues that the Transmission Provider's operation of its electric
system does not create any greater risk to the Interconnection Customer than to any other
customer. The interconnection of the Small Generating Facility, on the other hand,
increases the risks to the Transmission Provider. Furthermore, according to NRECA,
most Transmission Providers are already required to either self-insure or otherwise carry
insurance sufficient to cover any liability that may arise from operation of their electric
systems, so requiring further insurance is duplicative.
319. Empire District supports requiring the Transmission Provider to be named as an
additional insured for generators larger than 5 or 10 kW, while Avista opposes such a sizerelated requirement.
320. Avista notes that workers' compensation requirements vary significantly by state.
It argues that the Commission should not attempt to federally preempt these long-standing
practices. According to Avista and Nevada Power, the interconnection agreement should
simply require compliance by each Party with the applicable state workers' compensation
laws.
321. Cinergy states that while insurance may be a significant barrier to entry for some
Interconnection Customers, the Commission should heed the insurance market's
independent assessment of the risk of a particular project. Fundamental economic
principles require Interconnection Customers to bear the costs of the risks they impose on
third parties, and there is no sound basis for the Commission to shift that cost to the
Transmission Provider and its customers. Nevada Power and NRECA make similar
Collaborative to the Massachusetts Department of Telecommunications and Energy in
Compliance with DTE Order No. 02-38-A (May 15, 2003)).

Docket No. RM02-12-000

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arguments. NRECA also argues that if Interconnection Customers do not have insurance,
insurance companies will be forced to raise the cost of insurance for Transmission
Providers, and that in turn will be paid by all users of the Transmission System.
322. Small Generator Coalition, like most commenters representing Small Generating
Facilities, argues that purchasing insurance is a business decision and that the level and
nature of the insurance should be established by each business according to its needs, not
mandated by the federal government. It argues that requiring insurance would create a
major barrier to small generator interconnections and would prevent utility customers (as
opposed to commercial generation projects) from pursuing interconnection because the
administrative and financial barriers to entry would simply be too great. It asserts that the
insurance requirements for a small wind turbine should be less than for a nuclear power
plant or other large generator. Small Generator Coalition is particularly vehement in its
opposition to insurance requirements for projects under 2 MW in size. Overall, Small
Generator Coalition supports NARUC's comments and asks the Commission to use the
NARUC Model in lieu of the Proposed SGIA.
323. Small Generator Coalition states that if the Commission does include insurance
requirements in its Final Rule, it should exempt facilities no larger than 2 MW and require
only $1 million in general liability insurance for projects 2 MW or larger.
324. In general, Transmission Providers support requiring an insurance regime with
larger policy limits and a broad array of coverage. Interconnection Customers and
NARUC generally support requiring smaller amounts of insurance or none at all.
Southern Company proposes revisions to Proposed SGIA article 6.16.11 to clarify the
conditions under which one Party must notify the other of accidents and injuries arising
out of the interconnection agreement.
325. Central Maine proposes requiring the following policies: $1 million in employer's
liability and workers' compensation insurance; $1 million in Commercial General
Liability Insurance (with a $2 million aggregate combined limit); comprehensive
automobile liability insurance of $1 million (with a $2 million aggregate combined limit);
and an additional $1 million in excess public liability insurance (with a $5 million
aggregate cap).
326. Nevada Power proposes requiring $1 million in general liability coverage from
projects greater than or equal to 200 kW and $500,000 if the project is no larger than
200 kW. It also proposes requiring excess public liability insurance of $10 million if the
facility is greater than or equal to 10 MW in size ($10 million aggregate); $5 million for

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projects between 5 and 10 MW ($5 million aggregate); $2 million for projects between
200 kW and 5 MW ($2 million aggregate); and none for projects less than 200 kW.
327. Southern Company is in favor of requiring a flat level of coverage for all Small
Generating Facilities, regardless of size, and proposes requiring $1 million workers'
compensation insurance ($1 million aggregate); $2 million general liability insurance
($6 million aggregate); $2 million comprehensive automobile liability insurance; and
$10 million excess public liability insurance ($10 million aggregate).
328. Tangibl proposes differing levels of insurance requirements based on both size and
type of the generator. For solar or wind generators, Tangibl proposes requiring $2 million
in insurance for facilities larger than 10 MW; non-solar or wind facilities larger than
10 MW would maintain $4 million. However, for facilities no larger than 10MW, Tangibl
proposes $500,000 in workers' compensation insurance; $1 million Commercial General
Liability Insurance ($2 million aggregate); $1 million comprehensive automobile
insurance ($1 million aggregate); and $5 million excess public liability insurance
($5 million aggregate).
329. SoCal Edison urges the Commission to adopt the same insurance requirements that
the California Public Utilities Commission (CPUC) requires, asserting that California's
extensive experience with small generators should serve as a model for the Commission.
Specifically, California's Rule 21 requires general liability coverage in the amount of
$2 million for projects larger than 100 kW; $1 million for projects larger than 20 kW and
no larger than 100 kW; and $500,000 for projects no larger than 20 kW. Rule 21 also
creates a special reduced insurance requirement of $200,000 for facilities no larger than
10 kW associated with a retail customer. Rule 21 exempts some classes of solar and wind
generators from its insurance requirements entirely, and provides for waiver of the
insurance requirements for some small residential interconnections if insurance is not
easily obtainable.
330. In its supplemental comments, Joint Commenters proposes requiring the
Interconnection Customer to maintain insurance in an amount "sufficient to insure against
all reasonably foreseeable direct liabilities given the size and nature of the generating
equipment being interconnected, the interconnection itself, and the characteristics of the
system to which the interconnection is made." It also specifies that the provision shall not
require the Interconnection Customer to obtain additional insurance if the insurance it
already has is sufficient. The Interconnection Customer is required to document its
insurance coverage no later than ten days before the anticipated commercial operation date
of the Small Generating Facility, and afterwards as requested by the Transmission
Provider. The proposed provision also allows the Interconnection Customer to self insure

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when appropriate and requires the Transmission Provider to maintain insurance
"consistent with the Transmission Provider's commercial practice." While Joint
Commenters were able to reach consensus on the insurance requirement for most Small
Generating Facilities, they were not able to reach consensus on the issue of insurance
requirements for inverter-based generators no larger than 10 kW.
Commission Conclusion
331. The wide range of insurance recommendations points out the difficulties in
establishing a set dollar amount or type of insurance appropriate to every Small
Generating Facility. Insurance can add significant costs to a Small Generating Facility
and may affect the project's economic feasibility. Nevertheless, a mismanaged
interconnection can harm the Transmission Provider's electric system and affect power
customers, potentially subjecting the Parties to liability.
332. We adopt in its entirety Joint Commenters' proposal, which reflects appropriate
compromises regarding this diversity of insurance needs. We are pleased that such a
diverse group of stakeholders could reach consensus on this difficult issue.
333. The level of risk in interconnecting a 50 kW photovoltaic system with the
Transmission Provider's Transmission System is very different from the risk involved in
interconnecting a 10 MW generator. Mandating that the Interconnection Customer
maintain a reasonable amount of insurance based on the specific characteristics of its
interconnection avoids the one-size-misfits-all problem and addresses the differing needs
of different Interconnection Customers and Transmission Providers.
334. Joint Commenters, however, could not reach consensus on any insurance provision
for certified inverter-based generators no larger than 10 kW. Commenters have convinced
us that the risk of interconnecting these small inverter-based generators is low and we
therefore decline to impose a generic insurance requirement in this Final Rule.98 Instead,
we adopt the approach proposed by NARUC which is that each Party be required to
"follow all applicable insurance requirements imposed by the state in which the Point of
Interconnection is located. All insurance policies must be maintained with insurers
authorized to do business in that state." Given that most generators of this size and type
98

See, e.g., Cinergy, Empire District, ISO New England, NRECA, NYPSC,
PG&E, and Small Generator Coalition. But see, e.g., AEP, Central Maine, EEI, NYTO,
and Southern Company.

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will be interconnecting with state-jurisdictional facilities, it makes sense to coordinate our
approach with the approach recommended by NARUC. This will also avoid forum
shopping. This is also similar to the approach adopted in Order No. 2003-A, which
deferred to state insurance laws rather than imposing specific dollar amounts for these
types of insurance.99
335. However, because any uninsured risk will fall squarely on the Transmission
Provider's customers, who would effectively subsidize the costs of the interconnection, we
reject proposals that we completely waive insurance requirement. Several commenters
also advise the Commission to leave the issue of insurance to state regulators. While this
makes sense for small inverter-based generators, for larger Small Generating Facilities,
having insurance requirements vary by state would hamper our effort to promulgate
national small generator interconnection standards.
336. Cinergy asks that the Transmission Provider be allowed to waive or reduce
insurance requirements for a given project if it concludes that it poses little risk to its
electric system. The provision proposed by Joint Commenters would allow this type of
flexibility. If the Parties agree that the interconnection is safe, then they can agree that
insurance is not necessary. However, Transmission Providers must waive or reduce the
insurance requirements on a non-discriminatory basis that does not favor affiliated
facilities.
337. We also clarify that an RTO or ISO may propose additional or different insurance
requirements under the independent entity variation provision contained in this Final Rule.
338. Reservation of Rights (Proposed SGIA Article 6.20) – Some commenters
pointed out that Proposed SGIA article 6.20 contained a typographical error, which we are
correcting.
339. Signatures and Parties to the SGIA (Proposed SGIA Article 9) – Proposed
SGIA article 9 required both the Transmission Provider and the Transmission Owner to
sign the interconnection agreement. This is the same approach taken in Order No.
2003.100 In an RTO or ISO where the Transmission Provider is not the Transmission
Owner, the RTO's or ISO's compliance filing may propose a modified interconnection
99

See Order No. 2003-A at P 462.

100

Order No. 2003 at P 909.

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agreement that provides the Transmission Provider and Transmission Owner different
rights and obligations.
Comments
340. ISO New England supports the approach taken in Order No. 2003, allowing
Transmission Owners and Transmission Providers to propose a modified interconnection
agreement when the Transmission Provider is an entity distinct from the Transmission
Owner. It contends that this approach is necessary if the Commission wishes to establish
a single interconnection agreement for a region encompassed by an RTO or ISO.
341. NYISO argues that the SGIA should assign certain basic responsibilities to either
the Transmission Owner or Transmission Provider.
342. Midwest ISO asserts that it is the RTO's role as an independent entity "to ferret out
unnecessary studies or inappropriate contingencies."101 However, it argues that the
"NOPR's failure to fully distinguish between a transmission provider and transmission
owner belies the independence of the RTO,"102 and both it and other commenters103
request clarification of the respective roles of the RTO and the Transmission Owner.
343. National Grid argues that defining "Transmission Provider" to include both the
Transmission Provider and the Transmission Owner confuses the issue and adds
ambiguity into the interconnection process. The Commission should clearly define the
role of each Party. National Grid also notes that the Small Generator Interconnection
NOPR did not account for the role of stand-alone distribution companies.
344. Central Maine asks the Commission to clarify that the Transmission Owner (or
distribution company, where applicable) must sign the interconnection agreement and to
clarify whether the Transmission Provider needs to be a Party to the agreement. It asserts
that the division of functions between the Transmission Owner and the Transmission
Provider varies by region and depends on the role that the RTO or ISO plays in the region.
A request for interconnection with a Distribution System may require that a distribution
101

Midwest ISO at 6.

102

Id.

103

E.g., NYTO and PG&E.

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company be a Party to the interconnection agreement, in lieu of a Transmission Owner or
Transmission Provider. Central Maine concludes that the standard interconnection
agreement resulting from this proceeding must ultimately be a contract between the
Interconnection Customer and the entity that owns the Transmission System (i.e., the
Transmission Owner or the distribution company).
345. In RTO or ISO regions, if the Commission determines that the Transmission
Provider must also sign the interconnection agreement, Central Maine asks the
Commission to clarify that, under section 205 of the FPA, the Transmission Owner has the
right to file the agreement, consistent with Atlantic City Electric Co., et al. v. FERC, 329
F.3d 856, 858-59 (D.C. Cir. 2003) (explaining that while an ISO may have certain FPA
section 205 rights, the individual utility also has FPA section 205 rights). Central Maine
also says that the Transmission Owner, not the Transmission Provider, has the right to file
executed or unexecuted interconnection agreements.
346. In lieu of requiring the signatures of both the Transmission Owner and the
Transmission Provider, EEI contends that the Commission should require the signature
only of the Transmission Owner. Additionally, the Commission should encourage ISOs
and RTOs with operational roles that cause this distinction to clearly delineate the rights
and responsibilities in their operations agreements and protocols. The interconnection
agreement can specifically refer to the OATT already approved by the Commission,
thereby eliminating the need to have both a separate agreement between the Transmission
Provider and the Interconnection Customer and a three-party agreement.
347. PG&E argues that RTOs and ISOs do not need to become Parties to
interconnection agreements for distribution level projects because such entities only
operate transmission systems. These entities have very little interest in the smallest
projects interconnected with Distribution Systems and therefore, should not be the ones to
receive Interconnection Requests or maintain the queue for distribution level
interconnections. The Commission should designate the distribution provider to fulfill
these roles.
348. NYTO asserts that since an independent RTO or ISO has no right to bind a
Transmission Owner, the RTO or ISO should not sign the interconnection agreement.

Docket No. RM02-12-000

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Commission Conclusion
349. As in Order No. 2003, we are requiring three-party agreements in areas where the
Transmission Provider and Transmission Operator are different entities.104 In other
regions of the country where the Transmission Provider and the Transmission Owner are
the same entity, there is no need for a second signature block.105
350. Given that RTOs and ISOs have distinct characteristics and challenges, we have
permitted each RTO or ISO to propose, on compliance, an interconnection procedures
document and agreement tailored to its individual needs.106 Such proposals should
allocate to each entity the appropriate rights and obligations. As the Order No. 2003
compliance process demonstrated, the Transmission Provider and Transmission Owner are
capable of dividing responsibility among themselves.
351. Finally, Central Maine asks the Commission to specify that, under section 205 of
the FPA, the Transmission Owner, not the Transmission Provider, must file the
interconnection agreement. This is an issue better resolved on a case-by-case basis
through the compliance process. It would be premature to conclude that in all
circumstances the Transmission Owner, and not the Transmission Provider, has the right
to file the interconnection agreement.
352. Liability – In the Proposed SGIA, the Commission proposed including provisions
in the SGIA governing the apportionment of liability between the Parties. These
provisions (indemnity, consequential damages, and Force Majeure) were similar to the
provisions in the LGIA. The Commission requested comments on whether Small
Generating Facilities should be treated differently from Large Generating Facilities with
respect to liability. We discuss our general approach to the liability provisions first,
followed by a more detailed discussion of each provision.

104

Order No. 2003 at P 909.

105

We note that whether a public utility characterizes itself as a "transmission"
provider or a "distribution" provider does not matter, since the Transmission Provider is
defined to be the "public utility . . . that owns, controls, or operates transmission or
distribution facilities used for the transmission of electricity in interstate commerce and
provides transmission service under the Tariff."
106

Order No. 2003 at P 909.

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General Approach
Comments
353. In general, Transmission Providers support liability provisions similar to those in
the LGIA, arguing that interconnecting a Small Generating Facility raises as many safety
and reliability issues as interconnecting a Large Generating Facility.107
354. Small Generator Coalition and NARUC generally argue that these provisions
should be tailored specifically to Small Generating Facilities, arguing that the Proposed
SGIA was simply too complicated for many Small Generating Facilities. They first argue
that a Small Generating Facility poses less danger to the Transmission Provider's electric
system than a Large Generating Facility. Second, they argue that imposing liability
provisions similar to those in the LGIA on Small Generating Facilities would be a major
financial barrier to entry and deter the development of new Small Generating Facilities.
Third, they point out that the Transmission Provider has an incentive to include onerous
liability provisions in the SGIA to deter competition.
355. ISO New England similarly argues that Small Generating Facilities do not present
the same risks as do Large Generating Facilities. It asks the Commission to permit
independent entities to determine, on a case-by-case basis, whether to waive or relax the
liability provisions for individual generators.
356. Avista asks the Commission to follow Midwest Independent System Operator, Inc.,
et al., 100 FERC ¶ 61,144 (2002), which allows the Parties to propose customized liability
limitations. It argues that the August 14, 2003 Northeast Blackout is evidence of the need
for a comprehensive look at liability limitations. Avista argues that the interconnection
agreement should have a savings clause to let an RTO conform the liability and dispute
resolution provisions (and possibly others) to the standards and procedures being
implemented by the RTO. Otherwise, the Commission's rule could unnecessarily
grandfather inconsistent provisions.108 For example, the Agreement Limiting Liability

107

For instance, AEP, BPA, EEI, and Nevada Power argue that the LGIA and the
SGIA should be consistent. Nevada Power argues that such provisions would not
discourage well-run generators from interconnecting with the Transmission Provider.
108

Avista at 18.

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Among Western Interconnected Systems ("WIS Agreement")109 should continue to be an
option for generators and utilities. Avista argues that the SGIA should have a savings
clause for the WIS Agreement.
Commission Conclusion
357. Many commenters, including NARUC and independent entities like ISO New
England, agree that the Commission should modify the proposed liability provisions for
Small Generating Facilities in this Final Rule. We agree that the provisions can generally
be simplified without increasing the liability of any Party. The liability provisions
adopted here use many of the proposals made by NARUC and other commenters. They
address the Transmission Provider's need to protect its electric system while removing
unreasonable barriers to entry for Interconnection Customers.
358. We agree with ISO New England that an independent Transmission Provider (via
the independent entity variation standard) may propose on compliance to evaluate each
Interconnection Request on a case-by-case basis and fashion liability requirements that are
suitable to that particular entity.
359. We deny Avista's request for caps on the amount of liability the Transmission
Provider may be subject to, or that we allow it to develop its own liability rules.110 The
liability rules discussed in the interconnection context are distinct from the liability rules
in the rest of the OATT.111 In the interconnection context, the indemnity provision is twosided (or three-sided, in the case of an independent Transmission Provider). This means
that the indemnity provisions found in the SGIA are very different than the indemnity
109

"The WIS Agreement . . . is a multi-lateral agreement among parties in the
Pacific Northwest that operates to limit liability among the signatories." Id.
110

In Puget Sound Energy, Inc., 107 FERC ¶ 61,287 (2004), the Commission
denied a request by Puget Sound to include the WIS Agreement in its tariff because Puget
Sound did not explain why such inclusion was "consistent with or superior to" the pro
forma OATT. However, the Commission did not foreclose the possibility that a WIS
Agreement member may be able to make such a showing in a future compliance filing.
111

Order No. 2003 at P 636 ("Commenters have convinced us that interconnection
presents a greater risk of liability than exists for the provision of transmission service and
that, therefore, the OATT indemnity provision is not suitable in the interconnection
context.")

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provisions found in the OATT. Many of Avista's comments have more to do with the
liability provisions found in the transmission portions of the OATT than they do with
interconnection. While we agree that liability protection is important, this rulemaking is
not the place to decide such an issue. We also deny Avista's request to insert a savings
clause into the liability provision. Avista has not explained how the Transmission
Provider's participation in the WIS Agreement would be affected by this Final Rule. If
Avista wishes, it may seek to include such a provision on compliance under the
"consistent with or superior to" standard.
Consequential Damages (Proposed SGIA Article 6.19)
360. Proposed SGIA article 6.19 used the LGIA consequential damages provision,
which states that neither Party is liable to the other for special or consequential damages
except as expressly provided for in the interconnection agreement.
Comments
361. Central Iowa Coop is concerned that the phrase "[o]ther than as expressly provided
for in this agreement" could make the Parties subject to consequential damages when read
in conjunction with the indemnification provision in Proposed SGIA article 6.13. It asks
the Commission to clarify that the bar against consequential damages applies in all
circumstances, except when the Parties have reached an express agreement to the contrary.
362. Central Maine asks the Commission to clarify that indemnity payments to a third
party are not consequential damages.
363. NARUC proposes that the Commission adopt its Model language, which is less
complicated than the proposed provision. Specifically, NARUC proposes replacing
Proposed SGIA article 6.19 with a generic statement at the beginning of the liability
article:
Each Party's liability to the other Party for any loss, cost, claim,
injury, liability, or expense, including reasonable attorney's fees,
relating to or arising from any act or omission in its performance of
this agreement, shall be limited to the amount of direct damage
actually incurred. In no event shall either Party be liable to the other
Party for any indirect, special, consequential, or punitive damages of
any kind whatsoever.

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Commission Conclusion
364. We retain the provision as proposed. This is a contractual term and no commenter
has convinced us that it is necessary to deviate from the approach taken in Order
No. 2003.
365. Several commenters appear to have misunderstood the relationship between the
indemnity and consequential damages provisions in the Proposed SGIA. The bar against
consequential damages does not apply in the indemnity context. Instead, the
indemnification of one Party by another is comprehensive, and the indemnifying Party is
responsible for all of the indemnified Party's costs, regardless of whether those costs are
compensatory or punitive. While the consequential damages provision adopted in this
Final Rule prevents one Party from seeking consequential damages against another Party,
the purpose of the indemnification provision is different; it protects the indemnified Party
from liability to third parties (those who are not Parties to the interconnection agreement).
Requiring the indemnifying Party to reimburse the indemnified Party for, say, only
compensatory damages and not punitive damages would not make the indemnified Party
whole. We are adding language to the beginning of the indemnity section to make this
clear.
Indemnity (Proposed SGIA Article 6.13)
366. Indemnification is compensating another for a loss suffered due to a third party's
act or default.112 The Proposed SGIA contained indemnity provisions similar to those
contained in the LGIA. The proposal would require the Transmission Provider and the
Interconnection Customer to indemnify each other for any damages, losses, claims, and
obligations by or to third parties arising from performance of the Transmission Provider's
or Interconnection Customer's obligations under the interconnection agreement on behalf
of the other contracting party. Indemnity protection would include the amount of the
indemnified Party's loss, net of any insurance recovery, but would not apply where there is
gross negligence or intentional wrongdoing. The proposed provision also set forth
detailed procedures for pursuing an indemnity claim and allowed recovery of legal costs
in some cases.

112

Black's Law Dictionary 772 (7th ed. 1999).

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Comments
367. AEP, BPA, Idaho Power, and Nevada Power generally agree that Small and Large
Generating Facilities should be treated consistently with respect to indemnity protections.
368. Central Iowa Coop, Georgia Transmission, and NYTO request that the
Commission replace the mutual indemnity provision with a one-way indemnity provision
in favor of the Transmission Provider. They argue that the Transmission Provider
receives no benefit from an interconnection, but does face additional safety, reliability,
and power quality concerns as a result of it. To require the Transmission Provider to
indemnify the Interconnection Customer unfairly shifts the costs and risks to the
Transmission Provider's other customers.
369. Central Maine contends that Proposed SGIA article 6.13 should not exclude
"insurance or other recovery" from amounts owed to an indemnified party. It argues that
this is commercially unreasonable and undermines the very intent of the indemnity
provision.
370. ISO New England argues that applying the liability provisions contained in the
LGIA to Small Generating Facilities is unreasonable because the risks associated with
interconnecting the latter are not comparable to those associated with interconnecting
Large Generating Facilities. The Commission should permit independent entities such as
RTOs and ISOs to determine, on a case-by-case basis, whether a waiver or relaxation of
the indemnity provisions used for Large Generating Facilities should be permitted based
on the actual risk the Small Generating Facility presents. Permitting this type of
flexibility would minimize the cost of interconnection and ensure adequate protection for
the Transmission Provider.
371. Southern Company argues that the proposed indemnity provision is not workable.
The provision requires each Party to indemnify the other for damages arising out of such
other Party's "performance of obligations under this Agreement on behalf of the
indemnifying Party."113 It argues that it is unclear whether the indemnity provision would
ever apply because the Parties do not perform obligations on behalf of each other at all. It
proposes that each Party indemnify the other from any liabilities or damages resulting
from activities on the indemnifying Party's own side of the point of change of ownership.
Additionally, each Party should indemnify the other for the indemnifying Party's failure to
113

Southern Company at 34.

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adhere to operating requirements and for breaches of the interconnection agreement.
Southern Company also takes issue with the provision's limitation of expenses paid for the
legal defense of an indemnified Party. If an indemnified Party has additional legal
defenses, the proposed article requires the indemnifying Party to pay for only one
attorney.114 Southern Company requests that the Commission revise the provision to
require the payment of the indemnified party's reasonable legal expenses.
372. In its Model interconnection agreement, NARUC proposes a different approach to
indemnity. There, the Transmission Provider and the Interconnection Customer would
assume liability and indemnify each other for claims and expenses resulting from their
own negligence as it relates to the design, construction, and operation of their facilities. A
Party indemnifies the other only for claims brought by claimants who could directly
recover from the Party itself. Indemnity for both Parties includes monetary losses,
reasonable legal fees for defending a third party action, damages related to the
death/injury of a third party, damages to the Party's property or property of a third party,
and damages for disruption of a third party's business. Neither the Transmission Provider
nor the Interconnection Customer assumes liability for consequential, special, incidental,
or punitive damages, and neither is responsible for disruption of the other's business or for
the costs and expenses of pursuing legal action against the other.
Commission Conclusion
373.

We are adopting a streamlined indemnity provision in this Final Rule.

374. Several commenters appear to have misunderstood the relation between the
proposed indemnity provision and the bar against consequential damages provision (now
called Limitation of Liability). We are therefore including in the SGIA an explanation
that claims under the indemnity provision are exempt from the bar against consequential
damages contained in the Limitation of Liability provision.
375. Many of the comments addressing indemnity are identical to those addressed in
Order No. 2003 and do not argue that Small Generating Facilities should be treated
differently from Large Generating Facilities. We will not repeat the discussion in those
orders. For instance, the Commission addressed comments about the bilateral nature of
the provision in Order No. 2003 at P 637, and comments on which side of the Point of
Interconnection work is conducted in Order No. 2003 at P 638.
114

See Proposed SGIA article 6.13.

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376. Because the purpose of indemnification is to pay another for actual losses, the
exclusion of "insurance or other recovery" from amounts owed to an indemnified Party
does not undermine the intent of this provision, as Central Maine argues. Forcing an
indemnifying Party to pay damages already covered under an insurance policy would
allow the indemnified Party to profit at the expense of the indemnifying Party. Excluding
insurance and other recoverable amounts avoids overcompensating an indemnified Party.
377. In response to Southern Company's request that the provision cover an
indemnifying Party's failure to meet operating requirements or its breach of the SGIA, we
note that it covers damages from actions or inactions under the interconnection agreement.
However, in response to Southern Company's comments, we are modifying the provision
to add: "arising out of or resulting from the other Party's actions or failure to meet its
obligations under this SGIA."
Force Majeure (Proposed SGIA Article 6.14)
378. Proposed SGIA article 6.14 provided that no Party is considered to be in default
with respect to contractual obligations, other than payment of money due, if it is prevented
from fulfilling such obligations by a Force Majeure event. The affected Party is to
exercise due diligence to remove the disability and provide adequate notice to the other
Party. These provisions are consistent with those in the LGIA. The Commission
requested comments concerning whether a different approach should be taken for Small
Generating Facilities.
Comments
379. AEP, BPA, Idaho Power, and Nevada Power generally agree that all generating
facilities should be treated the same with respect to Force Majeure. AEP argues that
because Force Majeure can happen for either type of interconnection, there is no reason
that the contractual protection should differ according to generator size. Nevada Power
contends that consistent treatment does not interfere with having a simplified and
expedited interconnection process for Small Generating Facilities.
380. While NARUC's Model and the Proposed SGIA included similar Force Majeure
clauses, NARUC recommends that the Commission remove the statement that economic
hardship is not considered a Force Majeure Event. It also proposes that the Commission
require that an affected Party use "reasonable efforts" instead of "due diligence" to resume

Docket No. RM02-12-000

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its performance as soon as possible. Additionally, NARUC proposes changing the
definition of Force Majeure to include events that "the affected Party is unable to prevent
or provide against by exercising reasonable diligence."115
Commission Conclusion
381. We agree with NARUC that some modification to the Proposed SGIA is needed
and we are adopting a Force Majeure clause that melds the best aspects of NARUC's and
the Commission's proposals. For instance, this Final Rule provision allows the Party
asserting the Force Majeure Event to call or write to the other Party to make the required
notification. Easy notification ensures that both Parties know of a Force Majeure Event as
soon as possible.
382. We are not adopting all of NARUC's proposals, however. The NARUC Model
would not allow a Party to invoke Force Majeure if it could have prevented the event
through the exercise of "reasonable diligence." Our SGIA uses the terms "negligence"
and "intentional wrongdoing," which are commonly accepted legal terms.
383. Finally, we are moving the definition of Force Majeure Event to the body of the
SGIA from an appendix.
384. Reactive Power – The Proposed SGIA did not include a separate provision for
reactive power; however, the LGIA does.
Comments
385. CA ISO and Southern Company ask the Commission to include a provision for
reactive power in the interconnection agreement. CA ISO argues that this provision is
essential for the reliability of the Western Interconnection because the entire region is
afflicted by voltage instability. A Small Generating Facility interconnecting at the
transmission level should meet the reactive power requirements of the CA ISO tariff and
abide by reactive power dispatch instructions from the control area operator. Moreover, a
Small Generating Facility interconnecting at the "distribution" level should meet reactive
power requirements specified in the Wholesale Distribution Access Tariff and abide by
any reactive power dispatch instructions from the Distribution System operator.

115

NARUC Model – Definitions.

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386. Southern Company notes that the LGIA has a reactive power provision and argues
that one should be included in the SGIA as well. Otherwise, a Small Generating Facility
could become a burden on the Transmission Provider's electric system. The Transmission
Provider should be provided real-time information on the status and output of each
generator to ensure safe and reliable operation.
Commission Conclusion
387. We are requiring the Interconnection Customer's Small Generating Facility to
maintain a power factor within the range of 0.95 leading to 0.95 lagging, unless the
Transmission Provider establishes and the Commission approves different requirements
that apply to all similarly situated generators. There is no reactive power requirement for
wind powered Small Generating Facilities.
388. Generator Balancing Requirements – The Proposed SGIA did not include a
separate generator balancing provision.
Comment
389. Southern Company argues that the SGIA should include provisions for generator
balancing service, and presents several arguments in support of its position.
Commission Conclusion
390. In Order No. 2003-A, the Commission determined that generator balancing service
is more closely related to delivery service than to interconnection service, and because
delivery service requirements are addressed elsewhere in the OATT, the balancing service
requirement need not appear in the interconnection agreement. On rehearing, the
Commission in Order No. 2003-B did not add a generator balancing service provision to
the LGIA, but it did permit the Transmission Provider to include a provision for generator
balancing service in individual interconnection agreements. We reach the same
conclusion here.116 Any such provision should be tailored to the Parties' specific
circumstances and is subject to Commission approval.

116

Order No. 2003-B at P 72-75.

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391. Appendices to the SGIA – The Proposed SGIA included five appendices (called
attachments in the Final Rule SGIA) that set forth technical and operating information,
including: (1) a description and statement of the costs of the Small Generating Facility,
Interconnection Facilities, and metering equipment; (2) a one-line diagram depicting the
Small Generating Facility, Interconnection Facilities, metering equipment and Upgrades;
(3) project milestones; (4) additional operating requirements for the Transmission
Provider's electric system and Affected Systems needed to support the Interconnection
Customer's needs; and (5) the Transmission Provider's description of its Network
Upgrades and Distribution Upgrades and a best estimate of their costs.
Comments
392. Central Maine and NYTO state that these appendices would require information
that is not needed. They ask that the appendices include only: (1) Small Generating
Facility description, (2) one-line diagram, (3) description of the Interconnection Facilities,
(4) operation and maintenance (O&M) costs, and (5) operating procedures. They state
that additional operating procedures may have to be developed with input from the
Transmission Owner and the Interconnection Customer to ensure system integrity and
reliability.
Commission Conclusion
393. We are not persuaded that any change in the appendices is warranted. With the
exception of O&M costs, all the items that Central Maine and NYTO would have us
include in the appendices are already there. We agree with Central Maine and NYTO that
additional operating procedures with input from both the Transmission Provider and the
Interconnection Customer may be needed, and we encourage such efforts. The treatment
of O&M costs is discussed in more detail in Part II.H below (Responsibility for Operation
and Maintenance Costs).
G.

The 10 kW Inverter Process

394. In the Small Generator Interconnection NOPR, the Proposed SGIP included a
default interconnection Study Process for Small Generating Facilities and a simplified
procedure that used technical screens for certified Small Generating Facilities no larger
than 2 MW. The Proposed SGIA, however, would be used for the interconnection of all
Small Generating Facilities, up to and including 20 MW in size. The NOPR did not
include a separate procedures document or interconnection agreement for very small
generators, although some commenters urged, in comments submitted in response to the

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ANOPR, that 0-50 kW facilities (especially facilities that use inverters to convert the
direct current output of the generator to alternating current) need a separate and simpler
process than other generators.
Comments
395. Some commenters argue that the Proposed SGIP and Proposed SGIA are too
complicated for very small Interconnection Customers. Small Generator Coalition states
that unless the Commission is willing to modify the NOPR in fundamental ways, many of
its members believe that development of Small Generating Facilities would be better
served if the NOPR were simply withdrawn. It claims that, under the Proposed SGIP and
Proposed SGIA, the only method by which even a small photovoltaic system, say 10 kW,
could interconnect with the Transmission Provider is to follow the same process that
would apply to generators 1,000 times larger. It asks the Commission to "recognize the
simplicity of the very smallest generators and [to] include an exception for small inverterbased systems." Plug Power, also representing small generator interests, states that a
special process should be adopted for very small generators because their interconnection
requirements are fundamentally different from those of larger facilities. Moreover,
adopting simpler requirements would foster the growth of "plug and play" equipment.
396. NRECA, which represents a wide variety of cooperative utilities that interconnect
with small generators, states that it has adopted special procedures for evaluating very
small generators because they generally interconnect at low voltage and have different
technical requirements from larger ones.
397. Some state regulatory authorities already have a simplified process for very small
generators. NJ BPU points out that it has adopted simplified procedures for qualified very
small inverter-based generators. NARUC, in its updated Model, supports a simplified
Interconnection Request (application) for very small generators.
398. Joint Commenters submits in its supplemental comments a streamlined process for
certified inverter-based generators no larger than 10 kW. This consists of a simplified
Interconnection Request, simplified procedures, and a brief set of terms and conditions
(that is essentially a highly simplified interconnection agreement ) – all contained in a
single document. This Joint Commenter proposal consists of the following steps: (1) the
Interconnection Customer completes an abbreviated Interconnection Request and signs the
terms and conditions when it submits its Interconnection Request to the Transmission
Provider; (2) the Transmission Provider uses the Fast Track Process technical screens to
evaluate the Interconnection Request; (3) if the proposed interconnection passes the
technical screens, the Transmission Provider approves the application; (4) once the

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Interconnection Customer's equipment has been installed, it sends a certificate of
completion to the Transmission Provider; and (5) the Transmission Provider then inspects
the equipment installation and, if satisfied that it is safe for operation, authorizes the
interconnection.
Commission Conclusion
399. The comments demonstrate a near universal agreement of the need for special
provisions for very small generators, a need that is being met at least in part by some state
regulatory authorities. We agree with the commenters who state that the Proposed SGIP
and Proposed SGIA are too complicated for very small generators, and we recognize the
desire to accommodate their interconnection needs. However, a single document tailored
for the needs of the smallest generators would be unsuitable for the interconnection of
larger small generators; their technical evaluations and their legal rights and
responsibilities must be set out in greater detail.
400. We conclude that a balanced response to the comments is to issue two sets of
documents – an SGIP and SGIA that serve the needs of most small generators, and a
simplified document that meets the needs of very small generators.
401. Joint Commenters' proposed process for the interconnection of very small
generators, which enjoys broad support from a variety of stakeholder interests, is simple to
implement while ensuring the safety and reliability of the Transmission Provider's electric
system. Accordingly, we are adopting it in this Final Rule with minor modification under
the name "10 kW Inverter Process." The simplified 10 kW Inverter Process consists of
an Interconnection Request, simplified procedures, and a brief set of terms and conditions
applicable to inverter-based 0-10 kW generators. It is included as Attachment 5 to the
SGIP. This "all-in-one" document combines the attributes of both an interconnection
procedures document and an interconnection agreement. We are including it in the SGIP
because it is the SGIP that the Interconnection Customer will first encounter in the process
of interconnecting its Small Generating Facility with the Transmission Provider. A
flowchart showing the 10 kW Inverter Process may be found in Appendix D of this Final
Rule.
402. The 10 kW Inverter Process is user friendly and a straightforward interconnection
should be accomplished in short order. To accelerate the process, by signing the
application at the time of submission, the Interconnection Customer executes what
essentially is an interconnection agreement, in the form of standard terms and conditions
with which it agrees. This eliminates the additional step of signing an interconnection
agreement if the proposed interconnection passes the screens.

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403. The 10 kW Inverter Process, by its very name, applies only to equipment that is
interconnected with the Transmission Provider's electric system through an inverter.
Inverter-based equipment has a very small likelihood of causing safety and reliability
concerns on the Transmission Provider's electric system because it can quickly disconnect
from the electric system when a disturbance occurs. Nonetheless, while the 10 kW
Inverter Process should facilitate the interconnection of this class of Small Generating
Facilities, the technical requirements for interconnection are just as rigid as those for all
Small Generating Facilities up to 2 MW in size that elect to use the Fast Track Process.
Specifically, they must be certified by a Nationally Recognized Testing Laboratory and
the proposed interconnection must pass the technical screens. Consequently,
interconnections will not be permitted if they jeopardize the safety and reliability of the
Transmission Provider's electric system.
404. Although the Interconnection Customer signs an abbreviated set of terms and
conditions when it submits its Interconnection Request under the 10 kW Inverter Process,
it is a legal instrument nonetheless. Its provisions are consistent with the SGIA. Should a
dispute arise, we encourage the Parties to use this rulemaking for assistance in interpreting
the terms and conditions of the 10 kW Inverter Process. Moreover, because the intent of
the terms and conditions in this document are the same as those of the SGIA, no separate
discussion of them is necessary here again in this Final Rule.
405. The 10 kW Inverter Process is quick, inexpensive, and user friendly. Including it
in this Final Rule removes barriers to the development and interconnection of this class of
Small Generating Facilities, both at the federal and state jurisdiction levels. Its adoption
should promote standardization of interconnection rules across the nation. We encourage
states that do not have interconnection procedures for very small generators to consider
using this as a model for their own rules.
H.

Other Significant Issues

406. A number of issues, such as interconnection pricing policy, variations permitted for
independent transmission entities, and legal issues such as liquidated damages, transcend
individual provisions of the SGIP and SGIA. Accordingly, we address them below.

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Pricing/Cost Recovery for Interconnection Facilities and Upgrades
(Proposed SGIA Article 5.1)
407. In the Small Generator Interconnection NOPR, the Commission proposed to retain
its then existing pricing policy for the interconnection of a Generating Facility with a
Transmission System that is operated by a non-independent entity. That policy, as set
forth in Order No. 2003, was to allocate the costs of the new or upgraded transmission
facilities based on a locational test: whether they are at or beyond the Point of
Interconnection. Facilities that are on the Small Generating Facility's side of the Point of
Interconnection would be considered Interconnection Facilities, while those that are at or
beyond the Point of Interconnection would be considered Network Upgrades. The
Interconnection Customer would be directly assigned the costs of all Interconnection
Facilities because they are sole use facilities. The Interconnection Customer would
initially fund the Network Upgrades required for the interconnection unless the
Transmission Provider chooses to pay for them itself. However, the Interconnection
Customer would be entitled to a refund equal to the total amount paid to the Transmission
Provider and the Affected System operator, if any, for Network Upgrades, including any
tax-related payments. Order No. 2003 called for these refunds to be paid to the
Interconnection Customer, with interest, as credits on a dollar-for-dollar basis for the nonusage sensitive portion117 of transmission charges, as payments are made under the
Transmission Provider's tariff and the Affected System's tariff for any transmission
services taken by the Interconnection Customer on the respective systems, whether or not
the Generating Facility is the source of the power being transmitted.118 Order No. 2003
permitted the Interconnection Customer, Transmission Provider, and Affected System
operator to adopt any alternative payment schedule that is mutually agreeable provided all
amounts paid by the Interconnection Customer for Network Upgrades are refunded, with
interest, within five years of the generating facility's commercial operation date.119 The
Interconnection Customer would be allowed to assign its refund rights to any person.
117

Non-usage sensitive transmission charges include all transmission charges
except those for items that vary with the amount of power transmitted, such as congestion
charges, line losses, and Ancillary Services.
118

In Order No. 2003-A, this policy was revised to make credits available only for
transmission service that has the generating facility as the source of the power transmitted.
119

The five year refund period was subsequently changed to 20 years in Order
No. 2003-B.

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408. Because a Small Generating Facility may interconnect with a Transmission
Provider's Distribution System subject to an OATT in order to make a sale of electricity at
wholesale in interstate commerce, the Small Generator Interconnection NOPR also
addressed cost recovery for Distribution Upgrades at or beyond the Point of
Interconnection.120 Consistent with Order No. 2003, the Commission proposed that the
costs of Distribution Upgrades be directly assigned to the Interconnection Customer
because Distribution Upgrades do not generally benefit all users.
409. The Commission sought comments on whether this approach should also apply to
Small Generating Facilities. The Commission also invited commenters to recount their
recent experiences with interconnecting small generators with the "Distribution System,"
in particular the process for determining whether Distribution Upgrades are necessary, and
the cost assignment of those Upgrades.
410. For a Transmission Provider that is an independent entity, such as an RTO or ISO,
the Commission's policy, as adopted in Order No. 2003, is to allow more pricing
flexibility, subject to Commission approval. Also in Order No. 2003, we permitted a
Regional State Committee to establish criteria that an independent entity would use to
determine which Network Upgrades should be subject to "participant funding." Order
No. 2003 also permitted, for a period of transition to the start of RTO or ISO operations,
not to exceed a year, participant funding to be used for Network Upgrades as soon as an
independent entity has been approved by the Commission and the affected states. In the
Small Generator Interconnection NOPR, the Commission proposed to adopt the same
policies for Small Generating Facilities that interconnect with a Transmission System
operated by an independent entity. The Commission sought comments on this approach.
411. In the Small Generator Interconnection NOPR, the Commission also proposed
certain pricing provisions that are consistent with, but have no direct parallel with, the
Order No. 2003 pricing provisions. The Proposed SGIA provided that costs associated
with Interconnection Facilities could be shared with other entities that may benefit from
such facilities by agreement of the Interconnection Customer, such other entities, and the
Transmission Provider. It also proposed that, if the Parties agree that the Small
Generating Facility benefits the Transmission Provider's electric system, the
120

The costs of all Interconnection Facilities, whether owned by the
Interconnection Customer or the Transmission Provider, are directly assigned to the
Interconnection Customer.

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Interconnection Customer's cost responsibility for the Transmission Provider's
Interconnection Facilities or Upgrades would be reduced. The benefits would have to be
measurable and verifiable. Where there are multiple Interconnection Requests and each
requires Network Upgrades, Interconnection Customers would be assigned costs or
benefits separately if effects can be attributed to different projects. Where such attribution
is not possible, Interconnection Customers would share costs or benefits in proportion to
their projected Small Generating Facility capacities.
Pricing Comments that the Commission Already Addressed in the Large
Generator Interconnection Proceeding
Comments
412. Several commenters object to various features of the Commission's current
interconnection pricing policy, presenting arguments that the Commission has addressed
in Order No. 2003. For example, Alabama PSC and others argue that prohibiting the
direct assignment of the cost of Network Upgrades means that native load customers
subsidize the cost of Network Upgrades that benefit only the Interconnection Customer.
They argue that this may also cause the Interconnection Customer to make inefficient
siting decisions. Mississippi PSC objects to the requirement that the Transmission
Provider pay interest on unused credits and that it make a lump sum payment to the
Interconnection Customer for credits that remain unused after five years. Alabama PSC
argues that transmission credits should be provided only for Network Upgrades that
provide a system benefit and only when the Small Generating Facility is the source of
power for the transaction.
413. NRECA argues that if a merchant generator has not committed to serve network
and native load customers within the Transmission Provider's footprint on a long-term
basis, the generator and the Transmission Provider's own generators are not comparable.
It asserts that credits are appropriate only where the Small Generating Facility is
committed to customers in the Transmission Provider's footprint.
414. Central Maine requests clarification that transmission credits should be required
only when the Interconnection Customer is taking and paying for transmission service on
the Transmission System on which the Network Upgrade was made for the output of its
facility. Central Maine also requests clarification that cost responsibility for Network
Upgrades required by an Affected System is consistent with cost responsibility for
Network Upgrades required by the Transmission Owner with whom an Interconnection
Customer is directly interconnecting; that is, that transmission credits are required only
when the Interconnection Customer takes and pays for transmission service from the

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Transmission Owner or Affected System for the output of its facility. It also asks that the
contractual provisions concerning cost responsibility and payment obligations among
Affected Systems and Interconnection Customers be in a separate agreement, not in the
interconnection agreement.
415. Avista, Alabama PSC, and Mississippi PSC argue that allowing pricing flexibility
to an independent Transmission Provider such as an RTO or ISO is unduly discriminatory.
They state that this policy penalizes the retail customers of the non-independent
Transmission Provider because it forces them to bear the cost of Network Upgrades that
benefit only the Interconnection Customer. Idaho Power argues that having different
pricing for an independent and a non-independent Transmission Provider is bad public
policy, arbitrary and capricious, and discriminatory. TAPS states that the NOPR
incorrectly proposes participant funding for Upgrades to a Transmission System operated
by an independent entity.
Commission Conclusion
416. All of the comments summarized above relate to the Commission's general pricing
policy, and each was discussed in Order No. 2003.121 We adopt here the general
conclusions adopted in those orders. However, those orders did not address the specific
question of whether the Commission's general interconnection pricing policy is suitable
for Small Generating Facilities. Several commenters raise this question, and we address
their comments below.
Applicability of the Commission's Interconnection Pricing Policy to the
Interconnection of Small Generating Facilities
Comments
417. Several commenters support the use of the Commission's current interconnection
pricing policy. Western supports the Commission's proposal to have the Interconnection
Customer initially fund interconnections and associated Transmission System
improvements and states that this approach is consistent with the budgetary realities that

121

See Order No. 2003 at P 675-750, Order No. 2003-A at P 562-697, and Order
No. 2003-B at P 15-57.

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Western faces. Georgia PSC agrees that Interconnection Facilities are sole use facilities
and, accordingly, should be directly assigned to (paid for by) the Interconnection
Customer.
418. Nevada Power states that interconnection pricing policies must be consistent for
both Small and Large Generating Facilities to avoid the possibility of pricing
manipulation. It opposes credits for facilities that do not increase transfer capability, but
states that the requirement that the Interconnection Customer initially fund the Network
Upgrade costs is an important safeguard to ensure that the Transmission Provider and
other customers do not subsidize what would otherwise be an uneconomic project. SoCal
Edison states that the Small Generator Interconnection NOPR correctly mirrors the Large
Generator Final Rule with respect to the pricing policies for Network Upgrades and sole
use Interconnection Facilities. BPA generally supports consistency between pricing for
Small and Large Generating Facility interconnections, provided the Commission clearly
articulates the physical boundary between Interconnection Facilities and Network
Upgrades.
419. AEP and Midwest ISO agree that an independent Transmission Provider should be
allowed interconnection pricing policy flexibility, subject to Commission approval.
Midwest ISO states that few circumstances would warrant an approach for Small
Generating Facilities that differs from the approach that an RTO would establish for a
Large Generating Facility. A common approach makes good business sense, assures
comparability and makes the interconnection process more effective. Also, BPA
generally supports RTO pricing flexibility, provided it does not conflict with an RTO's
obligations under its governing agreements.
420. Cummins, however, argues that the Commission should adopt different pricing
rules for Small Generating Facilities because the Commission's current policy gives the
Transmission Provider the discretion to place a huge cost burden on the Small Generating
Facility. These costs may even exceed the installation and operating costs of a Small
Generating Facility, completely destroying project economics. Cummins argues that this
problem can be addressed only by specific performance standards (which Cummins does
not describe) that only the Commission can establish. Also, if the Interconnection
Customer is deemed to be the only beneficiary of the Upgrade or interconnection, the
five year refund mechanism would be of no benefit, as the project would not go forward.
421. The Small Generator Interconnection NOPR asked for specific examples of
situations where a Transmission Provider has seemingly applied excessive fees for
Upgrades. Cummins describes two examples that highlight its concerns:

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A manufacturer installed a 300 kW synchronous generator and
cogeneration system, and provided the interconnection equipment
specified by the [Transmission Provider]. The system was approved
by the [Transmission Provider] and went into successful operation.
When the owner decided to expand the facility to include a second
300 kW generator, they were informed that the distribution system
would need upgrades that would cost in excess of $140,000. On
further investigation, it was learned that the upgrades included only
"block closing" provisions on a recloser. This device is effectively a
simple voltage sensing relay that would interconnect into the existing
infrastructure at a substation. After intensive negotiations and
investigations, the customer was able to get the cost reduced to under
$50,000, and the project went forward. The $50,000 cost was still far
more than the upgrade should have cost, but the customer was forced
to pay it because the generator was key to the viability of the
customer's business. This represented a 10% increase in the overall
project.
In another case, a customer installed a 2 MW synchronous generator
with equipment that allowed it to parallel with the utility for 1/10th of
a second. The equipment included timer functions that prevented the
machine from staying in parallel for more than 1 second, as required
by local rules. The [Transmission Provider], unsatisfied with the
"quality" or "performance" of the relay in the customer's device,
forced the customer to install a new relay costing over $2,000 for the
1 second time function. This was an excessively expensive piece [of]
equipment to perform a simple operation; however the
Interconnection Customer needed the equipment to operate, and had
to pay the price.
422. Small Generator Coalition argues that the Small Generator Interconnection NOPR's
cost allocation provisions appear to guarantee pancaked wheeling charges on energy
produced by Small Generating Facilities, contrary to the Commission's goal of eliminating
such pancaking.122
122

By "pancaking," we presume that Small Generator Coalition is referring to the
possibility that the Interconnection Customer may be required to pay for Distribution
Upgrades and to make an up-front payment for Network Upgrades.

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423. MidAmerican states that a Commission rule requiring a Transmission Provider to
pay any interconnection-related costs could supersede state policy and also would affect
the ability of states to set retail rates following well-established cost causation principles.
MidAmerican argues that the rules should permit the Transmission Provider to directly
assign all costs to the Interconnection Customer unless that violates state regulatory
policy.
Commission Conclusion
424. We recognize that the Interconnection Facilities, Distribution Upgrades, and
Network Upgrades required to interconnect a generator can be costly. Indeed, such costs
can be a significant portion of the total project costs. Nevertheless, each Generating
Facility, whether large or small, must bear its fair share of the cost of the facilities and
Upgrades from which it benefits; otherwise, the facility simply does not make economic
sense.
425. To this end, the Small Generator Interconnection NOPR proposed to apply to Small
Generating Facility interconnections the same pricing policy that the Commission adopted
for Large Generating Facilities in Order No. 2003. Among other things, this means that
the Interconnection Customer must bear the cost of necessary Interconnection Facilities
and Distribution Upgrades. Also, the Interconnection Customer must initially fund the
cost of Network Upgrades, but is entitled to credits against its charges for transmission
delivery service equal to the amount funded, plus interest. None of the arguments
presented here convinces us that the policies adopted in Order No. 2003 should not also
apply to Small Generating Facility interconnections. In particular, contrary to the
assertions of Cummins and Small Generator Coalition, we do not view the policy as
creating rate pancaking or an undue burden for the Small Generating Facility. Thus, we
adopt the Order No. 2003 pricing policies for small generator interconnections in this
Final Rule.
426. With regard to Cummins's concern that the Transmission Provider may be able to
force the Small Generating Facility to bear unreasonable costs, we note that our principal
purpose in adopting a standardized procedures document and agreement for generator
interconnections, and making them part of the Transmission Provider's tariff, is to
eliminate much of the opportunity for the Transmission Provider to act in this manner.
Indeed, adoption of this Final Rule should greatly reduce the likelihood of the two
negative experiences that Cummins describes, if indeed the cost were unreasonable.

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427. In response to MidAmerican, this Final Rule applies only to generator
interconnections that are under the jurisdiction of the Commission. It does not apply
where we do not have jurisdiction. Although state regulators or other rate-making
authorities may model their own policies after those adopted herein, or the similar
NARUC Model, they are free to establish whatever rules for determining cost
responsibility that they deem reasonable for interconnections under their jurisdiction.
428. The Commission modified and clarified its pricing policy for Large Generator
Interconnections in Order Nos. 2003-A and 2003-B, which were issued after the Small
Generator Interconnection NOPR in this proceeding. Upon review of the revisions to the
Commission's pricing policy included in those orders, we conclude that they should apply
to the interconnection of Small Generating Facilities as well. Therefore, we are revising
the Proposed SGIA to reflect our current interconnection pricing policy as modified by
Order Nos. 2003-A and 2003-B. (See articles 4 and 5 of the SGIA)
Implementation of the Interconnection Pricing Policy for Small Generating
Facilities
Comments
429. Midwest ISO notes that Chart 1 of the Proposed SGIP shows a difference between
the Point of Interconnection and the "point of common coupling"123 and says that
equipment Upgrades may sometimes be needed between these two points. Midwest ISO
asks who is to be responsible for such Upgrades and whether transmission service credits
will be provided to the Interconnection Customer if it finances the Upgrades.
430. Empire District agrees that Upgrades that are directly assigned, such as radial
extensions to the generator, should not be paid for (or reimbursable to the Interconnection
Customer) by the Transmission Provider. In addition, it states that interconnection costs
should be treated in a manner similar to the crediting methods used by the Southwest
Power Pool (which Empire District does not describe).

123

The term "Point of Common Coupling" is not used in the SGIP and SGIA.

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431. Many commenters support the Commission's proposal to directly assign the cost of
Distribution Upgrades to the Interconnection Customer.124 For example, AEP states that a
Distribution Upgrade that is required to accommodate the proposed generator does not
benefit all users; rather, its sole purpose is to accommodate one customer. AEP contends,
therefore, that it is entirely reasonable for the Interconnection Customer to be responsible
for the cost of the Distribution Upgrade. Cinergy states that such responsibility follows
from the radial nature of the Distribution System and is consistent with the LGIA.
Baltimore G&E states that the Commission must guarantee that distribution utilities
receive full cost recovery from interconnecting Small Generating Facilities to avoid
subsidization by retail customers.
432. Nevada Power agrees that the cost of Distribution Upgrades should be directly
assigned to the Interconnection Customer, but is concerned that Proposed SGIA
article 5.1.3 does not adequately protect the Transmission Provider from having to bear
such costs. This article could be construed to say that wholesale transactions by the
Interconnection Customer change the segment of the distribution facilities to which the
Interconnection Customer connects into transmission facilities. Nevada Power argues that
the Proposed SGIA definition of Transmission System illustrates this concern:
"Transmission System shall mean the facilities owned, controlled or operated by the
Transmission Provider or Transmission Owner that are used to provide transmission
service under the Tariff." An inference can be drawn that what was previously a
distribution facility is now a transmission facility because it provides transmission service,
and is therefore subject to the crediting process. To address this concern, Nevada Power
proposes specific changes to Proposed SGIA article 5.1.3.
433. SoCal Edison notes that in the Small Generator Interconnection NOPR,
Distribution Upgrades and Network Upgrades are both defined as being at or beyond the
Point of Interconnection. Distribution Upgrades are defined as upgrades to the
Distribution System, while Network Upgrades are defined as upgrades to the
Transmission System. However, "Transmission System" is defined to include any facility,
be it transmission or distribution, that is subject to an OATT. Therefore, SoCal Edison
contends that because "Transmission System" is defined to include portions of the
Distribution System, the definition of Network Upgrades (in combination with other
provisions of the SGIP and SGIA) is confusing. SoCal Edison argues that keeping the
terms Transmission System and Distribution System distinct is crucial. For this reason,
124

See, e.g., AEP, Alabama PSC, Baltimore G&E, Central Maine, Cinergy,
Consumers, MidAmerican, Mississippi PSC, Nevada Power, NRECA, and SoCal Edison.

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the definition of Transmission System needs to exclude distribution facilities, which
facilities already are included in the term Distribution System.
434. In a similar vein, PacifiCorp argues that the definition of Network Upgrades must
be revised to prevent it from being applied to Upgrades to a Transmission Provider's
Distribution System. The Proposed SGIA's definition of Network Upgrades could be read
to include Upgrades to radial feeders or other facilities that are part of the Transmission
Provider's Distribution System. In PacifiCorp's view, Network Upgrades should include
only Upgrades to networked transmission or sub-transmission facilities. Any Upgrades to
radial feeders or other facilities that make up the Transmission Provider's Distribution
System should be paid for by the Interconnection Customer without credits.
435. PSE&G states that the definition of Network Upgrades should be modified as
follows: "[Network Upgrades] shall mean the additions, modifications and
upgrades…required (strike out "at or") beyond the point at which the Interconnection
Customer interconnects to the Transmission Provider's or Transmission Owner's or
distribution owner's (strike out "Transmission" and add "Distribution") System to
accommodate the Generating Facility…"
436. NRECA states that the Commission has an important role in determining whether
facilities are distribution or transmission. The Commission should apply the seven-factor
test where there are disputes and should not in doing so give undue deference to state or
public utility classifications of facilities. As shown by cases such as Arkansas Power &
Light,125 the Commission may conclude that a facility serves a transmission function even
if it is lower voltage and serves a few end-use customers, if the predominant use of the
facility is to provide wholesale transmission service.
437. In addition, NRECA seeks clarification of the NOPR's statement that "if a proposed
interconnection passes either the super-expedited screening procedures or the expedited
screening procedures, the Interconnection Customer would have no cost responsibility for
Upgrades." NRECA contends that this contradicts article 5.1.3 of the Proposed SGIA
(Distribution Upgrades), and thus is inconsistent with the Commission's proposal to
require Distribution Upgrades to be directly assigned to the Interconnection Customer.

125

Arkansas Power & Light Co. v. FPC, 368 F. 2d 376 (8th Cir. 1966) (Arkansas
Power & Light).

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Furthermore, the statement would shift costs from the Interconnection Customer to
utilities and their other customers. Also, Cummins says that the proposal runs counter to,
or may confuse the application of, screens that would expedite the interconnection
process.
438. Small Generator Coalition states that although Proposed SGIA article 5.1.5 gives
the Interconnection Customer an opportunity to demonstrate benefits to the Transmission
Provider's electric system that would reduce the Interconnection Customer's costs, the
NOPR's discussion of Distribution Upgrades at P 72 appears to rule out any cost
reductions for Distribution Upgrades. In addition, Small Generator Coalition argues that
ambiguous NOPR provisions may permit Transmission Owners to require the
Interconnection Customer to pay for Network Upgrades with no compensation to the
Interconnection Customer or consideration of network benefits. Because downstream
resources can benefit system reliability, Small Generator Coalition argues that the
Commission's rule should allocate Upgrade costs according to benefits to all portions of
an affected Transmission System, including facilities operating at distribution voltages.
439. Alabama PSC and Mississippi PSC argue that distribution facilities should be
directly assigned. However, because the Commission lacks jurisdiction over distribution
facilities, cost responsibility for Distribution Upgrades is an issue for state regulators to
address.
440. Midwest ISO notes that Proposed SGIA article 5.1.5 provides that if the Parties
agree that the Small Generating Facility benefits the Transmission Provider's electric
system, the Interconnection Customer's cost responsibility may be reduced accordingly.
The Small Generator Interconnection NOPR says that, if multiple facilities are involved,
pro rata allocation of the costs or benefits must be made. These provisions appear to
conflict with the NOPR's proposal at P 71, which allows an RTO flexibility with respect
to interconnection pricing.
Commission Conclusion
441. With reference to Chart 1 of the Proposed SGIP, Midwest ISO asks who is
responsible for the cost of Upgrades between the point of common coupling and the Point
of Interconnection. Chart 1 was in error. The Point of Interconnection is the point
identified as the point of common coupling, which is the point in the diagram where the
Interconnection Facilities connect to the Transmission Provider's Distribution System
subject to an OATT. Thus, the Upgrades to which Midwest ISO refers are in fact
Interconnection Facilities, and their cost is directly assigned to the Interconnection
Customer.

Docket No. RM02-12-000

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442. In response to Empire District, we confirm that radial extensions to the Small
Generating Facility are to be directly assigned to the Interconnection Customer if they are
Interconnection Facilities; that is, if the radial line is a sole use facility located between the
Small Generating Facility and the Point of Interconnection, its cost is directly assigned to
the Interconnection Customer. Also, Empire District recommends that the Commission
adopt a crediting policy that is similar to the methods set forth by the Southwest Power
Pool. However, Empire District does not explain how its recommended methods differ
from or are better than those proposed in the NOPR.
443. In order to eliminate the confusion expressed by Nevada Power, SoCal Edison and
others about the distinction between Distribution Upgrades and Network Upgrades, we are
adding the following sentence to the definition of Network Upgrades: "Network
Upgrades do not include Distribution Upgrades."
444. NRECA seeks clarification of the Small Generator Interconnection NOPR's
statement that "if a proposed interconnection passes either the super-expedited screening
procedures or the expedited screening procedures, the Interconnection Customer would
have no cost responsibility for Upgrades." The issue of who pays for an Upgrade in the
case of a proposed interconnection passing all the screens is moot because one of the
provisions of SGIP section 2.2.1 is a requirement to pass a screen that the interconnection
must not require an Upgrade.
445. Small Generator Coalition is concerned that the Proposed SGIA may assign to the
Interconnection Customer cost responsibility for Interconnection Facilities in a way that
gives no recognition to the benefits that the Interconnection Facilities may bring to the
Transmission Provider’s electric system. In response, we clarify that the Interconnection
Customer is responsible for the cost of Interconnection Facilities except when such cost is
shared with other entities that may benefit from the Interconnection Facilities by
agreement of the Interconnection Customer, the other entities, and the Transmission
Provider. This provision for cost sharing is included in SGIA article 4.1.1.
446. Small Generator Coalition also asks about sharing cost responsibility for
Distribution Upgrades and initial funding responsibility for Network Upgrades. The
Interconnection Customer is responsible for the upfront funding of Network Upgrades
unless the Transmission Provider elects to provide the upfront funding itself. This
payment option is included in SGIA article 5.2. However, we are not adopting the explicit

Docket No. RM02-12-000

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cost sharing provisions of Proposed SGIA article 5.1.5 relating to Distribution Upgrades
because they are not consistent with Order No. 2003 which specified that all Distribution
Upgrades shall be directly assigned to the Interconnection Customer.126
447. In response to Midwest ISO, we clarify that we are allowing flexibility for the
pricing that an independent Transmission Provider may propose to adopt, subject to
Commission approval, under the "independent entity" variation. Accordingly, an
independent Transmission Provider may propose a pricing method that differs from what
this Final Rule otherwise requires.
448. Alabama PSC and Mississippi PSC assert that cost responsibility for Distribution
Upgrades is beyond the scope of the Commission's authority. As explained above, the
Commission's assertion of jurisdiction here is no broader than in Order No. 888. This
Final Rule applies to interconnections with a Transmission System or with a Distribution
System subject to an OATT for the purpose of making wholesale sales. The
Commission's authority over such interconnections with Distribution Systems, for the
purposes of making a wholesale sale of electricity in interstate commerce, includes
allocating the cost of all of the Transmission Provider’s Upgrades needed to effect the
interconnection.. Otherwise, the Commission could not ensure that the costs incurred to
provide a jurisdictional service are allocated appropriately. The pricing policy for
Distribution Upgrades directly assigns costs to the Interconnection Customer so there is no
impact on retail customers of the Distribution System.
Responsibility for Operation and Maintenance Costs
449. Proposed SGIA article 5.1.4 stated that the Interconnection Customer is responsible
for the operating and maintenance costs associated with the Interconnection Facilities that
it owns as well as those owned by the Transmission Provider. The Proposed SGIA did not
assign responsibility for O&M costs associated with Network Upgrades or Distribution
Upgrades.

126

See LGIA article 11.3 ("The Interconnection Customer shall be responsible for
all costs related to Distribution Upgrades.")

Docket No. RM02-12-000

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Comments
450. Central Maine and NYTO ask the Commission to clarify that the Interconnection
Customer is responsible for ongoing O&M costs associated with Network Upgrades when
the Interconnection Customer does not take and pay for transmission service for the output
of its Small Generating Facility.
451. Southern Company contends that Proposed SGIA article 5.1.4 contemplates that
the Interconnection Customer is responsible for all reasonable expenses associated with
operating and maintaining its own Interconnection Facilities and the Transmission
Provider's Interconnection Facilities, but it is unclear whether all applicable O&M costs
are covered. It notes that LGIA article 10.5 does not limit O&M cost recovery to the
Transmission Provider's Interconnection Facilities, but explicitly provides that the
Interconnection Customer is responsible for all reasonable O&M costs. Therefore,
Southern Company proposes to revise article 5.1.4 to include Distribution Upgrades so as
to ensure that all appropriate O&M costs are included.
452. Robert L. Carrey contends that the Interconnection Customer should pay only the
O&M costs of the Interconnection Facilities built on its behalf. He argues that the
Interconnection Customer should not have to pay for routine O&M costs where no
Interconnection Customer and Transmission Provider share the same poles and rights-ofway.
Commission Conclusion
453. The Commission has long held that O&M costs associated with Network Upgrades
cannot be directly assigned to the Interconnection Customer, because Network Upgrades
are part of the integrated transmission system from which all transmission users benefit. 127

127

See, e.g., PJM Interconnection, L.L.C., 109 FERC ¶ 61,326 (2004) (holding that
O&M costs associated with Network Upgrades may not be directly assigned to the
Interconnection Customer). We note, however, that the Transmission Provider may
propose to recover the cost of Network Upgrades from the Interconnection Customer
through an incremental transmission rate. In that case, the Commission would entertain a
proposal to include in the incremental rate O&M costs associated with the Network
Upgrades. Order No. 2003-B at P 57.

Docket No. RM02-12-000

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Therefore, we deny the requests of Central Maine and NYTO that the Commission require
the Interconnection Customer to pay O&M costs associated with Network Upgrades.128
454. While the SGIA authorizes the Transmission Provider to collect O&M costs
associated with Interconnection Facilities, this Final Rule does not contain a rate recovery
mechanism for collecting those costs, because such costs will vary from case to case.
Therefore, if a Transmission Provider wishes, it may propose and justify its rate to recover
such costs under section 205 of the FPA.129 In response to Southern Company, a
Transmission Provider may make a similar filing to recover from the Interconnection
Customer an appropriate share of any Commission-jurisdictional component of the O&M
costs of Distribution Upgrades. Absent Commission approval of such a rate schedule, the
Transmission Provider may not collect Commission-jurisdictional O&M costs associated
with Interconnection Facilities or Distribution Upgrades.
455. In response to Mr. Carrey, the Transmission Provider is free to propose to recover
these expenses in any manner it sees fit; however, the Commission will approve the
Transmission Provider's proposed rate if it is shown to be just and reasonable and not
unduly discriminatory or preferential.
Responsibility for the Construction of Upgrades
456. Proposed SGIA article 5.1.2 stated that the Transmission Provider or Transmission
Owner shall design, procure, construct, install, and own the Network Upgrades.
Comments
457. PacifiCorp states that the Parties should be permitted to agree that the Network
Upgrades will be built by the Interconnection Customer on its land. This could facilitate a
faster interconnection. In addition, Proposed SGIA article 3.3 should be revised to give
the Transmission Provider the right to inspect, operate, or maintain Network Upgrades on
the Interconnection Customer's land.

128

This issue was discussed at P 421-424 of Order No. 2003-A.

129

16 U.S.C. § 824d (2000); see also 18 CFR § 35.12 (2004).

Docket No. RM02-12-000

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458. AMP-Ohio states that, in the region where its members' Distribution Systems are
located, the Transmission Provider would be an RTO. It notes that Proposed SGIA
article 5.1.3 stated that the "Transmission Provider or Transmission [Owner] shall design,
procure, construct, install, and own the distribution Upgrades…" AMP-Ohio is concerned
that this article could be construed to allow the RTO to own and operate piecemeal
sections of a member's electric system. The Commission should clarify that one entity
cannot assert the right to own a portion of another's electric system.
Commission Conclusion
459. In response to PacifiCorp, neither Proposed SGIA article 5.1.2 nor article 5.1.3
precluded the Parties from agreeing that the Interconnection Customer may construct
Network Upgrades or Distribution Upgrades on its own land. Nevertheless, we make this
option explicit in SGIA articles 4.2 and 5.2. PacifiCorp's proposed revisions to Proposed
SGIA article 3.3 are addressed above in our discussion of that article.
460. In response to AMP-Ohio, we clarify that this Final Rule does not authorize any
entity, including the Transmission Provider, to own a portion of another entity's
Transmission System without the permission of the Transmission Owner.
Miscellaneous Pricing Issues
Comments
461. PacifiCorp notes that Proposed SGIA article 5.1.2.1 would permit a refund to an
Interconnection Customer whose Small Generating Facility does not achieve commercial
operation, if another customer uses the Network Upgrades for which the first
Interconnection Customer paid. PacifiCorp asks that this provision specify that a refund is
available only if the second Interconnection Customer actually requires the Network
Upgrades for its Small Generating Facility.
462. TAPS states that the NOPR does not make the Transmission Provider remove its
own Interconnection Facilities from rate base.
Commission Conclusion
463. We agree with PacifiCorp that the first Interconnection Customer should not
receive a refund of amounts it has advanced for Network Upgrades unless the later
Interconnection Customer's Small Generating Facility actually would have required the
construction of the Network Upgrades. However we believe that the SGIA, as written,

Docket No. RM02-12-000

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makes this clear. To make a change to this provision would imply that it means
something different from the similar provision adopted in the LGIA, and that is not our
intent, therefore we decline to accept PacifiCorp’s proposed modification.
464. With regard to the issue that TAPS raises, the Commission addressed this matter in
Order No. 2003. There the Commission required the Transmission Provider to remove
from transmission rates the costs of Interconnection Facilities constructed by the
Transmission Provider after March 15, 2000 to interconnect generating facilities owned by
the Transmission Provider on the effective date of the Final Rule in the Large Generator
Interconnection proceeding.130 The Commission's conclusion about the need for the
Transmission Provider to remove its own Interconnection Facilities from rate base was not
intended to be limited to Large Generating Facilities. We clarify here that it applies to all
of the Transmission Provider's Interconnection Facilities, regardless of the size of the
associated generating facility.
Commission Jurisdiction under the Federal Power Act
465. Sections 205 and 206 of the FPA require the Commission to remedy undue
discrimination by public utilities. In Order No. 888, the Commission found that public
utilities owning or controlling jurisdictional transmission facilities had the incentive to
engage in, and had engaged in, unduly discriminatory practices.131 Because
interconnection is an element of transmission service that must be provided under the
OATT, the Commission in Order No. 2003 established generic interconnection terms and
procedures under its authority to remedy undue discrimination under sections 205 and
206.132 The Small Generator Interconnection NOPR proposed that its jurisdictional reach
would be identical to Order No. 2003.

130

See Order No. 2003 at P 744 and Order No. 2003-A at P 663.

131

Order No. 888 at 31,679-84; Order No. 888-A at 30,209-10.

132

Order No. 2003 at P 18-20.

Docket No. RM02-12-000

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Comments
466. NARUC, NRECA, several state regulatory commissions,133 and others134 argue that
the Small Generator Interconnection NOPR unlawfully encroaches upon the jurisdiction
of the states by proposing to regulate interconnections with "local distribution" facilities.
467. Many of the commenters opposing the Commission's exercise of jurisdiction over
facilities used both for Commission-jurisdictional and for state-jurisdictional transactions
("dual-use" facilities) cite Detroit Edison.135 They appear to have read Detroit Edison as
forbidding the exercise of federal jurisdiction over any facilities used to any degree to
distribute bundled power to end-users at retail, regardless of whether those facilities are
also used for transactions that are under the Commission's jurisdiction.136 Other
commenters, including Small Generator Coalition and SoCal Edison,137 assert that nothing
in Detroit Edison prevents the Commission from asserting jurisdiction over all
interconnections made to facilitate Commission-jurisdictional activities.
468. Interconnections with "distribution" facilities, argues Alabama PSC, should be
exclusively state-jurisdictional. It argues that "the Courts have long recognized and
enforced the State's primacy over the regulation of distribution facilities."138 CPUC makes
a similar argument, stating that:
133

E.g., Alabama PSC, CPUC, CT PUC, Florida PSC, Iowa Utilities Board,
Mississippi PSC, North Carolina Commission, and NYPSC.
134

E.g., Baltimore G&E, Central Maine, Consumers, EEI, Idaho Power,
PacifiCorp, Progress Energy, and Southern Company.
135

Shortly before comments were due in this docket, the D.C. Circuit issued
Detroit Edison v. FERC, 334 F.3d 48 (D.C. Cir. 2003) (Detroit Edison). Since then, the
Commission has issued both Order Nos. 2003-A (at P 705 et seq.) and 2003-B (at P 14),
which discuss Detroit Edison at length.
136

Alabama PSC at 4-5 (citing 16 U.S.C. § 824(b) (2003), which states that "[t]he
Commission . . . shall not have jurisdiction . . . over facilities used in local distribution . . .
.")
137
138

Id. at 10 (emphasis in original).

Id. at 5 (citing Southern Co. Services, Inc. v. FCC, 293 F.3d 1338, 1344 (11th
Cir. 2002)).

Docket No. RM02-12-000

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federal law was meant to supplement – and not to supplant – state
regulation of those utilities. The FPA was enacted to fill in gaps not
covered by state regulation, not as a mechanism for avoiding state
regulation of public utilities. In enacting the FPA, Congress did not
purport to exercise all of the authority it might have exercised under
the Commerce Clause, because its intention was to preserve, not
override, state regulatory jurisdiction.[139]
469. Alabama PSC, Mississippi PSC, and Southern Company also cite the preemption
doctrine (that federal preemption of state law is not to be assumed unless Congress
expresses a clear intent to do so) as another reason why the Commission is not permitted
to exercise jurisdiction over "distribution" facilities. "To the contrary," Alabama PSC
argues, "the FPA expressly provides that FERC does not have such jurisdiction."140
470. CT PUC asks the Commission to clarify that this Final Rule does not preempt state
regulatory authority with respect to electric distribution company regulation,
environmental protection (including Clean Air Act permitting), fire and building safety
regulation, etc., as these may apply to Small Generating Facility interconnections with
"distribution" facilities.
471. Idaho Power states that "[t]he 'dual use' theory leaves the "distribution" facility
owner that is trying to design an efficient and reliable "distribution" system in the
untenable position of having two masters attempting to control the same physical line for
differing purposes."141
472. PacifiCorp cites forum shopping concerns and suggests that a Small Generating
Facility interconnecting as a Qualifying Facility (QF) to a dual use facility could receive
different treatment depending on whether it sells its output to the host utility under the
Public Utility Regulatory Policies Act of 1978 (PURPA)142 or to a customer other than the
host utility. In the first instance, the interconnection would be state-jurisdictional; in the
139

CPUC at 8 (citing Conn. Light & Power Co. v. FPC, 324 U.S. 515, 529-30

(1945)).
140

Alabama PSC at 6 (citing 16 U.S.C. § 824(b)).

141

Idaho Power at 3.

142

16 U.S.C. § 824a-3 (2004).

Docket No. RM02-12-000

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second, Commission-jurisdictional. PacifiCorp asserts that this is a confusing outcome
and could be avoided if the Commission disclaims jurisdiction over low voltage and dual
use facilities.
473. Small Generator Coalition argues that not asserting jurisdiction over all
interconnections made to facilitate Commission-jurisdictional activities means adopting a
circuit-by-circuit approach to jurisdiction. This would be contrary to the Commission's
approach taken in a variety of contexts, including assignment of system losses143 and
recovery of fixed costs144 on a system-wide basis. Further, if the Commission allows a
Transmission Provider to refuse interconnections with the low-voltage "distribution"
portions of its system not already used for jurisdictional transactions, "small resource
development would be inhibited if not eliminated."145 Transmission Providers could "pick
and choose among interconnection applicants based on any criteria they elected to
employ."146 Finally, Small Generator Coalition argues that the Commission adequately
recognizes state jurisdiction by claiming jurisdiction over only interconnections with
"distribution" facilities that are used for wholesale transactions.
474. NRECA argues that, as more and more distributed generators participate in the
wholesale market, "many if not most distribution facilities will carry a few wholesale
electrons."147 Indeed, "many if not most distribution facilities will become subject to
Commission jurisdiction. The jurisdictional divide between the Federal Government and
the States that Congress clearly intended in the FPA will have collapsed."148 Baltimore
G&E asks the Commission to explain how it will avoid a "chicken and egg" situation
where the jurisdictional status of a particular facility would change after the
interconnection takes place.
143

Small Generator Coalition at 37 (citing Northern States Power Co. v. FERC,
30 F.3d 177 (D. C. Cir. 1994)).
144

Id. (citing Fort Pierce Utilities Authority v. FERC, 730 F.2d 778, 782 (D.C. Cir.

1984)).
145

Id. at 39.

146

Id. at 39.

147

NRECA at 41.

148

Id.

Docket No. RM02-12-000

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475. Solar Turbines expresses concern that "[a] utility apparently need merely deny that
a particular line is currently being used for any transmission of power in interstate
commerce or for any sales for resale, and can then refuse to accept an application for
interconnection to that specific facility"149 and requests that the Commission clarify what
the Interconnection Customer should do if it finds itself in such a situation.
476. MidAmerican asks whether this Final Rule would apply to a net metering
arrangement that allows a Small Generating Facility to net only a portion of its output and
resell the remainder to the host utility. It also asks what happens if it sells the non-net
metered portion of its output to a third party.
477. Avista asks the Commission to address the effect of Detroit Edison on an
interconnection for a purpose other than to "engage in sale for resale in interstate
commerce or to transmit electricity in interstate commerce." Avista differentiates "load
interconnections" from "generator interconnections," which are interconnections made to
export power. It requests clarification that a load interconnection to a dual use facility is
an exclusively state-jurisdictional interconnection "except if and to the extent there is an
OATT on file by the owner of the facilities that makes available new Commissionjurisdictional service over those facilities."150 Absent such a clarification, Avista argues
that "uncontrolled deregulation of service at the distribution level may occur, since any
new load can seek to characterize its service as 'wholesale' by inserting a 'sham utility'
between the customer and the incumbent utility."151 Avista states that FPA section 212(h)
already prohibits "sham wholesale transactions"152 and argues that "the Commission has
determined that Section 212(h) only applies to transmission orders, not interconnection

149

Solar Turbines at 4.

150

Avista at 9.

151

Id. at 9-10 (citing, e.g., Snake River Valley Elec. Ass'n v. PacifiCorp, 238 F.3d
1189 (9th Cir. 2001)).
152

16 U.S.C. § 824k(h) (2000).

Docket No. RM02-12-000

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requests."153 Without such a clarification, Avista fears that load interconnections with
dual use facilities could be used to force otherwise non-Commission-jurisdictional
"distribution" facilities into Commission-jurisdictional status.
478. USCHPA and Solar Turbines ask the Commission to exert jurisdiction over all load
interconnections. Additionally, many cogeneration projects, USCHPA asserts, make
sporadic sales of power when the economics favor doing so. Such projects should not be
denied the benefits of standardized interconnection rules simply because their sales into
the wholesale energy marketplace are sporadic. Solar Turbines argues that the needs of
Small Generating Facilities are different and that there are good reasons to depart from the
large generator precedent in this rulemaking. Specifically, Small Generating Facilities are
more likely to be near to load, while Large Generating Facilities are more likely to be far
from their load.
479. Midwest ISO argues that all interconnections with "distribution" facilities within an
RTO or ISO to sell power at wholesale should be processed under a single set of rules.
This would include both state- and Commission-jurisdictional facilities. Midwest ISO
remarks that regardless of "[w]hether the physical requirements of the interconnection
come under the RTO's purview, the generating facility's operation will" come under the
RTO's jurisdiction. Therefore, the RTO should be able to "evaluate the proposed
interconnection with the generating facility's subsequent operation in mind."154
480. Finally, several comments address whether the use of a 69 kV cutoff in the SGIP
affects the Commission's jurisdiction.
Commission Conclusion
481. The Commission's assertion of jurisdiction in this Final Rule is identical to the
jurisdiction asserted in Order Nos. 2003 and 888 and upheld by the Supreme Court in New
York v. FERC. Just as the Commission stated in Order No. 2003-A:

153

Avista at 9-10 (citing Laguna Irrigation District, 95 FERC ¶ 61,305 (2001), aff'd
sub nom. Pacific Gas & Electric Co. v. FERC, 44 Fed. Appx. 170 (9th Cir. 2002)
(unpublished opinion); City of Corona v. Southern California Edison Co., 101 FERC
¶ 61,240 at 62,025-026 (2002)).
154

Midwest ISO at 6.

Docket No. RM02-12-000

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There is no intent to expand the jurisdiction of the Commission in
any way; if a facility is not already subject to Commission
jurisdiction at the time interconnection is requested, the Final Rule
will not apply. Thus, only facilities that already are subject to the
Transmission Provider's OATT are covered by this rule. The
Commission is not encroaching on the States' jurisdiction and is not
improperly asserting jurisdiction over "local distribution"
facilities.[155]
482. Many commenters seek clarification of issues (particularly related to the Detroit
Edison case) that were discussed at length in Order Nos. 2003-A and 2003-B, which were
issued after comments on the Small Generator Interconnection NOPR were due.156 Since
the jurisdiction asserted in this Final Rule is identical to that asserted in Order No. 2003,
we adopt here our discussion from those orders rather than repeat the same information.
483. However, several commenters focused on how the jurisdictional issues raised by
small generator interconnections may differ from those raised in the Large Generator
Interconnection rulemaking. Additionally, some commenters raised issues in this
proceeding that were not addressed in Order Nos. 2003-A or 2003-B. These issues we
discuss in more detail below.
484. We disagree with Alabama PSC, Mississippi PSC, and Southern Company that the
Commission is evading FPA section 201(b)(1) or preempting state law. In New York v.
FERC, the U.S. Supreme Court approved the Commission's assertion of jurisdiction in
Order No. 888.157 The applicability of this Final Rule is identical to the applicability of
Order No. 888.
485. CT PUC is correct that this Final Rule in no way alters the permitting and other
environmental requirements applicable to Interconnection Customers. Nor does this Final
Rule affect any other state police powers.

155

Order No. 2003-A at P 700.

156

See Order No. 2003-A at P 698 et seq. and Order No. 2003-B at P 12 et seq.

157

New York v. FERC, 535 U.S. 1 (2002).

Docket No. RM02-12-000

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486. NRECA asserts that while there are now relatively few Small Generating Facility
interconnections that are Commission-jurisdictional, that number will increase as time
passes. Small Generator Coalition complains that the number of lower voltage
Commission-jurisdictional facilities is too small. Ultimately, however, the Commission's
jurisdiction does not rest on how common dual use facilities may be or how many
interconnections are Commission-jurisdictional.
487. Baltimore G&E asks if the jurisdictional status of a facility would change after an
interconnection takes place. Whether a facility is subject to this rule depends on whether
it is subject to an OATT at the time the Interconnection Request is filed. The use of a
facility and thus its inclusion in an OATT can change over time. Nothing in this Final
Rule (or Order No. 2003) alters the status of any facility.
488. Avista is correct that some interconnections are made simply to receive power from
the electric system. These "load interconnections" are not subject to this Final Rule.
489. In response to USCHPA's concern over Interconnection Customers who may wish
to make sporadic sales of power into the marketplace, we clarify that there is no
requirement that an Interconnection Customer's participation in the wholesale marketplace
be constant. An Interconnection Customer is free to request interconnection service and
then wait until the economics are favorable before actually making a wholesale sale.
490. In response to Midwest ISO's desire to process all interconnections (whether to
Commission-jurisdictional or non-Commission-jurisdictional facilities) under its tariff, we
note that the Commission does not have the authority to order states to use Midwest ISO's
tariff to process interconnections with state or other non-jurisdictional facilities.
However, we encourage the states and others to use the Commission's interconnection rule
or the NARUC Model as a starting point for developing their own interconnection rules.
491. Many commenters also address the legality of the Small Generator Interconnection
NOPR's proposed use of 69 kV to determine whether portions of the SGIP would apply.
Since the Commission has abandoned this distinction in this Final Rule, these arguments
are moot.

Docket No. RM02-12-000

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Arguments that the Commission Should Delay or Abandon the Small
Generator Interconnection Rulemaking
492. Several commenters argue that the Proposed SGIP and Proposed SGIA are too
complicated for small entities and would create a barrier to entry. Some commenters
argue that the Commission should delay issuing a Final Rule and allow the various states
and other entities to develop their own model rules. Others disagree.158
493. This Final Rule includes several provisions to address these concerns. First, we are
adopting a separate application/procedures/terms and conditions document for very small
certified inverter-based Small Generating Facilities. This is a big step in facilitating quick
interconnections at very little cost, as long as they can be made safely and without
harming reliability. We are also simplifying many SGIA provisions at the request of
commenters. This Final Rule borrows liberally from NARUC's Model interconnection
rules, which are simpler than the Small Generator Interconnection NOPR.
494. We address below specific comments relating to our decision to proceed with this
Final Rule. We have divided commenters' arguments into three sections: (1) arguments
that the Commission should defer to the states to deal with small generator
interconnections; (2) arguments that the Commission's NOPR is too complex; and
(3) arguments that the Commission should adopt a policy statement or model rules instead
of a Final Rule.
Arguments in Favor of Deferring to the States on Small
Generator Interconnections
Comments
495. NARUC proposes that the Commission adopt its Model, arguing that it "would
offer the greatest possibility of consistency between Federal and State interconnection
policies"159 It explains that "the NARUC Model was developed by melding the best
158

CT DPUC at 1 ("The CT DPUC generally supports the effort by the
Commission to initiate standardization of interconnection agreements and procedures . . .
."); see also Cummins at 1 ("We strongly support the Commission's continued work in this
area.")
159

NARUC at 18.

Docket No. RM02-12-000

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practices of existing State distributed generation interconnection programs."160 NARUC
argues in its supplemental comments that state programs are successful and that imposing
an unnecessary layer of federal regulation will be disruptive to small generator developers
and customers. Commission action can only create confusion and impede project
development. Because states have better insight into local operating, planning, safety,
reliability, and adequacy needs and conditions, they are in the best position to address the
interconnection of small generators, regardless of what those generators may do with the
output from their facilities or where they are interconnected. At bottom, NARUC urges
the Commission to take no action on the Small Generator Interconnection NOPR. In the
alternative, if the Commission implements small generator interconnection rules, it should
grandfather existing state interconnection programs and the interconnections
accomplished under such programs, and include a mechanism for granting deference to
future state small generator interconnection programs.
496. CPUC states that California, New York, Ohio, and Texas all have interconnection
procedures applicable to their state-regulated utility "distribution" systems.161 Because
one third of the country's population already lives in states with standard interconnection
rules, there is no need for Commission action. It also contends that (1) existing California
interconnection rules meet the needs of small generators seeking to connect to statejurisdictional utility "distribution" systems, (2) California procedures already provide
small generators with one-stop shopping, and (3) there is no "actual or legitimate need for
FERC assistance to cover interconnections to state-jurisdictional facilities in states where
distributed generation interconnection rules are already in place."162
497. Furthermore, CPUC argues, only state-specific interconnection rules can account
for "regional practices." As an example, CPUC's rules allow it to exempt small
Transmission Providers, but the Small Generator Interconnection NOPR lacks such
needed flexibility.163 In sum, CPUC questions the need for the Commission's proposal

160

Id. at 8.

161

Virginia, Massachusetts, and other states also have small generator
interconnection rules.
162

CPUC at 16.

163

Id. at 18.

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and asserts that "there is no legitimate public policy basis for the assertion of FERC
jurisdiction over small generators that would result if the FERC proposal were
adopted."164
498. In contrast, Cummins argues that the Commission should assert jurisdiction over all
interconnections, regardless of whether the interconnection is with a Commissionjurisdictional facility. Cummins argues that, although Small Generating Facilities often
connect at the "distribution" level, their effects can be felt on the Transmission System. It
explains that, because Small Generating Facilities can relieve congestion on crowded
transmission facilities, the effect of even on-site Small Generating Facilities is felt beyond
the Point of Interconnection. Thus, it is important that the Commission use all its
jurisdictional authority to apply this rule as broadly as possible. And, where the
Commission does not have jurisdiction, Cummins encourages state regulators to develop
interconnection rules that are consistent with this Final Rule.
499. Plug Power claims that by not proposing standards applicable to interconnections
with distribution facilities, the Commission's interconnection rules will not help small
generators. Further, the rules proposed in the NOPR are inferior to those already in place
in several states.
500. EEI urges the Commission to work with states to better define the state-federal role
in small generator interconnections. According to EEI, this approach would provide both
Interconnection Customers and Transmission Providers with clear guidance as to which
rules apply to which interconnections. Finally, EEI states that, with certain modifications,
the interconnection procedures document and agreement could be a model for use by both
federal and state authorities to process small generator Interconnection Requests.
501. CT DPUC, while supporting the Commission's efforts, argues that this Final Rule
should not lead to a loss of state jurisdiction.
Commission Conclusion
502. We agree with commenters that general consistency between the Commission's
interconnection procedures document and agreement and those of the states will be helpful
to removing roadblocks to the interconnection of small generators. To a large extent, this
Final Rule harmonizes state and federal practices by adopting many of the provisions
164

Id. at 15.

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proposed by NARUC and Joint Commenters. This Final Rule adopts interconnection
rules that are largely consistent with the "best practices" interconnection rules proposed by
NARUC. By doing so, we hope to minimize the federal-state division and promote
consistent, nationwide interconnection rules.165 We hope that states that do not currently
have interconnection rules for small generators will look to the documents presented in
this Final Rule and the NARUC Model as guides for their own rules. To grandfather
existing state interconnection programs and grant deference to future state small generator
interconnection programs would not fulfill the Commission’s statutory mandate to
regulate jurisdictional activities, of which generator interconnection is one. However, as
discussed elsewhere, the all-in-one document for certified inverter-based generators no
larger than 10 kW should go a long way towards harmonizing state-federal
interconnection practices for this class of generators.
503. Our hope is that states may find these interconnection rules helpful in formulating
their own interconnection processes. In particular, we hope the Fast Track and 10 kW
Inverter Processes will prove helpful as starting points from which to develop their own
procedures and agreements.
504. The concerns of CPUC and several other commenters that the Commission is
claiming jurisdiction over interconnections with non-Commission jurisdictional facilities
are addressed elsewhere in more detail.
Arguments that the NOPR Is Too Complex
Comments
505. CPUC argues that the Proposed SGIA and Proposed SGIP are too complicated for
small Interconnection Customers, especially the smallest, to use. Small Generator
Coalition argues that unless the Commission is willing to modify the NOPR in
fundamental ways, many of its members believe that development of Small Generating
Facilities would be better served if the NOPR were simply withdrawn. According to
Small Generator Coalition, the NOPR's framing of
interconnection issues as a competition between maintaining system
reliability and encouraging small resources is wholly inappropriate,
165

Model.

A particular state's interconnection rules may also differ from the NARUC

Docket No. RM02-12-000

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and it gives disproportionate weight to the reliability 'concerns' of
transmission/distribution owners with generating units of their own.
That system reliability must not be compromised goes without
saying, but the need for system reliability does not compete with the
goal of encouraging small resource development via affordable and
clear interconnection terms and conditions. The compatibility of
small resources with the grid was proven long ago – there are literally
thousands of such small resources in place and operating in the
United States, safely interconnected with the grid (such as the solar
array on the roof of the Commission's own office building).[166]
506. Small Generator Coalition says that on-site Small Generating Facilities actually
enhance electric system reliability, and that complex technical provisions should therefore
not be required.
507. Plug Power asserts that unless the Commission adopts a simpler SGIA, the
Commission's rulemaking will not help to reach national interconnection standards.167 Of
particular concern to Plug Power are the Proposed SGIA's insurance requirements and
what Plug Power terms its open-ended cost provisions.
508. CT DPUC urges the Commission to adopt rules that are not unnecessarily
complicated to administer.
Commission Conclusion
509. We agree with commenters that the Small Generator Interconnection NOPR
contained some provisions that were overly complicated for many Small Generating
Facility interconnections. Wherever possible, we have simplified the SGIP and SGIA.
And, for very small certified Small Generating Facilities, this Final Rule includes the
highly simplified 10 kW Inverter Process.

166

Small Generator Coalition at 7-8.

167

Plug Power at 3.

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Arguments in Favor of a Non-Binding Model Rule
Comments
510. CPUC states that it would support Commission efforts to establish non-binding
guidelines, or a model rule, for use by states that have not yet adopted their own standards.
511. NARUC comments that any standard interconnection procedures document and
agreement issued by the Commission that disclaims jurisdiction over "local distribution"
facilities has limited applicability. It also claims that states are better situated to handle
small generator interconnections, and having two competing interconnection regimes for
small generator interconnections would be confusing. NARUC therefore also urges the
Commission to adopt a policy statement instead of a binding rule.
Commission Conclusion
512. We conclude that as much standardization as possible of the rates, terms, and
conditions of jurisdictional interconnection service will help eliminate undue
discrimination. A non-binding policy statement would not end this undue discrimination.
Further, not regulating jurisdictional interconnections would leave a regulatory gap where
neither the states nor the Commission held sway. A gap of this sort would make it more
difficult for Interconnection Customers wanting to interconnect and would in fact, leave
them worse off than the owners of Large Generating Facilities.
513. This Final Rule both fulfills the Commission's duty to remedy undue discrimination
when covered by this rule and, when not covered by this rule, provides a model that state
regulators may wish to use as a starting point for developing their own procedures and
agreement. We hope that the SGIP and SGIA we adopt in this Final Rule are a step
towards having a seamless interconnection process where interconnections with federaljurisdictional facilities and state-jurisdictional facilities will be handled in a similar
fashion. By doing so, we intend to avoid the very federal-state clashes NARUC
anticipates.
Issues Relating to Qualifying Facilities
514. The NOPR did not address the issue of how QFs would be impacted by the small
generator rulemaking.

Docket No. RM02-12-000

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Comments
515. EEI and PacifiCorp ask the Commission to clarify that a QF that is not selling at
wholesale, other than to a host utility under PURPA, should seek interconnection service
through state procedures, not through Commission procedures. PacifiCorp states that the
PURPA regulatory scheme for QFs involves considerable deference to state regulation
with regard to the interconnection of QFs to state-regulated utilities. The Iowa Utilities
Board agrees and asserts that this Final Rule should say that states have authority to
establish standards for the interconnection of QFs. To avoid confusion, PacifiCorp
proposes that the SGIP state clearly that a Small Generating Facility with QF status or one
seeking such status is not eligible for interconnection under the Commission's rule.
PacifiCorp recommends amending the Interconnection Request so that the Interconnection
Customer must certify that it does not intend to seek QF status. If it then seeks QF status,
PacifiCorp proposes to require a review of the interconnection to determine whether it
meets state interconnection standards for QFs. The Interconnection Customer would also
pay any costs incurred by the Transmission Provider that a QF would have paid, if such
costs would not be recovered by the Transmission Provider under the SGIP.
Commission Conclusion
516. The Commission has regulations that govern a QF's interconnection with most
electric utilities in the United States,168 including normally non-jurisdictional utilities.169
When an electric utility is required to interconnect under section 292.303 of the
Commission's regulations, that is, when it purchases the QF's total output, the state has
authority over the interconnection and the allocation of interconnection costs.170 But
when an electric utility interconnecting with a QF does not purchase all of the QF's output

168

18 CFR §§ 292.303, 292.306 (2004).

169

The absence of interstate commerce in Alaska, Hawaii, and portions of Texas
and Maine, and Puerto Rico is not germane to the Commission's jurisdiction over QF
matters under PURPA. See 16 U.S.C. § 2602 (2000).
170

See Western Massachusetts Electric Co., 61 FERC ¶ 61,182 at 61,661-62 (1992),
aff'd sub nom. Western Massachusetts Electric Co. v. FERC, 165 F.3d. 922, 926 (D.C.
Cir. 1999).

Docket No. RM02-12-000

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and instead transmits the QF's power in interstate commerce, the Commission exercises
jurisdiction over the rates, terms, and conditions affecting or related to such service, such
as interconnections.171
The Commission thus exercises jurisdiction over a QF's interconnection if the QF's
owner sells any of the QF's output to an entity other than the electric utility directly
interconnected with the QF. This Final Rule applies when the owner of the QF seeks
interconnection with a facility subject to the OATT to sell any of the output of the QF to a
third party. This applies to a new QF that plans to sell any of its output to a third party
and to an existing QF interconnected with an electric utility or on-site customer that
decides in the future to sell any of its output to a third party. States continue to exercise
authority over QF interconnections when the owner of the QF sells the output of the QF
only to the interconnected utility or to on-site customers.
517.

518. PacifiCorp's proposal that the Commission require the Interconnection Customer to
certify that it does not intend to seek QF status is unnecessary. This Final Rule only
applies when the interconnection is subject to the Commission's jurisdiction. Other rules
apply if the generator seeks to interconnect as a QF. PacifiCorp has provided no
convincing rationale why this proposed amendment is necessary for this rulemaking.
Taxes
519. The NOPR did not explicitly address the potential taxation of payments made by
the Interconnection Customer to the Transmission Provider for Interconnection Facilities
and Upgrades.
Comments
520. A few commenters urge the Commission to address taxes. They argue that the
Commission should adopt an approach similar to that taken in the LGIA so that any taxes
incurred by the Transmission Provider are not shifted to its customers.

171

Id. at 61,661-62. The Commission further clarified that "[t]he fact that the
facilities used to support the jurisdictional service might also be used to provide various
nonjurisdictional services, such as back-up and maintenance power for a QF, does not vest
state regulatory authorities with authority to regulate matters subject to the Commission's
exclusive jurisdiction." Id. at 61,662.

Docket No. RM02-12-000

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521. Because payments received for Upgrades by the Transmission Provider may be
taxed, EEI and Ameren ask the Commission to clarify how the Transmission Provider will
recover those tax payments. Further, EEI argues that additional financial security may be
required because such facilities could be jurisdictional to either the Commission or state
utility commissions. Additional financial security would ensure that the utility is not
forced to recover such costs from its entire customer base. EEI proposes that the
following sentence be added to Proposed SGIA article 5.2: "[The] Transmission Provider
may request additional financial security to cover tax liabilities that it may incur as a result
of a transaction being deemed by the Internal Revenue Service to have been a taxable
event, for example, when an Interconnection Customer terminates a signed
Interconnection Agreement."
522. Southern Company proposes a tax provision modeled after the ANOPR consensus
documents. Under Proposed SGIA article 5.1.2.1, the refunds paid to the Interconnection
Customer through transmission credits include "any tax gross-up or other tax-related
payments" in connection with Network Upgrades required for interconnection. It argues
that if the Interconnection Customer receives transmission credits for such payments, all
other transmission customers will have to bear the tax liability created by the
Interconnection Customer. Transmission credits should be provided to the
Interconnection Customer for the cost of installing facilities only if those costs may
facilitate transmission delivery service. Any tax gross-up paid by the Interconnection
Customer would not facilitate transmission delivery service, but instead would be a tax
liability created solely by the interconnection. Moreover, requiring the refund through
credits of taxes paid, plus interest, would force the Transmission Provider to pay the full
carrying cost of income taxes on the Interconnection Customer's assets with no means of
recouping the expenditure.
Commission Conclusion
523. The commenters are correct that payments received for Upgrades by the
Transmission Provider may be taxed under certain circumstances. If construction of
Upgrades is necessary, any associated taxes are to be handled consistent with Commission
precedent and applicable tax rules and regulations. In particular, the Parties should then
look to the LGIA's tax framework.172 We also reiterate that it is Commission policy that
each Party must cooperate with the other Party to maintain the Transmission Provider's tax
exempt status, where applicable.
172

See, e.g., LGIA articles 5.17 and 5.18 and Order No. 2003-A at P 324 et seq.

Docket No. RM02-12-000

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OATT Reciprocity Requirements
524. The Small Generator Interconnection NOPR did not propose any changes to the
existing reciprocity policy; accordingly, the Small Generator Interconnection NOPR did
not discuss it.
Comments
525. NRECA states that it "applauds the Commission's decision to apply the reciprocity
provision in the OATT and the reciprocity policy articulated in Order No. 888 [and]
appreciates the sensitivity the Commission has demonstrated to the needs of nonjurisdictional service providers."173 However, it remains concerned that non-public
utilities may be discouraged from interconnecting new generation out of fear that such an
interconnection will make them subject to the jurisdiction of the Commission. To avoid
this, NRECA advocates the creation of a safe harbor for non-jurisdictional entities that
want to interconnect new generation, yet maintain their non-jurisdictional status. NRECA
points to several Commission natural gas decisions that it asserts provide precedent for
creating a safe harbor of the type it proposes. NRECA also states that the Commission
could achieve the same result by ordering an interconnection under section 211 of the
FPA.
526. AMP-Ohio and LADWP ask the Commission to clarify that the reciprocity
condition applies only to the public utility over whose system the non-public utility takes
transmission service. They also ask the Commission to clarify that there is no reciprocity
obligation on the part of a non-public utility that owns only distribution facilities, not
transmission facilities. The effect of most small generators is felt at the distribution level,
LADWP argues, and these interconnections are more likely to affect retail customers.
SMUD makes a similar argument.
527. PacifiCorp requests that the Commission clarify that if a public utility is forced to
offer interconnection service on its distribution lines to a non-public utility under the
reciprocity condition, then the public utility must be offered similar rights to interconnect
with the non-public utility. PacifiCorp argues that

173

NRECA at 57.

Docket No. RM02-12-000

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[b]ecause many non-jurisdictional utilities own distribution systems
that they do not consider 'transmission,' even when the corresponding
system of a public utility is considered transmission by the
Commission, the potential for discriminatory impact is real. At a
minimum, the definition of a non-jurisdictional utility's 'transmission
facilities' should be modified to include any distribution facility that
would be considered 'transmission' if it were owned by a
jurisdictional utility.[174]
528. SMUD asks if reciprocity applies when the Interconnection Customer seeks to
connect at distribution voltage to the non-jurisdictional utility and proposes to engage in
sales for resale. It also asks if reciprocity applies differently for non-jurisdictional utilities
seeking bilateral agreements with public utilities than to non-jurisdictional utilities seeking
approval of safe harbor tariffs.
529. NRECA asks the Commission to clarify that a non-jurisdictional utility is not
required to offer interconnection service if doing so would jeopardize its tax-exempt
status.
530. Finally, Bureau of Reclamation, BPA, and others assert that as federal agencies,
they are not able to comply with all of the provisions of the Proposed SGIP and SGIA.
For instance, BPA says its contracts must accommodate the Freedom of Information Act
and that it could not comply with all aspects of the Commission's proposed confidentiality
provisions. BPA and Bureau of Reclamation request clarification that they are not
required to comply with these provisions.
Commission Conclusion
531. Most of the comments focus on whether interconnections with "distribution"
systems are subject to the reciprocity condition. The answer is, to satisfy the reciprocity
condition of Order No. 888, a non-public utility must offer to a public utility with an
OATT service comparable to that offered to its own or affiliated Interconnection
Customers.175

174

PacifiCorp at 2-3.

175

Order No. 2003-A at P 775.

Docket No. RM02-12-000

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532. PacifiCorp is correct that what the facility is termed by its owner does not affect its
jurisdictional status. The reciprocity condition would apply to any facility used to offer
services that would be Commission-jurisdictional if the non-public utility were a public
utility.
533. The reciprocity requirement in Order No. 888 permits a public utility to require, as
a condition of providing open access service to a non-public utility that owns, controls, or
operates transmission facilities, that the non-public utility provide reciprocal transmission
service. In Order No. 2003-A, the Commission explained that the reciprocity provision
applies to Interconnection Service in the same way.176
534. There are three ways a non-public utility may satisfy the reciprocity provision.177
First, it may provide service under a Commission-approved "safe harbor" tariff – a tariff
that the Commission has determined offers truly open access service. Second, it may
provide service to a public utility under a bilateral agreement that satisfies its reciprocity
obligation. Third, the non-public utility may ask the public utility to waive the reciprocity
condition.
535. A non-public utility that has a "safe harbor" tariff that is modeled on the OATT
must add to that tariff an interconnection procedures document and interconnection
agreement that either are modeled on the OATT interconnection procedures document and
agreement or are otherwise found to offer truly open access service if it wishes to continue
to qualify for "safe harbor" treatment.178 A non-public utility that owns, controls, or
operates transmission, has not filed with the Commission a "safe harbor" tariff, and seeks
transmission service from a public utility that invokes the reciprocity provision must either
satisfy its reciprocity obligation under a bilateral agreement or ask the public utility to
waive the OATT reciprocity condition.
536. This Final Rule does not modify the Commission's reciprocity policy as laid out in
Order Nos. 888 and 2003.

176

See Order No. 2003-A at P 760 et seq.

177

Id. at P 761.

178

Id.

Docket No. RM02-12-000

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537. LADWP also states that there are relatively few Commission-jurisdictional Small
Generating Facility interconnections and urges the Commission not to apply its reciprocity
policy in the small generator context. The fact that there may be relatively few
interconnections subject to this Final Rule does not justify abandoning long-standing
reciprocity policy.
538. As the Commission determined in Order Nos. 888179 and 2003-A,180 reciprocal
service is not required if providing such service would jeopardize the tax-exempt status or
bond status of the non-public utility.
539. As to BPA and Bureau of Reclamation's comments, we reiterate that reciprocity
does not require federal entities to provide services or sign contracts that they cannot
legally enter into. If such entities choose to amend their safe harbor tariffs on compliance,
they may propose modifications to the SGIP and SGIA that address their concerns.
540. Finally, we deny NRECA's proposed safe harbor provision. As it notes, section
211 of the FPA already allows a non-public utility to safeguard its non-jurisdictional
status. We see no need to fix a system that does not appear to be broken.
Coordination with Affected Systems
541. An Affected System is an electric system other than the Transmission Provider
that may be affected by the proposed interconnection. In the Small Generator
Interconnection NOPR, the Commission proposed to treat coordination between the
Transmission Provider, Interconnection Customer, and any Affected Systems the same
way as in the LGIA. Order Nos. 2003 and 2003-A required the Transmission Provider to
coordinate with an Affected System. The Commission requested comments on whether
there are any issues specific to Small Generating Facilities that necessitate a different
policy.

179

Order No. 888 at 31,762, n.499.

180

Order No. 2003-A at P 782.

Docket No. RM02-12-000

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Comments
542. While no commenters present any arguments on this issue specific to the small
generator context, some discuss the Affected System provision in terms of Distribution
Systems.
Commission Conclusion
543. We are adopting an Affected System provision comparable to the one in the LGIP
and LGIA. Regarding the comments addressing the Affected System provision in terms
of Distribution Systems subject to an OATT, we note that the definition of Affected
System includes not only transmission facilities. The definition is more inclusive; it is "an
electric system . . . that may be affected by the proposed interconnection." Thus, an
Affected System may be any type of electric system.181
I.

Compliance Issues
Amendments to the Transmission Provider's OATT

544. In this Final Rule, we are requiring all public utilities that own, control, or operate
interstate transmission facilities to adopt the SGIP and SGIA, but are using a process
different from the one used in Order No. 2003. On the effective date of Order No. 2003,
the OATT of each Transmission Provider was deemed to have included the LGIP and
LGIA.182 On the effective date of this Final Rule, as in Order No. 2003,183 the OATTs of
all non-independent Transmission Providers are deemed revised to include the Final Rule
SGIP and SGIA. But unlike the Order No. 2003 process, where the Commission directed
Transmission Providers to make ministerial filings to include the LGIP and LGIA in their
next filings with the Commission, here the Commission will require no formal amendment

181

We note that, similar to when the Affected System is a non-jurisdictional entity,
the Commission does not have to have jurisdiction over the Affected System in order for
the interconnection to proceed. See Order No. 2003-A at P 114-115.
182
183

Order No. 2003 at P 910.

See Standardization of Generator Interconnection Agreements and Procedures,
Notice Clarifying Compliance Procedures, 106 FERC ¶ 61,009 at P 2 (2004).

Docket No. RM02-12-000

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until compliance is due in the Commission's rulemaking on Electronic Tariff Filings.184
This means that a non-independent Transmission Provider that wishes to adopt the SGIP
and SGIA (without variations) into its OATT need not formally add the documents to its
OATT until it submits a compliance filing in response to the Commission's pending
Electronic Tariff Filings rulemaking. A non-independent Transmission Provider that
decides to take this option nevertheless must apply the SGIP and SGIA to any request for
small generator interconnection that it receives after the effective date of this Final Rule,
but before it complies with the rulemaking on Electronic Tariff Filings. The compliance
obligation is different for non-independent Transmission Providers that seek variations
from the Final Rule documents, as discussed further below.
545. If an RTO or ISO wishes to adopt the SGIP and SGIA into its OATT, it may also
await compliance with the Electronic Tariff Filings rulemaking before formally adding the
documents to its OATT. But the RTO or ISO should notify the Commission by the
effective date of this Final Rule that it will adopt the Final Rule documents and that
requests for interconnection of Small Generating Facilities will be subject to the SGIP and
SGIA in the interim period. An RTO or ISO that does not adopt the SGIP and SGIA will
have additional time to submit its compliance filings to allow for the stakeholder process
and other measures that must be taken before an RTO or ISO adopts tariff changes.
Therefore, an RTO or ISO that seeks variations will have an additional 90 days to submit
its compliance filing. As in the Order No. 2003 proceeding, until the Commission acts on
the compliance filing of an RTO or ISO that seeks variations, the RTO's or ISO's existing
Commission-approved interconnection procedures and agreement remain in effect.
Variations from the Final Rule
546. As in Order No. 2003, the Commission will consider two categories of variations
from the Final Rule submitted by a non-independent Transmission Provider.185 First, the
Commission will consider "regional reliability variations" that track established reliability
requirements (i.e., requirements approved by the applicable regional reliability council).
Any request for a "regional reliability variation" must be supported by references to

184

Electronic Tariff Filings, Notice of Proposed Rulemaking, 69 FR 43929
(July 23, 2004), FERC Stats. & Regs., Proposed Regulations, ¶ 32,575 (July 8, 2004)
185

Order No. 2003 at P 824-25.

Docket No. RM02-12-000

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established reliability requirements,186 and the text of the reliability requirements must be
provided in support of the variation. If the variation is for any other reason, the nonindependent Transmission Provider must demonstrate that the variation is "consistent with
or superior to" the Final Rule provision. Blanket statements that a variation meets the
standard or clarifies the Final Rule provision are not sufficient. Any request for
application of this standard will be considered under FPA section 205 and must be
supported by arguments explaining how each variation meets the standard.
547. Requests for regional reliability variations are due on the effective date of this Final
Rule. Requests for "consistent with or superior to" variations may be submitted on or
after the effective date of the Final Rule. We note that the "consistent with or superior to"
standard is difficult to meet because the burden of showing that a variation is "consistent
with or superior to" the relevant provision or provisions in the Final Rule document is
significant.
548. Any request for a variation should be accompanied by a request to include the
complete SGIP and SGIA into the Transmission Provider's OATT. The Commission will
consider incomplete any request for a variation that does not also propose to append to the
Transmission Provider's OATT the complete SGIP and SGIA. As explained above, an
RTO or ISO will have 90 additional days (for a total of 150 days) to submit a compliance
filing. That compliance filing must contain all proposed independent entity variations.
549. With respect to an RTO or ISO, at the time its compliance filing is made, as
explained in Order No. 2003, the Commission will allow it to seek "independent entity
variations" from the Final Rule pricing and non-pricing provisions.187 The RTO or ISO
should explain the basis for each variation.
550. Finally, for a non-independent Transmission Provider that belongs to an RTO or
ISO, the RTO's or ISO's Commission-approved standards and procedures are to govern
interconnection with its members' facilities that are under the operational control of the
RTO or ISO. An interconnection with a Commission jurisdictional facility that is owned
by a non-independent Transmission Provider but is not under the operational control of
the RTO or ISO is to be conducted according to the non-independent Transmission
186

See also New York Independent System Operator, Inc., 108 FERC ¶ 61,159 at
P 95 (2004), reh'g pending.
187

Order No. 2003 at P 827.

Docket No. RM02-12-000

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Provider's procedures and agreement. A non-independent Transmission Provider, even if
it belongs to an RTO or ISO, is not eligible for "independent entity variations" for
procedures and agreements applicable to interconnection with facilities that remain within
its operational control (and therefore, are subject to a tariff different from the RTO or
ISO's OATT). To clarify, if a non-independent Transmission Provider belongs to an RTO
or ISO, but keeps operational control of some jurisdictional facilities, and those facilities
are not subject to the interconnection procedures under the OATT of the RTO or ISO, then
the non-independent Transmission Provider must have a separate set of interconnection
procedures and agreement applicable to these facilities. To address the confusion that
may arise from having inconsistent interconnection procedures and agreements applicable
within an RTO or ISO region, we allow a non-independent Transmission Provider that
keeps control over some jurisdictional facilities to subject these facilities to an RTO- or
ISO-controlled interconnection process. In such instance, the non-independent
Transmission Provider must agree to transfer to the RTO or ISO control over the
significant aspects of the interconnection process, including the performance of all
interconnection studies and cost determinations applicable to Network Upgrades.188
Interconnection Requests Submitted Prior to the Effective Date of this
Final Rule and Grandfathering of Existing Interconnection Agreements
551. The grandfathering of existing agreements was not specifically addressed in the
Small Generator Interconnection NOPR; however, the Commission did request comments
on whether generic Commission policies applicable to Large Generating Facilities (such
as grandfathering) should be applied to Small Generating Facilities.
Comments
552. American Forest and National Grid seek clarification that small generators that are
already interconnected are not subject to this rulemaking. To avoid unintended barriers to
Small Generating Facilities, they urge the Commission to follow the Order No. 2003
approach for grandfathering. American Forest states that generators should not have to
undergo this new interconnection process, particularly where the generating facilities that
are already interconnected have not changed their physical operations.

188

See Order No. 2003-B at P 80.

Docket No. RM02-12-000

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553. California Wind Energy requests that, as in Order No. 2003, contract conversion of
pre-existing interconnection contracts with former QFs should not trigger an obligation
under this Final Rule to file an Interconnection Request because a change in contract
status alone does not affect a generator's demand on the electric system. It also seeks
clarification that, when the QF's interconnection agreement provides for greater capacity
than what is to be sold to the interconnecting utility under the PURPA power purchase
contract, upon contract conversion, the former QF should not have to submit an
Interconnection Request if the transmission requirements are consistent with those
provided for in the prior agreement.
554. Finally, if the Commission adopts the approach used in Order No. 2003, California
Wind Energy requests that the Commission clarify when a change in a QF's contract status
triggers an obligation to file a new Interconnection Request. It notes that Order No. 2003
states that the owner of a QF formerly interconnected with a Transmission System has no
obligation to file an Interconnection Request when its contract status changes if the output
of its generator "will be substantially the same as before."189 California Wind Energy
asserts that the term "output" leaves ambiguous the effect of the Commission's criteria on
projects that are to be repowered after contract conversion. It explains that when a QF
repowers, it increases energy production while maintaining its maximum megawatt
output. California Wind Energy seeks clarification that when a small generator increases
energy production as a result of a post-PURPA contract repower, and there is no
meaningful change in the generator's maximum output, there is no obligation to file a new
Interconnection Request.
Commission Conclusion
555. As in Order No. 2003, the Commission is not requiring changes to interconnection
agreements filed with the Commission before the effective date of this Final Rule.
Interconnection agreements submitted for approval by the Commission before the
effective date of this Final Rule are grandfathered and will not be rejected outright for
failing to conform to the SGIA. Small Generating Facilities already interconnected that
have not changed their physical operations in such a way as to require a new
Interconnection Request are not subject to this rulemaking.

189

Order No. 2003 at P 815.

Docket No. RM02-12-000

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556. We also note that the Small Generator NOPR did not address what happens to
Interconnection Customers whose Interconnection Requests are pending at the time this
Final Rule goes into effect. LGIP section 5 addresses how such interconnections are to be
processed, and we adopt a shortened version of that provision in the SGIP as well. The
new section 1.7 clarifies that nothing in this Final Rule is intended to affect an
Interconnection Customer's Queue Position assigned prior to the effective date of this rule.
It also states that the Parties shall continue to process any executed interconnection study
agreements (or study agreements that have been filed unexecuted with the Commission)
once this Final Rule becomes effective. However, we will require that any new
interconnection study agreement entered into after this Final Rule becomes effective
follow the pro forma study agreements contained in the SGIP. Any accommodation
needed to process such Interconnection Requests (i.e., should the pre- and post- Final Rule
study processes be significantly different) should be filed with the Commission and will
be evaluated on a case-by-case basis.
557. If an interconnection agreement has been executed prior to the effective date of this
Final Rule, then no additional steps need to be taken. We agree with the commenters that
an existing Interconnection Customer whose Small Generating Facility is already
interconnected should not have to undergo a new interconnection process.
558. We also reiterate that a change in an Interconnection Customer's contract status
does not, by itself, trigger an obligation to file an Interconnection Request. As the
Commission noted in Order Nos. 2003 and 2003-A, a former QF interconnected with a
Transmission System that sells electric energy at wholesale in interstate commerce need
not submit an Interconnection Request if it represents that the output of the generating
facility is substantially the same as before.190 Under the Commission's regulations,191 a
QF must provide electric energy to its interconnecting utility much like the
interconnecting utility's other network resources because the utility must purchase the
QF's power to displace its own generation. When the owner of a QF that was formerly
interconnected with a Transmission System seeks to sell energy at wholesale and
represents that the output of its generator will be substantially the same after conversion, it
would be unreasonable for a Transmission Provider to require the former QF to join the
interconnection queue.

190

Order No. 2003 at P 815.

191

18 CFR § 292.303 (2004).

Docket No. RM02-12-000

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559. California Wind Energy also asks the Commission to clarify that a plant
repowering at the time of contract conversion that does not increase plant capacity will not
trigger an obligation to file an Interconnection Request. We clarify that a contract
conversion that does not affect a generator's demands on the Transmission System does
not trigger an obligation to file. When a QF's existing interconnection agreement provides
for capacity greater than the capacity sold by the QF to the interconnecting utility under
the PURPA power purchase contract, the QF's contract conversion will not trigger an
obligation to file an Interconnection Request if its transmission requirements are
consistent with the capacity provided for in the existing interconnection agreement.
Order No. 2001 and the Filing of Interconnection Agreements
560. Order No. 2001192 revised how traditional public utilities and power marketers
must satisfy their obligation, under section 205 of the FPA and Part 35 of the
Commission's regulations, to file agreements with the Commission.193 Public utilities that
have standard forms of agreement in their OATTs, cost-based power sales tariffs, or tariffs
for other generally applicable services no longer need to file conforming service
agreements with the Commission. The filing requirement for conforming agreements
(those that follow the standard form) is now satisfied by filing the standard form of
192

Revised Public Utility Filing Requirements, Order No. 2001, 67 FR 31043
(May 8, 2002), FERC Stats. & Regs. & 31,127 (2002); reh'g denied, Order 2001-A,
100 FERC & 61,074 (2002); reconsideration and clarification denied, Order No. 2001-B,
100 FERC & 61,342 (2002); further order, Order No. 2001-C, 101 FERC & 61,314 (2002).
193

Order No. 2001 pointed out that Part 35 of the Commission's regulations does
not make a distinction between an interconnection agreement and other agreements for
service that must be filed under the Commission's regulations. Order No. 2001, therefore,
said that if an interconnection agreement conforms to a Commission-approved standard
form of interconnection agreement, the utility does not have to file it, but must report it in
the Electric Quarterly Reports. It also stated that the requirement to file contract data and
transaction data begins with the first Electric Quarterly Report filed after service begins
under an agreement, and continues until the Electric Quarterly Report filed after it expires
or by order of the Commission. However, an interconnection agreement that does not
precisely match the Transmission Provider's approved interconnection agreement or that is
unexecuted must be filed with the Commission. The Transmission Provider must clearly
show where the agreement does not conform to its standard interconnection agreement,
preferably through red-lining and strike-out.

Docket No. RM02-12-000

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agreement and an Electronic Quarterly Report. Order No. 2001 also lifted the requirement
that Parties to an expiring conforming agreement file a notice of cancellation or a
cancellation tariff sheet with the Commission. The public utility may simply remove the
agreement from its Electric Quarterly Report in the quarter after it terminates.
561. Non-conforming agreements, which are agreements for transmission, cost-based
power sales or other generally applicable services that do not conform to a standard form
of agreement in a public utility's tariff, must continue to be filed with the Commission for
approval before going into effect. This category includes unexecuted agreements and
agreements that do not precisely match the standard form of agreement.
562. Order No. 2003 explained that, under Order No. 2001, if an interconnection
agreement conforms to a Commission-approved standard form of interconnection
agreement, the Transmission Provider does not have to file it with the Commission, but
must report it in its Electric Quarterly Reports. The same filing rules will apply to nonconforming SGIAs as for non-conforming LGIAs. However, an interconnection
agreement that does not precisely match the Transmission Provider's Commissionapproved standard interconnection agreements or that is unexecuted must be filed in its
entirety. The Transmission Provider shall clearly show where the filed agreement does
not conform to its standard interconnection agreement through red-lining and strike-out
and justify the basis for the nonconformance.
III.

Information Collection Statement

563. The Office of Management and Budget (OMB) regulations require that OMB
approve certain reporting and record keeping (collections of information) imposed by an
agency.194 The information collection requirements in this Final Rule are identified under
the Commission data collection, FERC-516A "Standardization of Small Generator
Interconnection Agreements and Procedures." Under section 3507(d) of the Paperwork
Reduction Act of 1995,195 the proposed reporting requirements in the subject rulemaking
will be submitted to OMB for review. Interested persons may obtain information on the
reporting requirements by contacting the Federal Energy Regulatory Commission,
888 First Street, NE, Washington, D.C. 20426 (Attention: Michael Miller, Office of the
Executive Director, 202-502-8415) or from the Office of Management and Budget
(Attention: Desk Officer for the Federal Energy Regulatory Commission, fax: 202-3957285, e-mail:mailto: oira_submission@omb.eop.gov).
194

5 CFR § 1320.11 (2004).

195

44 U.S.C. § 3507(d) (2000).

Docket No. RM02-12-000

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564. The "public protection" provision of the Paperwork Reduction Act196 requires each
agency to display a currently valid OMB control number and inform respondents that a
response is not required unless the information collection displays a valid OMB control
number on each information collection. This provision has two legal effects: (1) it creates
a legal responsibility for the agency; and (2) it provides an affirmative legal defense for
respondents if the information collection is imposed on respondents by the Commission
through regulation or administrative means in order to satisfy a legal authority or
responsibility of the Commission. If the Commission should fail to display an OMB
control number, then it is the Commission not the respondent who is in violation of the
law. “Display” is defined as publishing the OMB control number in regulations,
guidelines or other issuances in the Federal Register (for example, in the preamble or
regulatory text for the final rule containing the information collection).197 Therefore, the
Commission may not conduct or sponsor, and a person is not required to respond to a
collection of information unless the information collection displays a valid OMB control
number.
565. Public Reporting Burden: The Commission did not receive specific comments
concerning its burden estimates and uses the same estimates here in the Final Rule.
Comments on the substantive issues raised in the NOPR are addressed elsewhere in the
Final Rule.

196

44 U.S.C. § 3512; 5 CFR § 1320.5(b); 5 CFR § 1320.6(a).

197

See 1 CFR § 21.35 and 5 CFR § 1320.3(f)(3).

Docket No. RM02-12-000

Data Collection

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No. of
Respondents

No. of
Responses

Hours Per
Response

Total Annual
Hours

SGIPs &
SGIAs

238

1

25

5,950

Recordkeeping

238

1

2

476

FERC-516A

Totals

6,426

Total Annual Hours for Collection: 5,950 (reporting) [238 respondents x 1 x 25 hours] +
476 hours (recordkeeping ) [238 hours x 1 filing x 2 hours to retain interconnection
documents] = 6,426.198
566. Information Collection Costs: The Commission sought comments about the time
needed to comply with these requirements. No comments were received. Staffing
requirements to review and modify existing SGIPs and SGIAs = $309,400 [238
respondents x $1,300 (25 hours @ $52 hourly rate)]. To be added to this cost are the
annualized costs for operations and management (238 respondents x $34 [2 hours @
$17 hourly rate for recordkeeping] or $8,092)). Total costs of $317,492 for preparing
filings for modification of the OATT and for recordkeeping of interconnection documents.
There will be a one-time start up cost to comply with these requirements for the
procedures and agreements and then an additional cost to maintain them.199
Titles: FERC-516A "Standardization of Small Generator Interconnection Agreements
and Procedures

198

Adjustments made to reflect an increase in the number of respondents from the
estimates in the Small Generator Interconnection NOPR.
199

Adjusted figures to reflect an increase in the number of respondents.

Docket No. RM02-12-000

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Action: Revision of Currently Approved Collection of Information
OMB Control Nos: 1902-0203.
Respondents: Business or other for profit.
Frequency of Responses: One occasion.
Necessity of Information: The Final Rule revises the reporting requirements contained in
18 CFR Part 35. The Commission promulgates a standardized SGIP and SGIA that public
utilities must adopt. As noted in the Final Rule, adopting these procedures and agreement
will (1) reduce interconnection costs and time for the owners of Small Generating
Facilities and Transmission Providers alike; (2) limit opportunities for Transmission
Providers to favor their own generation; (3) facilitate market entry for generation
competitors; and (4) encourage needed investment in generator and transmission
infrastructure.
567. Interconnection plays a growing, crucial role in bringing generation into the market
to meet the needs of electricity customers. However, requests for interconnection
frequently result in complex technical disputes about interconnection feasibility, cost and
cost responsibility. The Commission expects that a standardized SGIP and SGIA will
reduce interconnection costs and time for Interconnection Customers and Transmission
Providers, resolve most interconnection disputes, minimize opportunities for undue
discrimination, foster increased development of economic generation, and improve system
reliability.
568. For information on the requirements, submitting comments on the collection of
information and the associated burden estimates including suggestions for reducing this
burden, please send your comments to the Federal Energy Regulatory Commission,
888 First Street, NE, Washington, D.C. 20426 (Attention: Michael Miller, Office of the
Executive Director, 202-502-8415) or send comments to the Office of Management and
Budget (Attention: Desk Officer for the Federal Energy Regulatory Commission, fax:
202-395-7285, e-mail oira_submission@omb.eop.gov).

Docket No. RM02-12-000
IV.

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Environmental Impact Statement

569. Commission regulations require that an environmental assessment or an
environmental impact statement be prepared for any Commission action that may have a
significant adverse effect on the human environment.200 No environmental consideration
is necessary for the promulgation of a rule that is clarifying, corrective, or procedural or
does not substantially change the effect of legislation or regulations being amended,201 and
also for information gathering, analysis, and dissemination.202 The Final Rule updates
Part 35 of the Commission's regulations and does not substantially change the effect of the
underlying legislation or the regulations being revised or eliminated. In addition, the Final
Rule involves information gathering, analysis, and dissemination. Therefore, this Final
Rule falls within categorical exemptions provided in the Commission's regulations.
Consequently, neither an environmental impact statement nor an environmental
assessment is required.
570. While some Small Generating Facilities, such as reciprocating engines, may
produce more pollution, others, such as photovoltaics and fuel cells, produce significantly
less air, water and noise pollution than do new central station technologies. Others, such
as micro-turbines, provide opportunities to reduce emissions by improving the efficiency
with which energy is consumed, through improved heat rates and combined heat and
power applications. Small Generating Facilities may eliminate the need to run older, more
polluting generating units and reduce power line losses. As one of the goals of this rule is
to allow interconnection of Small Generating Facilities that can provide environmental
and economic benefits, this rule will benefit customers by providing alternative generation
sources.

200

Regulations Implementing National Environmental Policy Act, Order No. 486,
52 FR 47897 (Dec. 17, 1987), FERC Stats. & Regs. & 30,783 (1987).
201

18 CFR § 380.4(a)(2)(ii) (2004).

202

18 CFR § 380.4(a)(5) (2004).

Docket No. RM02-12-000
V.

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Regulatory Flexibility Act

571. The Regulatory Flexibility Act (RFA)203 requires that a rulemaking contain either
a description and analysis of the effect that the proposed rule will have on small entities or
a certification that the rule will not have a significant economic impact on a substantial
number of small entities. However, the RFA does not define “significant” or “substantial”
instead leaving it up to any agency to determine the impacts of its regulations on small
entities. In the NOPR, the Commission stated that the proposed regulations would impose
requirements only on interstate Transmission Providers, which are not small businesses.
The Commission certified that the proposed regulations would not have a significant
adverse impact on a substantial number of small entities. In making its certification, the
Commission determined that the rule applies only to public utilities that own, control, or
operate facilities for transmitting electric energy in interstate commerce and not to electric
utilities per se. Small entities that believe this rule will have a significant impact on them
may apply to the Commission for waivers.
Comments
572. NRECA questions this certification. NRECA argues that to lessen the impact of
this rule on small entities, the Commission should: "(1) Provide a durable blanket waiver
of the NOPR requirements to all currently FPA-jurisdictional utilities, that qualify as
'small' public utilities under the Small Business Administration (SBA) utility size
standards, and (2) provide a safe harbor for all 'small' non-jurisdictional providers that
want to work with consumers to interconnect generation, but want to maintain their nonjurisdictional status."
Commission Conclusion
573. We are applying the same standards to any entity seeking a waiver of the
requirements of this Final Rule. Because the possible scenarios under which small entities
may seek waivers are diverse, they are not susceptible to resolution on a generic basis, and
we are requiring applications and fact-specific determinations in each instance. The
Commission does not have jurisdiction over non-public utilities' rate, terms and conditions
of transmission service under sections 205 and 206 of the FPA, and Order No. 888 does
not require that non-public utilities file open access transmission tariffs. In addition,
under the waiver provisions of Order No. 888, small non-public utilities may seek waiver
203

5 U.S.C. § 601-612 (2000).

Docket No. RM02-12-000

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from the reciprocity provision. This waiver policy follows the SBA definition of a small
utility.204 The SBA defines a small electric utility as one that disposes of 4 MWh or less
of electric energy in a given year.205
574. We disagree with NRECA that this Final Rule will have a significant economic
effect on a substantial number of small entities. Of the 931 electric cooperatives in the
47 states across the country, 686 receive financial assistance from the U.S. Department of
Agriculture and therefore are not subject to the Commission’s jurisdiction.206 Of the
67 members of NRECA who have generation and transmission facilities, only 34 electric
cooperatives are subject to the Commission’s jurisdiction. They are only a small subset of
the entities considered when determining a significant impact on a substantial number of
small entities. Within the subset of 34 entities, only a few own, control, or operate
interstate transmission facilities.
575. As NRECA noted in its comments, the Commission has an important role in
determining whether facilities are distribution or transmission, and as the Commission
noted elsewhere in this Final Rule, the only facilities that are already subject to a
Transmission’s Provider’s OATT are covered by this rule and apply only to a small
percentage of small generator interconnections. The Commission recognizes that most
small generators will interconnect with facilities that are not subject to the OATT.
576.
However, in drafting this rule the Commission has followed the provisions of
both the RFA and the Paperwork Reduction Act to consider the potential impact of
regulations on small business and other small entities. Specifically, the RFA directs
agencies to consider four regulatory alternatives to be considered in a rulemaking to lessen
the impact on small entities: tiering or establishment of different compliance or reporting
requirements for small entities, classification, consolidation, clarification or simplification
of compliance and reporting requirements, performance rather than design standards, and
exemptions. The Commission has adopted both tiering, and classification and
simplification when developing technical accelerated procedures to apply to
interconnections that will have no adverse effect on the Transmission Provider’s electric
204

See 5 U.S.C. § 601(3) and § 601(6) and 15 U.S.C. § 632(a).

205

See 13 CFR § 121.601.

206

Source: Rural Utilities Service, U.S. Department of Agriculture,
http://www.usdagov.rus/electric/borrowers/index.htm. April, 2005.

Docket No. RM02-12-000

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system. By the use of tiering, the Commission is creating three ways to evaluate
Interconnection Requests that can be applied to size and operating conditions of a small
generating facility. As noted earlier, all Small Generating Facilities are subject to the
Study Process, but in order to expedite the process and reduce the requirements on
facilities smaller than 2 MW, technical screens were developed for certified Small
Generating Facilities no larger than 2 MW (Fast Track) and certified inverter-based Small
Generating Facilities no larger than 10 kW (10 kW Inverter Process). The latter process
was further simplified as it does not use an SGIA, instead using an all-in-one document
that includes the application form, interconnection procedures, and terms and conditions.
In addition, many provisions of the SGIA are based on the NARUC Model which in turn
is based on the experience of several states for implementing interconnections.
577. A core issue has been whether standards could be developed that will allow for a
cost effective interconnection solution without jeopardizing the safety and reliability of
the Transmission System. One study showed that the typical cost of interconnection
ranges from $50/kW – $200/kW depending on the size of the generating facility,
application and utility requirements.207 By simplifying both the interconnection
procedures document and interconnection agreement, the costs of small generating
facilities should be reduced, equipment manufacturers will be able to operate from a single
set of technical specifications, and seamless procedures will be in place that do not
jeopardize the safety and reliability of the Transmission System.
VI.

Document Availability

578. In addition to publishing the full text of this document in the Federal Register, the
Commission provides all interested persons an opportunity to obtain this document from
the Public Reference Room during normal business hours (8:30 a.m. to 5:00 p.m. Eastern
Time) at 888 First Street, N.E., Room 2A, Washington, D.C. The full text of this
document is also available electronically from the Commission's eLibrary system
(formerly called FERRIS) in PDF and Microsoft Word format for viewing, printing, and
downloading. eLibrary may be accessed through the Commission's Home Page
(http://www.ferc.gov). To access this document in eLibrary, type "RM02-1-" in the
docket number field and specify a date range that includes this document's issuance date.

207

Source: Arthur D. Little, Distribution Generation: System Interfaces, Arthur D.
Little, Inc., Cambridge, Massachusetts, 1999.

Docket No. RM02-12-000

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579. User assistance is available for eLibrary and the Commission's website during
normal business hours from our Help Line at 202-502-8222 or the Public Reference Room
at 202-502-8371 Press 0, TTY 202-502-8659. E-Mail the Public Reference Room at
public.referenceroom@ferc.gov.
VII.

Effective Date And Congressional Notification

580. This Final Rule will take effect on [insert date that is 60 days after date of
publication in the FEDERAL REGISTER]. The Commission has determined, with the
concurrence of the Administrator of the Office of Information and Regulatory Affairs of
the Office of Management and Budget, that this rule is not a "major rule" within the
meaning of section 251 of the Small Business Regulatory Enforcement Fairness Act of
1996.208 The Commission will submit the Final Rule to both houses of Congress and the
General Accounting Office.209
List of Subjects in 18 CFR Part 35
581.

Electric power rates, Electric utilities, Reporting and recordkeeping requirements.

By the Commission.
(SEAL)

Magalie R. Salas,
Secretary.

In consideration of the foregoing, the Commission revises part 35, Chapter I,
Title 18 of the Code of Federal Regulations, as follows.
PART 35 B FILING OF RATE SCHEDULES
1. The authority citation for part 35 continues to read as follows:
208

5 U.S.C. § 804(2) (2000).

209

5 U.S.C. § 801(a)(1)(A) (2000).

Docket No. RM02-12-000

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Authority: 16 U.S.C. § 791a-825r, §§ 2601-2645; 31 U.S.C. § 9701; 42 U.S.C.
§§ 7101-7352.
2. In § 35.28, the heading of paragraph (f) is revised, the first sentences of
currently existing paragraphs (f)(1), (f)(1)(i), (f)(1)(ii), (f)(2), (f)(3) and (f)(3)(i) are
revised, a new paragraph (f)(1)(ii) is added, currently existing paragraph (f)(1)(ii) is
renumbered to account for new paragraph (f)(1)(ii), and paragraphs (f)(4), (f)(4)(i), and
(f)(4)(ii) are added, all to read as follows:
§ 35.28 Non-discriminatory open access transmission tariff.
*

*

*

*

*

(f) Standard generator interconnection procedures and agreements.
(1) Every public utility that is required to have on file a non-discriminatory open
access transmission tariff under this section must amend such tariff by adding the standard
interconnection procedures and agreement contained in Order No. 2003, FERC Stats. &
Regs. & 31,146 (Final Rule on Generator Interconnection) and the standard small
generator interconnection procedures and agreement contained in Order No. 2006, FERC
Stats. & Regs. ¶ _____ (Final Rule on Small Generator Interconnection), or such other
interconnection procedures and agreements as may be approved by the Commission
consistent with Order No. 2003, FERC Stats. & Regs. & 31,146 (Final Rule on Generator
Interconnection) and Order No. 2006, FERC Stats. & Regs. ¶ _____ (Final Rule on Small
Generator Interconnection).
(i) The amendment to implement the Final Rule on Generator Interconnection
required by the preceding subsection must be filed no later than January 20, 2004.
(ii) The amendment to implement the Final Rule on Small Generator
Interconnection required by the preceding subsection must be filed no later than [insert
date 60 days after publication in the FEDERAL REGISTER].
(iii) Any public utility that seeks a deviation from the standard interconnection
procedures and agreement contained in Order No. 2003, FERC Stats. & Regs. & 31,146
(Final Rule on Generator Interconnection) or the standard small generator interconnection
procedures and agreement contained in Order No. 2006, FERC Stats. & Regs. ¶ _____
(Final Rule on Small Generator Interconnection), must demonstrate that the deviation is
consistent with the principles of either Order No. 2003, FERC Stats. & Regs. & 31,146
(Final Rule on Generator Interconnection) or Order No. 2006, FERC Stats. & Regs.
¶ _____ (Final Rule on Small Generator Interconnection).

Docket No. RM02-12-000

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(2) The non-public utility procedures for tariff reciprocity compliance described in
paragraph (e) of this section are applicable to the standard interconnection procedures and
agreements.
(3) A public utility subject to the requirements of this paragraph pertaining to the
Final Rule on Generator Interconnection may file a request for waiver of all or part of the
requirements of this paragraph, for good cause shown. An application for waiver must be
filed either:
(i) No later than January 20, 2004, or
(ii) No later than 60 days prior to the time the public utility would otherwise have
to comply with the requirements of this paragraph.
(4) A public utility subject to the requirements of this paragraph pertaining to the
Final Rule on Small Generator Interconnection may file a request for waiver of all or part
of the requirements of this paragraph, for good cause shown. An application for waiver
must be filed either:
(i) No later than [insert date 60 days after publication in the FEDERAL
REGISTER], or
(ii) No later than 60 days prior to the time the public utility would otherwise have
to comply with the requirements of this paragraph.

Docket No. RM02-12-000

- 160 -

The following Appendices will not be published in the Code of Federal Regulations.

Appendix A

Commenter Acronyms

1

AEP – American Electric Power System
Alabama PSC – Alabama Public Service Commission
Allegheny Energy – Allegheny Energy Supply Company, LLC and Allegheny Power
Ameren – Ameren Services Company
American Forest – American Forest & Paper Association and the Process Gas
Consumers Group
AMP-Ohio – American Municipal Power – Ohio, Inc.
Avista – Avista Corp. and Puget Sound Energy, Inc.
Baltimore G&E – Baltimore Gas and Electric Company
BPA – Bonneville Power Administration, U.S. Department of Energy
Bureau of Reclamation – Bureau of Reclamation, U.S. Department of Interior
CA ISO – California ISO
California Wind Energy – California Wind Energy Association
Capstone – Capstone Turbine Corp.
Central Iowa Coop – Central Iowa Power Cooperative and Corn Belt Power
Cooperative
Central Maine – Central Maine Power Company, New York State Electric & Gas
Corporation, and Rochester Gas & Electric Corporation
Cinergy – Cinergy Services, Inc.
Consumers – Consumers Energy Company
CPUC – California Public Utilities Commission
CT DPUC – Connecticut Department of Public Utility Control
Cummins – Cummins, Inc.
EEI – Edison Electric Institute
Empire District – Empire District Electric Co.
Encorp – Encorp, Inc.
Exelon – Exelon Generation Company, LLC, Commonwealth Edison Company, PECO
Energy Company, and Sithe Energies, Inc.
FERC DRS – Dispute Resolution Service, Federal Energy Regulatory Commission
Florida PSC – Florida Public Service Commission
Garwin McNeilus – Mr. Garwin McNeilus
1

This list includes commenters who filed in response to the request for comments
in the Notice of Proposed Rulemaking, the August 12, 2004 Request for Supplemental
Comments, or both. Commenters who responded to the Request for Supplemental
Comments are also listed separately at the end of this appendix.
-1-

Georgia PSC – Georgia Public Service Commission
Georgia Transmission – Georgia Transmission Corporation
Idaho Power – Idaho Power Company
Iowa Utilities Board – Iowa Utilities Board
ISO New England – ISO New England
Joint Commenters – National Association of Regulatory Utility Commissioners, Small
Generator Coalition (members listed below), American Public Power Association
(who did not participate in the filing of supplemental comments), National Rural
Electric Cooperative Association, and Edison Electric Institute
LADWP – Los Angeles Department of Water and Power
Massachusetts DTE – Massachusetts Department of Telecommunications and Energy
MidAmerican – MidAmerican Energy Company
Midwest ISO – Midwest Independent Transmission System Operator, Inc.
Minnesota PUC – Minnesota Public Utilities Commission and the Minnesota
Department of Commerce
Mississippi PSC – Mississippi Public Service Commission
NARUC – National Association of Regulatory Utility Commissioners
National Grid – National Grid USA
NEMA – National Electrical Manufacturers Association
NEPOOL Participants – New England Power Pool Participants Committee
Nevada Power – Nevada Power Company and Sierra Pacific Power Company
NJ BPU – New Jersey Board of Public Utilities
North Carolina Commission – North Carolina Utilities Commission and the Public
Staff of the North Carolina Utilities Commission
NorthWestern Energy – NorthWestern Energy
NRECA – National Rural Electric Cooperative Association
NYISO – New York Independent System Operator, Inc.
NYPSC – New York State Public Service Commission
NYTO – Central Hudson Gas and Electric Corp., Consolidated Edison Company of New
York, Inc., Long Island Power Authority, New York Power Authority, New York
State Electric and Gas Corp., Orange and Rockland Utilities, Inc., and Rochester
Gas and Electric Corp.
Ohio PUC – Public Utilities Commission of Ohio
PacifiCorp – PacifiCorp
PG&E – Pacific Gas and Electric Company
PJM – PJM Interconnection, L.L.C.
Plug Power – Plug Power, Inc.
Progress Energy – Progress Energy, Inc., Carolina Power and Light Co., and Florida
Power Corp.
PSE&G – Public Service Electric and Gas Company
Robert L. Carey – Mr. Robert L. Carey
-2-

RW Beck – R.W. Beck, Inc.
Small Generator Coalition – American Council for an Energy Efficient Economy;
American Solar Energy Society; American Wind Energy Association; BP Solar;
Citizens Action Coalition of Indiana; Coffman Electrical Equipment; Cummins
Power Generation; Elliott Energy Systems; Encorp; Environmental Law & Policy
Center; Kyocera Solar, Inc.; MAN Turbomachinery, Inc.; Natural Resources
Defense Council; Northeast-Midwest Institute; Northwest Energy Coalition; Pace
Energy Program; Pennsylvania Energy Project; Plug Power, Inc.; Power
Equipment Associates; PowerLight Corporation; RWE SCHOTT Solar, Inc.;
Shepherd Advisors; Solar Energy Industries Association; Spire Solar, Inc.; U.S.
Combined Heat and Power Association; and University of Oregon Solar Radiation
Monitoring Laboratory.
SMUD – Sacramento Municipal Utility District
SoCal Edison – Southern California Edison Company
Solar Turbines – Solar Turbines, Inc.
Southern Company – Southern Company Services, Inc.
SW TDU Group – Southwest Transmission Dependent Utility Group (Aguila Irrigation
District, Ak-Chin Electric Utility Authority, Buckeye Water Conservation and
Drainage District, Central Arizona Water Conservation District, Electrical District
No. 3, Electrical District No. 4, Electrical District No. 5, Electrical District No. 6,
Electrical District No. 7, Electrical District No. 8, Harquahala Valley Power
District, Maricopa County Municipal Water District No. 1, McMullen Valley
Water Conservation and Drainage District, City of Needles, Roosevelt Irrigation
District, City of Safford, Tonopah Irrigation District, Wellton-Mohawk Irrigation
and Drainage District)
Tangibl – Tangibl, LLC
TAPS – Transmission Access Policy Study Group
TDU Systems – Transmission Dependent Utility Systems (Alabama Electric
Cooperative, Inc.; Arkansas Electric Cooperative Corporation; Golden Spread
Electric Cooperative; Kansas Electric Power Cooperative, Inc.; Old Dominion
Electric Cooperative; and Seminole Electric Cooperative, Inc.)
USCHPA – U.S. Combined Heat and Power Association
Western – Western Area Power Administration

Commenters Who Filed in Response to the Commission's
Request for Supplemental Comments
CT DPUC – Connecticut Department of Public Utility Control
FERC DRS – Dispute Resolution Service, Federal Energy Regulatory Commission
Joint Commenters – National Association of Regulatory Utility Commissioners, Small
-3-

Generator Coalition (members listed above), National Rural Electric Cooperative
Association, and Edison Electric Institute (American Public Power Association did
not participate in the filing of supplemental comments)
Massachusetts DTE – Massachusetts Department of Telecommunications and Energy
Minnesota PUC – Minnesota Public Utilities Commission and the Minnesota
Department of Commerce
National Grid – National Grid USA
NJ BPU – New Jersey Board of Public Utilities
North Carolina Commission – North Carolina Utilities Commission and the Public
Staff of the North Carolina Utilities Commission
NRECA – National Rural Electric Cooperative Association
Ohio PUC – Public Utilities Commission of Ohio
PJM – PJM Interconnection, L.L.C.
Small Generator Coalition (members listed above)
USCHPA – U.S. Combined Heat and Power Association

-4-

Appendix B

Flow Chart for Interconnecting a Small Generating
Facility Using the "Study Process"
Pre-Application Discussions
Interconnection Customer submits
Interconnection Request and feasibility study
deposit
Yes
Is the Interconnection Request
complete?

Interconnection
Customer provides more
information?

No

No

Yes
Scoping meeting

Is a feasibility study needed?

No

Yes
No

Does the feasibility study show the
interconnection affects safety and
reliability?
Yes
Perform system impact study

Perform facilities study
Does the Interconnection Customer agree to pay for any
necessary Interconnection Facilities and Upgrades to the
Transmission Provider's Transmission electric system?
Yes

Sign an Interconnection
Agreement

No

Withdraw
Interconnection
Request

Appendix C

Flow Chart for Interconnecting a Certified Small Generating
Facility No Larger than 2 MW Using the "Fast Track Process"
Pre-Application Discussions

Interconnection Customer
submits Interconnection
Request and processing fee
Yes
Is the Interconnection Request
complete?

Interconnection Customer
provides more information?

No

No
Yes
Is the Small Generating
Facility certified and ≤ 2
MW?

Evaluate the Interconnection
Request under the Study
Process (Appendix B)

No

Yes

Does the proposed
interconnection pass the
screens?
Yes

No

Does the Transmission
Provider believe it can
safely interconnect the
Small Generating Facility?

No

Customer options
meeting and
supplemental review

Yes

Does the Interconnection Customer
agree to pay for any necessary
Interconnection Facilities and Upgrades
to the Transmission Provider's
Transmission electric system?

Sign an
Interconnection
Agreement

Yes

No

Withdraw
Interconnection Request

Appendix D

Flow Chart for Interconnecting a Certified Inverter-Based
Small Generating Facility No Larger than 10 kW
Using the "10 kW Inverter Process"

Pre-Application Discussions

Interconnection Customer
submits Interconnection
Request/procedures/terms and
conditions document and
submits processing fee
Yes
Is the Interconnection Request
complete?

Interconnection Customer
provides more information?

No

No

Yes
Is the Small Generating Facility
certified, inverter-based, and ≤
10 kW?

No

Evaluate the Interconnection
Request under the Study Process
(Appendix B) or Fast Track
Process (Appendix C)

Yes

Does the proposed
interconnection pass
the screens?

No

Yes
The Interconnection Customer
installs equipment and returns
certificate of completion to the
Transmission Provider

The Transmission Provider
notifies the Interconnection
Customer that the
interconnection is authorized

Withdraw
Interconnection Request

Appendix E to the Small
Generator Interconnection Final Rule

SMALL GENERATOR
INTERCONNECTION PROCEDURES (SGIP)

(For Generating Facilities No Larger Than 20 MW)

TABLE OF CONTENTS
Page No.
Section 1. Application ..............................................................................................................- 1 1.1
1.2
1.3
1.4
1.5
1.6
1.7

Applicability .......................................................................................................- 1 Pre-Application ...................................................................................................- 1 Interconnection Request......................................................................................- 2 Modification of the Interconnection Request .....................................................- 2 Site Control .........................................................................................................- 2 Queue Position ....................................................................................................- 3 Interconnection Requests Submitted Prior to the Effective Date of the SGIP ...- 3 -

Section 2. Fast Track Process ................................................................................................- 3 2.1
2.2
2.3
2.4

Applicability .......................................................................................................- 3 Initial Review......................................................................................................- 3 2.2.1 Screens ....................................................................................................- 3 Customer Options Meeting .................................................................................- 6 Supplemental Review .........................................................................................- 6 -

Section 3. Study Process ..........................................................................................................- 7 3.1
3.2
3.3
3.4
3.5

Applicability .......................................................................................................- 7 Scoping Meeting .................................................................................................- 7 Feasibility Study .................................................................................................- 8 System Impact Study ..........................................................................................- 9 Facilities Study..................................................................................................- 10 -

Section 4. Provisions that Apply to All Interconnection Requests ....................................- 11 4.1
4.2
4.3
4.4
4.5
4.6
4.7
4.8
4.9
4.10

Reasonable Efforts ............................................................................................- 11 Disputes.............................................................................................................- 11 Interconnection Metering..................................................................................- 12 Commissioning .................................................................................................- 12 Confidentiality ..................................................................................................- 12 Comparability ...................................................................................................- 13 Record Retention ..............................................................................................- 13 Interconnection Agreement...............................................................................- 13 Coordination with Affected Systems ................................................................- 14 Capacity of the Small Generating Facility........................................................- 14 -

Attachment 1 – Glossary of Terms
Attachment 2 – Small Generator Interconnection Request
Attachment 3 – Certification Codes and Standards
Attachment 4 – Certification of Small Generator Equipment Packages
Attachment 5 – Application, Procedures, and Terms and Conditions for Interconnecting a
Certified Inverter-Based Small Generating Facility No Larger than 10 kW ("10 kW Inverter
Process")
Attachment 6 – Feasibility Study Agreement
-i-

Attachment 7 – System Impact Study Agreement
Attachment 8 – Facilities Study Agreement

- ii -

Section 1. Application
1.1

1.2

Applicability
1.1.1

A request to interconnect a certified Small Generating Facility (See Attachments
3 and 4 for description of certification criteria) no larger than 2 MW shall be
evaluated under the section 2 Fast Track Process. A request to interconnect a
certified inverter-based Small Generating Facility no larger than 10 kW shall be
evaluated under the Attachment 5 10 kW Inverter Process. A request to
interconnect a Small Generating Facility larger than 2 MW but no larger than 20
MW or a Small Generating Facility that does not pass the Fast Track Process or
the 10 kW Inverter Process, shall be evaluated under the section 3 Study Process.

1.1.2

Capitalized terms used herein shall have the meanings specified in the Glossary of
Terms in Attachment 1 or the body of these procedures.

1.1.3

Neither these procedures nor the requirements included hereunder apply to Small
Generating Facilities interconnected or approved for interconnection prior to 60
Business Days after the effective date of these procedures.

1.1.4

Prior to submitting its Interconnection Request (Attachment 2), the
Interconnection Customer may ask the Transmission Provider's interconnection
contact employee or office whether the proposed interconnection is subject to
these procedures. The Transmission Provider shall respond within 15 Business
Days.

1.1.5

Infrastructure security of electric system equipment and operations and control
hardware and software is essential to ensure day-to-day reliability and operational
security. The Federal Energy Regulatory Commission expects all Transmission
Providers, market participants, and Interconnection Customers interconnected
with electric systems to comply with the recommendations offered by the
President's Critical Infrastructure Protection Board and best practice
recommendations from the electric reliability authority. All public utilities are
expected to meet basic standards for electric system infrastructure and operational
security, including physical, operational, and cyber-security practices.

1.1.6

References in these procedures to interconnection agreement are to the Small
Generator Interconnection Agreement (SGIA).

Pre-Application
The Transmission Provider shall designate an employee or office from which information
on the application process and on an Affected System can be obtained through informal
requests from the Interconnection Customer presenting a proposed project for a specific
site. The name, telephone number, and e-mail address of such contact employee or office

Small Generator Interconnection Procedures (SGIP) - 1 -

shall be made available on the Transmission Provider's Internet web site. Electric system
information provided to the Interconnection Customer should include relevant system
studies, interconnection studies, and other materials useful to an understanding of an
interconnection at a particular point on the Transmission Provider's Transmission System,
to the extent such provision does not violate confidentiality provisions of prior
agreements or critical infrastructure requirements. The Transmission Provider shall
comply with reasonable requests for such information.
1.3

Interconnection Request
The Interconnection Customer shall submit its Interconnection Request to the
Transmission Provider, together with the processing fee or deposit specified in the
Interconnection Request. The Interconnection Request shall be date- and time-stamped
upon receipt. The original date- and time-stamp applied to the Interconnection Request at
the time of its original submission shall be accepted as the qualifying date- and timestamp for the purposes of any timetable in these procedures. The Interconnection
Customer shall be notified of receipt by the Transmission Provider within three Business
Days of receiving the Interconnection Request. The Transmission Provider shall notify
the Interconnection Customer within ten Business Days of the receipt of the
Interconnection Request as to whether the Interconnection Request is complete or
incomplete. If the Interconnection Request is incomplete, the Transmission Provider
shall provide along with the notice that the Interconnection Request is incomplete, a
written list detailing all information that must be provided to complete the
Interconnection Request. The Interconnection Customer will have ten Business Days
after receipt of the notice to submit the listed information or to request an extension of
time to provide such information. If the Interconnection Customer does not provide the
listed information or a request for an extension of time within the deadline, the
Interconnection Request will be deemed withdrawn. An Interconnection Request will be
deemed complete upon submission of the listed information to the Transmission
Provider.

1.4

Modification of the Interconnection Request
Any modification to machine data or equipment configuration or to the interconnection
site of the Small Generating Facility not agreed to in writing by the Transmission
Provider and the Interconnection Customer may be deemed a withdrawal of the
Interconnection Request and may require submission of a new Interconnection Request,
unless proper notification of each Party by the other and a reasonable time to cure the
problems created by the changes are undertaken.

1.5

Site Control
Documentation of site control must be submitted with the Interconnection Request. Site
control may be demonstrated through:
1.8.1

Ownership of, a leasehold interest in, or a right to develop a site for the purpose of
constructing the Small Generating Facility;

Small Generator Interconnection Procedures (SGIP) - 2 -

1.8.2

An option to purchase or acquire a leasehold site for such purpose; or

1.8.3

An exclusivity or other business relationship between the Interconnection
Customer and the entity having the right to sell, lease, or grant the Interconnection
Customer the right to possess or occupy a site for such purpose.

1.6

Queue Position
The Transmission Provider shall assign a Queue Position based upon the date- and timestamp of the Interconnection Request. The Queue Position of each Interconnection
Request will be used to determine the cost responsibility for the Upgrades necessary to
accommodate the interconnection. The Transmission Provider shall maintain a single
queue per geographic region. At the Transmission Provider's option, Interconnection
Requests may be studied serially or in clusters for the purpose of the system impact
study.

1.7

Interconnection Requests Submitted Prior to the Effective Date of the SGIP
Nothing in this SGIP affects an Interconnection Customer's Queue Position assigned
before the effective date of this SGIP. The Parties agree to complete work on any
interconnection study agreement executed prior the effective date of this SGIP in
accordance with the terms and conditions of that interconnection study agreement. Any
new studies or other additional work will be completed pursuant to this SGIP.

Section 2. Fast Track Process
2.1

Applicability
The Fast Track Process is available to an Interconnection Customer proposing to
interconnect its Small Generating Facility with the Transmission Provider's Transmission
System if the Small Generating Facility is no larger than 2 MW and if the Interconnection
Customer's proposed Small Generating Facility meets the codes, standards, and
certification requirements of Attachments 3 and 4 of these procedures, or the
Transmission Provider has reviewed the design or tested the proposed Small Generating
Facility and is satisfied that it is safe to operate.

2.2

Initial Review
Within 15 Business Days after the Transmission Provider notifies the Interconnection
Customer it has received a complete Interconnection Request, the Transmission Provider
shall perform an initial review using the screens set forth below, shall notify the
Interconnection Customer of the results, and include with the notification copies of the
analysis and data underlying the Transmission Provider's determinations under the
screens.
2.2.1

Screens

Small Generator Interconnection Procedures (SGIP) - 3 -

2.2.1.1

The proposed Small Generating Facility’s Point of Interconnection
must be on a portion of the Transmission Provider’s Distribution
System that is subject to the Tariff.

2.2.1.2

For interconnection of a proposed Small Generating Facility to a
radial distribution circuit, the aggregated generation, including the
proposed Small Generating Facility, on the circuit shall not exceed
15 % of the line section annual peak load as most recently
measured at the substation. A line section is that portion of a
Transmission Provider’s electric system connected to a customer
bounded by automatic sectionalizing devices or the end of the
distribution line.

2.2.1.3

For interconnection of a proposed Small Generating Facility to the
load side of spot network protectors, the proposed Small
Generating Facility must utilize an inverter-based equipment
package and, together with the aggregated other inverter-based
generation, shall not exceed the smaller of 5 % of a spot network's
maximum load or 50 kW1.

2.2.1.4

The proposed Small Generating Facility, in aggregation with other
generation on the distribution circuit, shall not contribute more
than 10 % to the distribution circuit's maximum fault current at the
point on the high voltage (primary) level nearest the proposed
point of change of ownership.

2.2.1.5

The proposed Small Generating Facility, in aggregate with other
generation on the distribution circuit, shall not cause any
distribution protective devices and equipment (including, but not
limited to, substation breakers, fuse cutouts, and line reclosers), or
Interconnection Customer equipment on the system to exceed 87.5
% of the short circuit interrupting capability; nor shall the
interconnection proposed for a circuit that already exceeds 87.5 %
of the short circuit interrupting capability.

2.2.1.6

Using the table below, determine the type of interconnection to a
primary distribution line. This screen includes a review of the type
of electrical service provided to the Interconnecting Customer,
including line configuration and the transformer connection to

1

A spot Network is a type of distribution system found within modern commercial
buildings to provide high reliability of service to a single customer. (Standard Handbook for
Electrical Engineers, 11th edition, Donald Fink, McGraw Hill Book Company)
Small Generator Interconnection Procedures (SGIP) - 4 -

limit the potential for creating over-voltages on the Transmission
Provider's electric power system due to a loss of ground during the
operating time of any anti-islanding function.
Primary Distribution Line
Type
Three-phase, three wire
Three-phase, four wire

Type of Interconnection to Result/Criteria
Primary Distribution Line
3-phase or single phase,
Pass screen
phase-to-phase
Effectively-grounded 3
Pass screen
phase or Single-phase, lineto-neutral

2.2.1.7

If the proposed Small Generating Facility is to be interconnected
on single-phase shared secondary, the aggregate generation
capacity on the shared secondary, including the proposed Small
Generating Facility, shall not exceed 20 kW.

2.2.1.8

If the proposed Small Generating Facility is single-phase and is to
be interconnected on a center tap neutral of a 240 volt service, its
addition shall not create an imbalance between the two sides of the
240 volt service of more than 20 % of the nameplate rating of the
service transformer.

2.2.1.9

The Small Generating Facility, in aggregate with other generation
interconnected to the transmission side of a substation transformer
feeding the circuit where the Small Generating Facility proposes to
interconnect shall not exceed 10 MW in an area where there are
known, or posted, transient stability limitations to generating units
located in the general electrical vicinity (e.g., three or four
transmission busses from the point of interconnection).

2.2.1.10

No construction of facilities by the Transmission Provider on its
own system shall be required to accommodate the Small
Generating Facility.

2.2.2

If the proposed interconnection passes the screens, the Interconnection Request
shall be approved and the Transmission Provider will provide the Interconnection
Customer an executable interconnection agreement within five Business Days
after the determination.

2.2.3

If the proposed interconnection fails the screens, but the Transmission Provider
determines that the Small Generating Facility may nevertheless be interconnected
consistent with safety, reliability, and power quality standards, the Transmission

Small Generator Interconnection Procedures (SGIP) - 5 -

Provider shall provide the Interconnection Customer an executable
interconnection agreement within five Business Days after the determination.
2.2.4

2.3

2.4

If the proposed interconnection fails the screens, but the Transmission Provider
does not or cannot determine from the initial review that the Small Generating
Facility may nevertheless be interconnected consistent with safety, reliability, and
power quality standards unless the Interconnection Customer is willing to
consider minor modifications or further study, the Transmission Provider shall
provide the Interconnection Customer with the opportunity to attend a customer
options meeting.

Customer Options Meeting
If the Transmission Provider determines the Interconnection Request cannot be approved
without minor modifications at minimal cost; or a supplemental study or other additional
studies or actions; or at significant cost to address safety, reliability, or power quality
problems, within the five Business Day period after the determination, the Transmission
Provider shall notify the Interconnection Customer and provide copies of all data and
analyses underlying its conclusion. Within ten Business Days of the Transmission
Provider's determination, the Transmission Provider shall offer to convene a customer
options meeting with the Transmission Provider to review possible Interconnection
Customer facility modifications or the screen analysis and related results, to determine
what further steps are needed to permit the Small Generating Facility to be connected
safely and reliably. At the time of notification of the Transmission Provider's
determination, or at the customer options meeting, the Transmission Provider shall:
2.3.1

Offer to perform facility modifications or minor modifications to the
Transmission Provider's electric system(e.g., changing meters, fuses, relay
settings) and provide a non-binding good faith estimate of the limited cost to
make such modifications to the Transmission Provider's electric system; or

2.3.2

Offer to perform a supplemental review if the Transmission Provider concludes
that the supplemental review might determine that the Small Generating Facility
could continue to qualify for interconnection pursuant to the Fast Track Process,
and provide a non-binding good faith estimate of the costs of such review; or

2.3.3

Obtain the Interconnection Customer's agreement to continue evaluating the
Interconnection Request under the section 3 Study Process.

Supplemental Review
If the Interconnection Customer agrees to a supplemental review, the Interconnection
Customer shall agree in writing within 15 Business Days of the offer, and submit a
deposit for the estimated costs. The Interconnection Customer shall be responsible for
the Transmission Provider's actual costs for conducting the supplemental review. The
Interconnection Customer must pay any review costs that exceed the deposit within 20

Small Generator Interconnection Procedures (SGIP) - 6 -

Business Days of receipt of the invoice or resolution of any dispute. If the deposit
exceeds the invoiced costs, the Transmission Provider will return such excess within 20
Business Days of the invoice without interest.
2.4.1

Within ten Business Days following receipt of the deposit for a supplemental
review, the Transmission Provider will determine if the Small Generating Facility
can be interconnected safely and reliably.
2.4.1.1

If so, the Transmission Provider shall forward an executable an
interconnection agreement to the Interconnection Customer within
five Business Days.

2.4.1.2

If so, and Interconnection Customer facility modifications are
required to allow the Small Generating Facility to be
interconnected consistent with safety, reliability, and power quality
standards under these procedures, the Transmission Provider shall
forward an executable interconnection agreement to the
Interconnection Customer within five Business Days after
confirmation that the Interconnection Customer has agreed to make
the necessary changes at the Interconnection Customer's cost.

2.4.1.3

If so, and minor modifications to the Transmission Provider's
electric system are required to allow the Small Generating Facility
to be interconnected consistent with safety, reliability, and power
quality standards under the Fast Track Process, the Transmission
Provider shall forward an executable interconnection agreement to
the Interconnection Customer within ten Business Days that
requires the Interconnection Customer to pay the costs of such
system modifications prior to interconnection.

2.4.1.4

If not, the Interconnection Request will continue to be evaluated
under the section 3 Study Process.

Section 3. Study Process
3.1

Applicability
The Study Process shall be used by an Interconnection Customer proposing to
interconnect its Small Generating Facility with the Transmission Provider's Transmission
System if the Small Generating Facility (1) is larger than 2 MW but no larger than 20
MW, (2) is not certified, or (3) is certified but did not pass the Fast Track Process or the
10 kW Inverter Process.

3.2

Scoping Meeting

Small Generator Interconnection Procedures (SGIP) - 7 -

3.3

3.2.1

A scoping meeting will be held within ten Business Days after the Interconnection
Request is deemed complete, or as otherwise mutually agreed to by the Parties.
The Transmission Provider and the Interconnection Customer will bring to the
meeting personnel, including system engineers and other resources as may be
reasonably required to accomplish the purpose of the meeting.

3.2.2

The purpose of the scoping meeting is to discuss the Interconnection Request and
review existing studies relevant to the Interconnection Request. The Parties shall
further discuss whether the Transmission Provider should perform a feasibility
study or proceed directly to a system impact study, or a facilities study, or an
interconnection agreement. If the Parties agree that a feasibility study should be
performed, the Transmission Provider shall provide the Interconnection
Customer, as soon as possible, but not later than five Business Days after the
scoping meeting, a feasibility study agreement (Attachment 6) including an
outline of the scope of the study and a non-binding good faith estimate of the cost
to perform the study.

3.2.3

The scoping meeting may be omitted by mutual agreement. In order to remain in
consideration for interconnection, an Interconnection Customer who has
requested a feasibility study must return the executed feasibility study agreement
within 15 Business Days. If the Parties agree not to perform a feasibility study,
the Transmission Provider shall provide the Interconnection Customer, no later
than five Business Days after the scoping meeting, a system impact study
agreement (Attachment 7) including an outline of the scope of the study and a
non-binding good faith estimate of the cost to perform the study.

Feasibility Study
3.3.1

The feasibility study shall identify any potential adverse system impacts that
would result from the interconnection of the Small Generating Facility.

3.3.2

A deposit of the lesser of 50 percent of the good faith estimated feasibility study
costs or earnest money of $1,000 may be required from the Interconnection
Customer.

3.3.3 The scope of and cost responsibilities for the feasibility study are described in the
attached feasibility study agreement.
3.3.4

If the feasibility study shows no potential for adverse system impacts, the
Transmission Provider shall send the Interconnection Customer a facilities study
agreement, including an outline of the scope of the study and a non-binding good
faith estimate of the cost to perform the study. If no additional facilities are

Small Generator Interconnection Procedures (SGIP) - 8 -

required, the Transmission Provider shall send the Interconnection Customer an
executable interconnection agreement within five Business Days.
3.3.5

3.4

If the feasibility study shows the potential for adverse system impacts, the review
process shall proceed to the appropriate system impact study(s).

System Impact Study
3.4.1

A system impact study shall identify and detail the electric system impacts that
would result if the proposed Small Generating Facility were interconnected
without project modifications or electric system modifications, focusing on the
adverse system impacts identified in the feasibility study, or to study potential
impacts, including but not limited to those identified in the scoping meeting. A
system impact study shall evaluate the impact of the proposed interconnection on
the reliability of the electric system.

3.4.2

If no transmission system impact study is required, but potential electric power
Distribution System adverse system impacts are identified in the scoping meeting
or shown in the feasibility study, a distribution system impact study must be
performed. The Transmission Provider shall send the Interconnection Customer a
distribution system impact study agreement within 15 Business Days of
transmittal of the feasibility study report, including an outline of the scope of the
study and a non-binding good faith estimate of the cost to perform the study, or
following the scoping meeting if no feasibility study is to be performed.

3.4.3

In instances where the feasibility study or the distribution system impact study
shows potential for transmission system adverse system impacts, within five
Business Days following transmittal of the feasibility study report, the
Transmission Provider shall send the Interconnection Customer a transmission
system impact study agreement, including an outline of the scope of the study and
a non-binding good faith estimate of the cost to perform the study, if such a study
is required.

3.4.4

If a transmission system impact study is not required, but electric power
Distribution System adverse system impacts are shown by the feasibility study to
be possible and no distribution system impact study has been conducted, the
Transmission Provider shall send the Interconnection Customer a distribution
system impact study agreement.

3.4.5

If the feasibility study shows no potential for transmission system or Distribution
System adverse system impacts, the Transmission Provider shall send the
Interconnection Customer either a facilities study agreement (Attachment 8),
including an outline of the scope of the study and a non-binding good faith

Small Generator Interconnection Procedures (SGIP) - 9 -

estimate of the cost to perform the study, or an executable interconnection
agreement, as applicable.

3.5

3.4.6

In order to remain under consideration for interconnection, the Interconnection
Customer must return executed system impact study agreements, if applicable,
within 30 Business Days.

3.4.7

A deposit of the good faith estimated costs for each system impact study may be
required from the Interconnection Customer.

3.4.8

The scope of and cost responsibilities for a system impact study are described in
the attached system impact study agreement.

3.4.9

Where transmission systems and Distribution Systems have separate owners, such
as is the case with transmission-dependent utilities ("TDUs") – whether investorowned or not – the Interconnection Customer may apply to the nearest
Transmission Provider (Transmission Owner, Regional Transmission Operator, or
Independent Transmission Provider) providing transmission service to the TDU to
request project coordination. Affected Systems shall participate in the study and
provide all information necessary to prepare the study.

Facilities Study
3.5.1

Once the required system impact study(s) is completed, a system impact study
report shall be prepared and transmitted to the Interconnection Customer along
with a facilities study agreement within five Business Days, including an outline
of the scope of the study and a non-binding good faith estimate of the cost to
perform the facilities study. In the case where one or both impact studies are
determined to be unnecessary, a notice of the fact shall be transmitted to the
Interconnection Customer within the same timeframe.

3.5.2

In order to remain under consideration for interconnection, or, as appropriate, in
the Transmission Provider's interconnection queue, the Interconnection Customer
must return the executed facilities study agreement or a request for an extension
of time within 30 Business Days.

3.5.3

The facilities study shall specify and estimate the cost of the equipment,
engineering, procurement and construction work (including overheads) needed to
implement the conclusions of the system impact study(s).

3.5.4

Design for any required Interconnection Facilities and/or Upgrades shall be
performed under the facilities study agreement. The Transmission Provider may
contract with consultants to perform activities required under the facilities study
agreement. The Interconnection Customer and the Transmission Provider may

Small Generator Interconnection Procedures (SGIP) - 10 -

agree to allow the Interconnection Customer to separately arrange for the design
of some of the Interconnection Facilities. In such cases, facilities design will be
reviewed and/or modified prior to acceptance by the Transmission Provider,
under the provisions of the facilities study agreement. If the Parties agree to
separately arrange for design and construction, and provided security and
confidentiality requirements can be met, the Transmission Provider shall make
sufficient information available to the Interconnection Customer in accordance
with confidentiality and critical infrastructure requirements to permit the
Interconnection Customer to obtain an independent design and cost estimate for
any necessary facilities.
3.5.5

A deposit of the good faith estimated costs for the facilities study may be required
from the Interconnection Customer.

3.5.6

The scope of and cost responsibilities for the facilities study are described in the
attached facilities study agreement.

3.5.7

Upon completion of the facilities study, and with the agreement of the
Interconnection Customer to pay for Interconnection Facilities and Upgrades
identified in the facilities study, the Transmission Provider shall provide the
Interconnection Customer an executable interconnection agreement within five
Business Days.

Section 4. Provisions that Apply to All Interconnection Requests
4.1

Reasonable Efforts
The Transmission Provider shall make reasonable efforts to meet all time frames
provided in these procedures unless the Transmission Provider and the Interconnection
Customer agree to a different schedule. If the Transmission Provider cannot meet a
deadline provided herein, it shall notify the Interconnection Customer, explain the reason
for the failure to meet the deadline, and provide an estimated time by which it will
complete the applicable interconnection procedure in the process.

4.2

Disputes

4.2.1

The Parties agree to attempt to resolve all disputes arising out of the interconnection
process according to the provisions of this article.

4.2.2

In the event of a dispute, either Party shall provide the other Party with a written Notice
of Dispute. Such Notice shall describe in detail the nature of the dispute.

Small Generator Interconnection Procedures (SGIP) - 11 -

4.2.3

If the dispute has not been resolved within two Business Days after receipt of the Notice,
either Party may contact FERC's Dispute Resolution Service (DRS) for assistance in
resolving the dispute.

4.2.4

The DRS will assist the Parties in either resolving their dispute or in selecting an
appropriate dispute resolution venue (e.g., mediation, settlement judge, early neutral
evaluation, or technical expert) to assist the Parties in resolving their dispute. DRS can
be reached at 1-877-337-2237 or via the internet at http://www.ferc.gov/legal/adr.asp.

4.2.5

Each Party agrees to conduct all negotiations in good faith and will be responsible for
one-half of any costs paid to neutral third-parties.

4.2.6

If neither Party elects to seek assistance from the DRS, or if the attempted dispute
resolution fails, then either Party may exercise whatever rights and remedies it may have
in equity or law consistent with the terms of this Agreement.

4.3

Interconnection Metering
Any metering necessitated by the use of the Small Generating Facility shall be installed at
the Interconnection Customer's expense in accordance with Federal Energy Regulatory
Commission, state, or local regulatory requirements or the Transmission Provider's
specifications.

4.4

Commissioning
Commissioning tests of the Interconnection Customer's installed equipment shall be
performed pursuant to applicable codes and standards. The Transmission Provider must
be given at least five Business Days written notice, or as otherwise mutually agreed to by
the Parties, of the tests and may be present to witness the commissioning tests.

4.5.

Confidentiality
4.5.1

Confidential information shall mean any confidential and/or proprietary
information provided by one Party to the other Party that is clearly marked or
otherwise designated "Confidential." For purposes of this Agreement all design,
operating specifications, and metering data provided by the Interconnection
Customer shall be deemed confidential information regardless of whether it is
clearly marked or otherwise designated as such.

4.5.2

Confidential Information does not include information previously in the public
domain, required to be publicly submitted or divulged by Governmental
Authorities (after notice to the other Party and after exhausting any opportunity to
oppose such publication or release), or necessary to be divulged in an action to
enforce this Agreement. Each Party receiving Confidential Information shall hold
such information in confidence and shall not disclose it to any third party nor to

Small Generator Interconnection Procedures (SGIP) - 12 -

the public without the prior written authorization from the Party providing that
information, except to fulfill obligations under this Agreement, or to fulfill legal
or regulatory requirements.
4.5.2.1 Each Party shall employ at least the same standard of care to protect
Confidential Information obtained from the other Party as it employs to
protect its own Confidential Information.
4.5.2.2 Each Party is entitled to equitable relief, by injunction or otherwise, to
enforce its rights under this provision to prevent the release of
Confidential Information without bond or proof of damages, and may seek
other remedies available at law or in equity for breach of this provision.
4.5.3

Notwithstanding anything in this article to the contrary, and pursuant to 18 CFR §
1b.20, if FERC, during the course of an investigation or otherwise, requests
information from one of the Parties that is otherwise required to be maintained in
confidence pursuant to this Agreement, the Party shall provide the requested
information to FERC, within the time provided for in the request for information.
In providing the information to FERC, the Party may, consistent with 18 CFR §
388.112, request that the information be treated as confidential and non-public by
FERC and that the information be withheld from public disclosure. Parties are
prohibited from notifying the other Party to this Agreement prior to the release of
the Confidential Information to FERC. The Party shall notify the other Party to
this Agreement when it is notified by FERC that a request to release Confidential
Information has been received by FERC, at which time either of the Parties may
respond before such information would be made public, pursuant to 18 CFR §
388.112. Requests from a state regulatory body conducting a confidential
investigation shall be treated in a similar manner if consistent with the applicable
state rules and regulations.

4.6

Comparability
The Transmission Provider shall receive, process and analyze all Interconnection
Requests in a timely manner as set forth in this document. The Transmission Provider
shall use the same reasonable efforts in processing and analyzing Interconnection
Requests from all Interconnection Customers, whether the Small Generating Facility is
owned or operated by the Transmission Provider, its subsidiaries or affiliates, or others.

4.7

Record Retention
The Transmission Provider shall maintain for three years records, subject to audit, of all
Interconnection Requests received under these procedures, the times required to complete
Interconnection Request approvals and disapprovals, and justification for the actions
taken on the Interconnection Requests.

4.8

Interconnection Agreement

Small Generator Interconnection Procedures (SGIP) - 13 -

After receiving an interconnection agreement from the Transmission Provider, the
Interconnection Customer shall have 30 Business Days or another mutually agreeable
timeframe to sign and return the interconnection agreement, or request that the
Transmission Provider file an unexecuted interconnection agreement with the Federal
Energy Regulatory Commission. If the Interconnection Customer does not sign the
interconnection agreement, or ask that it be filed unexecuted by the Transmission
Provider within 30 Business Days, the Interconnection Request shall be deemed
withdrawn. After the interconnection agreement is signed by the Parties, the
interconnection of the Small Generating Facility shall proceed under the provisions of the
interconnection agreement.
4.9

Coordination with Affected Systems
The Transmission Provider shall coordinate the conduct of any studies required to
determine the impact of the Interconnection Request on Affected Systems with Affected
System operators and, if possible, include those results (if available) in its applicable
interconnection study within the time frame specified in these procedures. The
Transmission Provider will include such Affected System operators in all meetings held
with the Interconnection Customer as required by these procedures. The Interconnection
Customer will cooperate with the Transmission Provider in all matters related to the
conduct of studies and the determination of modifications to Affected Systems. A
Transmission Provider which may be an Affected System shall cooperate with the
Transmission Provider with whom interconnection has been requested in all matters
related to the conduct of studies and the determination of modifications to Affected
Systems.

4.10

Capacity of the Small Generating Facility
4.10.1 If the Interconnection Request is for an increase in capacity for an existing Small
Generating Facility, the Interconnection Request shall be evaluated on the basis of
the new total capacity of the Small Generating Facility.
4.10.2 If the Interconnection Request is for a Small Generating Facility that includes
multiple energy production devices at a site for which the Interconnection
Customer seeks a single Point of Interconnection, the Interconnection Request
shall be evaluated on the basis of the aggregate capacity of the multiple devices.
4.10.3 The Interconnection Request shall be evaluated using the maximum rated capacity
of the Small Generating Facility.

Small Generator Interconnection Procedures (SGIP) - 14 -

Attachment 1

Glossary of Terms
10 kW Inverter Process – The procedure for evaluating an Interconnection Request for a
certified inverter-based Small Generating Facility no larger than 10 kW that uses the section 2
screens. The application process uses an all-in-one document that includes a simplified
Interconnection Request, simplified procedures, and a brief set of terms and conditions. See
SGIP Attachment 5.
Affected System – An electric system other than the Transmission Provider's Transmission
System that may be affected by the proposed interconnection.
Business Day – Monday through Friday, excluding Federal Holidays.
Distribution System – The Transmission Provider's facilities and equipment used to transmit
electricity to ultimate usage points such as homes and industries directly from nearby generators
or from interchanges with higher voltage transmission networks which transport bulk power over
longer distances. The voltage levels at which Distribution Systems operate differ among areas.
Distribution Upgrades – The additions, modifications, and upgrades to the Transmission
Provider's Distribution System at or beyond the Point of Interconnection to facilitate
interconnection of the Small Generating Facility and render the transmission service necessary to
effect the Interconnection Customer's wholesale sale of electricity in interstate commerce.
Distribution Upgrades do not include Interconnection Facilities.
Fast Track Process – The procedure for evaluating an Interconnection Request for a certified
Small Generating Facility no larger than 2 MW that includes the section 2 screens, customer
options meeting, and optional supplemental review.
Interconnection Customer – Any entity, including the Transmission Provider, the Transmission
Owner or any of the affiliates or subsidiaries of either, that proposes to interconnect its Small
Generating Facility with the Transmission Provider's Transmission System.
Interconnection Facilities – The Transmission Provider's Interconnection Facilities and the
Interconnection Customer's Interconnection Facilities. Collectively, Interconnection Facilities
include all facilities and equipment between the Small Generating Facility and the Point of
Interconnection, including any modification, additions or upgrades that are necessary to
physically and electrically interconnect the Small Generating Facility to the Transmission
Provider's Transmission System. Interconnection Facilities are sole use facilities and shall not
include Distribution Upgrades or Network Upgrades.
Interconnection Request – The Interconnection Customer's request, in accordance with the
Tariff, to interconnect a new Small Generating Facility, or to increase the capacity of, or make a
Material Modification to the operating characteristics of, an existing Small Generating Facility
that is interconnected with the Transmission Provider’s Transmission System.

SGIP Glossary of Terms

-1-

Material Modification – A modification that has a material impact on the cost or timing of any
Interconnection Request with a later queue priority date.
Network Upgrades – Additions, modifications, and upgrades to the Transmission Provider's
Transmission System required at or beyond the point at which the Small Generating Facility
interconnects with the Transmission Provider’s Transmission System to accommodate the
interconnection with the Small Generating Facility to the Transmission Provider’s Transmission
System. Network Upgrades do not include Distribution Upgrades.
Party or Parties – The Transmission Provider, Transmission Owner, Interconnection Customer
or any combination of the above.
Point of Interconnection – The point where the Interconnection Facilities connect with the
Transmission Provider's Transmission System.
Queue Position – The order of a valid Interconnection Request, relative to all other pending
valid Interconnection Requests, that is established based upon the date and time of receipt of the
valid Interconnection Request by the Transmission Provider.
Small Generating Facility – The Interconnection Customer's device for the production of
electricity identified in the Interconnection Request, but shall not include the Interconnection
Customer's Interconnection Facilities.
Study Process – The procedure for evaluating an Interconnection Request that includes the
section 3 scoping meeting, feasibility study, system impact study, and facilities study.
Transmission Owner – The entity that owns, leases or otherwise possesses an interest in the
portion of the Transmission System at the Point of Interconnection and may be a Party to the
Small Generator Interconnection Agreement to the extent necessary.
Transmission Provider – The public utility (or its designated agent) that owns, controls, or
operates transmission or distribution facilities used for the transmission of electricity in interstate
commerce and provides transmission service under the Tariff. The term Transmission Provider
should be read to include the Transmission Owner when the Transmission Owner is separate
from the Transmission Provider.
Transmission System – The facilities owned, controlled or operated by the Transmission
Provider or the Transmission Owner that are used to provide transmission service under the
Tariff.
Upgrades – The required additions and modifications to the Transmission Provider's
Transmission System at or beyond the Point of Interconnection. Upgrades may be Network
Upgrades or Distribution Upgrades. Upgrades do not include Interconnection Facilities.

SGIP Glossary of Terms

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Attachment 2

SMALL GENERATOR INTERCONNECTION REQUEST
(Application Form)
Transmission Provider: _______________________________________________________________
Designated Contact Person:

______

Address:

______

Telephone Number: _____________________________________________________________
Fax:

_____

E-Mail Address:

_____

An Interconnection Request is considered complete when it provides all applicable and correct
information required below.
Preamble and Instructions
An Interconnection Customer who requests a Federal Energy Regulatory Commission jurisdictional
interconnection must submit this Interconnection Request by hand delivery, mail, e-mail, or fax to the
Transmission Provider.
Processing Fee or Deposit:
If the Interconnection Request is submitted under the Fast Track Process, the non-refundable processing
fee is $500.
If the Interconnection Request is submitted under the Study Process, whether a new submission or an
Interconnection Request that did not pass the Fast Track Process, the Interconnection Customer shall
submit to the Transmission Provider a deposit not to exceed $1,000 towards the cost of the feasibility
study.
Interconnection Customer Information
Legal Name of the Interconnection Customer (or, if an individual, individual's name)
Name:
Contact Person:
Mailing Address:
City:

Small Generator Interconnection Request

State:

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Zip:

Facility Location (if different from above):
Telephone (Day): ______________________ Telephone (Evening): _____________________
Fax: _______________________________ E-Mail Address: __________________________________
Alternative Contact Information (if different from the Interconnection Customer)
Contact Name:

___________________________________

Title: ____________________________________________________________________
Address:

______

___________________________________
___________________________________

Telephone (Day): ______________________ Telephone (Evening): ______________________
Fax: _____________________________________ E-Mail Address: _________________________

Application is for: ______New Small Generating Facility
______Capacity addition to Existing Small Generating Facility
If capacity addition to existing facility, please describe:
Will the Small Generating Facility be used for any of the following?
Net Metering? Yes ___ No ___
To Supply Power to the Interconnection Customer? Yes ___No ___
To Supply Power to Others? Yes ____ No ____
For installations at locations with existing electric service to which the proposed Small Generating
Facility will interconnect, provide:

(Local Electric Service Provider*)

(Existing Account Number*)

[*To be provided by the Interconnection Customer if the local electric service provider is different from
the Transmission Provider]
Contact Name:

__________________________________

Title:

__________________________________

Address:

__________________________________

Small Generator Interconnection Request

-2-

__________________________________
Telephone (Day): _____________________________ Telephone (Evening): ______________________
Fax: _________________________________________ E-Mail Address: _________________________
Requested Point of Interconnection:

_____________

Interconnection Customer's Requested In-Service Date:
Small Generating Facility Information
Data apply only to the Small Generating Facility, not the Interconnection Facilities.
Energy Source: ___ Solar ___ Wind ___ Hydro ___ Hydro Type (e.g. Run-of-River):_____________
Diesel ___ Natural Gas ___ Fuel Oil ___ Other (state type) ___________________________

Prime Mover:

Fuel Cell
Recip Engine
Microturbine

Type of Generator: ____Synchronous

____Induction

Generator Nameplate Rating: ________kW (Typical)

Gas Turb
PV

Steam Turb
Other

____ Inverter
Generator Nameplate kVAR: _______

Interconnection Customer or Customer-Site Load: _________________kW (if none, so state)
Typical Reactive Load (if known): _________________
Maximum Physical Export Capability Requested: ______________ kW
List components of the Small Generating Facility equipment package that are currently certified:
Equipment Type
1.
2.
3.
4.
5.

Certifying Entity

Is the prime mover compatible with the certified protective relay package? ____Yes

____No

Generator (or solar collector)
Manufacturer, Model Name & Number:
Version Number:
Nameplate Output Power Rating in kW: (Summer) _____________ (Winter) ______________
Nameplate Output Power Rating in kVA: (Summer) _____________ (Winter) ______________

Small Generator Interconnection Request

-3-

Individual Generator Power Factor
Rated Power Factor: Leading: _____________Lagging: _______________
Total Number of Generators in wind farm to be interconnected pursuant to this
Interconnection Request: __________ Elevation: ______
___Single phase

___Three phase

Inverter Manufacturer, Model Name & Number (if used): _____________________________________
List of adjustable set points for the protective equipment or software: __________________________
Note: A completed Power Systems Load Flow data sheet must be supplied with the Interconnection
Request.

Small Generating Facility Characteristic Data (for inverter-based machines)
Instantaneous

Max design fault contribution current:

or RMS?

Harmonics Characteristics:
Start-up requirements:

Small Generating Facility Characteristic Data (for rotating machines)
RPM Frequency: _____________
(*) Neutral Grounding Resistor (If Applicable): ____________

Synchronous Generators:
Direct Axis Synchronous Reactance, Xd: _______ P.U.
Direct Axis Transient Reactance, X' d: ___________P.U.
Direct Axis Subtransient Reactance, X" d: ______________P.U.
Negative Sequence Reactance, X2: _________ P.U.
Zero Sequence Reactance, X0: ____________ P.U.
KVA Base: __________________________
Field Volts: ______________
Field Amperes: ______________

Induction Generators:
Motoring Power (kW): ______________
I22t or K (Heating Time Constant): ______________
Rotor Resistance, Rr: ______________

Small Generator Interconnection Request

-4-

Stator Resistance, Rs: ______________
Stator Reactance, Xs: ______________
Rotor Reactance, Xr: ______________
Magnetizing Reactance, Xm: ______________
Short Circuit Reactance, Xd'': ______________
Exciting Current: ______________
Temperature Rise: ______________
Frame Size: ______________
Design Letter: ______________
Reactive Power Required In Vars (No Load): ______________
Reactive Power Required In Vars (Full Load): ______________
Total Rotating Inertia, H: _____________ Per Unit on kVA Base
Note: Please contact the Transmission Provider prior to submitting the Interconnection Request to
determine if the specified information above is required.
Excitation and Governor System Data for Synchronous Generators Only
Provide appropriate IEEE model block diagram of excitation system, governor system and power system
stabilizer (PSS) in accordance with the regional reliability council criteria. A PSS may be determined to
be required by applicable studies. A copy of the manufacturer's block diagram may not be substituted.
Interconnection Facilities Information
Will a transformer be used between the generator and the point of common coupling? ___Yes ___No
Will the transformer be provided by the Interconnection Customer? ____Yes ____No
Transformer Data (If Applicable, for Interconnection Customer-Owned Transformer):
Is the transformer: ____single phase _____three phase?
Transformer Impedance: _______% on __________kVA Base

Size: ___________kVA

If Three Phase:
Transformer Primary: _____ Volts _____ Delta _____Wye _____ Wye Grounded
Transformer Secondary: _____ Volts _____ Delta _____Wye _____ Wye Grounded
Transformer Tertiary: _____ Volts _____ Delta _____Wye _____ Wye Grounded
Transformer Fuse Data (If Applicable, for Interconnection Customer-Owned Fuse):
(Attach copy of fuse manufacturer's Minimum Melt and Total Clearing Time-Current Curves)
Manufacturer: __________________ Type: _______________ Size: ________Speed: ______________
Interconnecting Circuit Breaker (if applicable):
Manufacturer: ____________________________ Type: __________

Small Generator Interconnection Request

-5-

Load Rating (Amps): _______ Interrupting Rating (Amps): ________ Trip Speed (Cycles): __________
Interconnection Protective Relays (If Applicable):

If Microprocessor-Controlled:
List of Functions and Adjustable Setpoints for the protective equipment or software:
Setpoint Function

Minimum

Maximum

1.
2.
3.
4.
5.
6.
If Discrete Components:
(Enclose Copy of any Proposed Time-Overcurrent Coordination Curves)
Manufacturer:
Manufacturer:
Manufacturer:
Manufacturer:
Manufacturer:

Type:
Type:
Type:
Type:
Type:

Style/Catalog No.:
Style/Catalog No.:
Style/Catalog No.:
Style/Catalog No.:
Style/Catalog No.:

Proposed Setting:
Proposed Setting:
Proposed Setting:
Proposed Setting:
Proposed Setting:

Current Transformer Data (If Applicable):
(Enclose Copy of Manufacturer's Excitation and Ratio Correction Curves)
Manufacturer:
Type:

Accuracy Class:

Proposed Ratio Connection: ____

Manufacturer:
Type:

Accuracy Class:

Proposed Ratio Connection: ____

Potential Transformer Data (If Applicable):
Manufacturer:

Small Generator Interconnection Request

-6-

Type:

Accuracy Class:

Proposed Ratio Connection: ____

Manufacturer:
Type:

Accuracy Class:

Proposed Ratio Connection: ____

General Information
Enclose copy of site electrical one-line diagram showing the configuration of all Small Generating
Facility equipment, current and potential circuits, and protection and control schemes. This one-line
diagram must be signed and stamped by a licensed Professional Engineer if the Small Generating Facility
is larger than 50 kW. Is One-Line Diagram Enclosed? ____Yes ____No
Enclose copy of any site documentation that indicates the precise physical location of the proposed Small
Generating Facility (e.g., USGS topographic map or other diagram or documentation).
Proposed location of protective interface equipment on property (include address if different from the
Interconnection Customer's address) ___________________________________________________
Enclose copy of any site documentation that describes and details the operation of the protection and
control schemes.
Is Available Documentation Enclosed? ___Yes ____No
Enclose copies of schematic drawings for all protection and control circuits, relay current circuits, relay
potential circuits, and alarm/monitoring circuits (if applicable).
Are Schematic Drawings Enclosed? ___Yes ____No
Applicant Signature
I hereby certify that, to the best of my knowledge, all the information provided in this Interconnection
Request is true and correct.
For Interconnection Customer: ____________________________________ Date: ____________

Small Generator Interconnection Request

-7-

Attachment 3

Certification Codes and Standards
IEEE1547 Standard for Interconnecting Distributed Resources with Electric Power Systems
(including use of IEEE 1547.1 testing protocols to establish conformity)
UL 1741 Inverters, Converters, and Controllers for Use in Independent Power Systems
IEEE Std 929-2000 IEEE Recommended Practice for Utility Interface of Photovoltaic (PV)
Systems
NFPA 70 (2002), National Electrical Code
IEEE Std C37.90.1-1989 (R1994), IEEE Standard Surge Withstand Capability (SWC) Tests for
Protective Relays and Relay Systems
IEEE Std C37.90.2 (1995), IEEE Standard Withstand Capability of Relay Systems to Radiated
Electromagnetic Interference from Transceivers
IEEE Std C37.108-1989 (R2002), IEEE Guide for the Protection of Network Transformers
IEEE Std C57.12.44-2000, IEEE Standard Requirements for Secondary Network Protectors
IEEE Std C62.41.2-2002, IEEE Recommended Practice on Characterization of Surges in Low
Voltage (1000V and Less) AC Power Circuits
IEEE Std C62.45-1992 (R2002), IEEE Recommended Practice on Surge Testing for Equipment
Connected to Low-Voltage (1000V and Less) AC Power Circuits
ANSI C84.1-1995 Electric Power Systems and Equipment – Voltage Ratings (60 Hertz)
IEEE Std 100-2000, IEEE Standard Dictionary of Electrical and Electronic Terms
NEMA MG 1-1998, Motors and Small Resources, Revision 3
IEEE Std 519-1992, IEEE Recommended Practices and Requirements for Harmonic Control in
Electrical Power Systems
NEMA MG 1-2003 (Rev 2004), Motors and Generators, Revision 1

Small Generator Certification Codes and Standards

-1-

Attachment 4

Certification of Small Generator Equipment Packages
1.0

Small Generating Facility equipment proposed for use separately or packaged with other
equipment in an interconnection system shall be considered certified for interconnected
operation if (1) it has been tested in accordance with industry standards for continuous
utility interactive operation in compliance with the appropriate codes and standards
referenced below by any Nationally Recognized Testing Laboratory (NRTL) recognized
by the United States Occupational Safety and Health Administration to test and certify
interconnection equipment pursuant to the relevant codes and standards listed in SGIP
Attachment 3, (2) it has been labeled and is publicly listed by such NRTL at the time of
the interconnection application, and (3) such NRTL makes readily available for
verification all test standards and procedures it utilized in performing such equipment
certification, and, with consumer approval, the test data itself. The NRTL may make
such information available on its website and by encouraging such information to be
included in the manufacturer’s literature accompanying the equipment.

2.0

The Interconnection Customer must verify that the intended use of the equipment falls
within the use or uses for which the equipment was tested, labeled, and listed by the
NRTL.

3.0

Certified equipment shall not require further type-test review, testing, or additional
equipment to meet the requirements of this interconnection procedure; however, nothing
herein shall preclude the need for an on-site commissioning test by the parties to the
interconnection nor follow-up production testing by the NRTL.

4.0

If the certified equipment package includes only interface components (switchgear,
inverters, or other interface devices), then an Interconnection Customer must show that
the generator or other electric source being utilized with the equipment package is
compatible with the equipment package and is consistent with the testing and listing
specified for this type of interconnection equipment.

5.0

Provided the generator or electric source, when combined with the equipment package, is
within the range of capabilities for which it was tested by the NRTL, and does not violate
the interface components' labeling and listing performed by the NRTL, no further design
review, testing or additional equipment on the customer side of the point of common
coupling shall be required to meet the requirements of this interconnection procedure.

6.0

An equipment package does not include equipment provided by the utility.

7.0

Any equipment package approved and listed in a state by that state’s regulatory body for
interconnected operation in that state prior to the effective date of these small generator

Small Generator Certification Process

-1-

interconnection procedures shall be considered certified under these procedures for use in
that state.

Small Generator Certification Process

-2-

Attachment 5

Application, Procedures, and Terms and Conditions for Interconnecting
a Certified Inverter-Based Small Generating Facility No
Larger than 10 kW ("10 kW Inverter Process")
1.0

The Interconnection Customer ("Customer") completes the Interconnection Request
("Application") and submits it to the Transmission Provider ("Company").

2.0

The Company acknowledges to the Customer receipt of the Application within three
Business Days of receipt.

3.0

The Company evaluates the Application for completeness and notifies the Customer
within ten Business Days of receipt that the Application is or is not complete and, if not,
advises what material is missing.

4.0

The Company verifies that the Small Generating Facility can be interconnected safely
and reliably using the screens contained in the Fast Track Process in the Small Generator
Interconnection Procedures (SGIP). The Company has 15 Business Days to complete
this process. Unless the Company determines and demonstrates that the Small
Generating Facility cannot be interconnected safely and reliably, the Company approves
the Application and returns it to the Customer. Note to Customer: Please check with the
Company before submitting the Application if disconnection equipment is required.

5.0

After installation, the Customer returns the Certificate of Completion to the Company.
Prior to parallel operation, the Company may inspect the Small Generating Facility for
compliance with standards which may include a witness test, and may schedule
appropriate metering replacement, if necessary.

6.0

The Company notifies the Customer in writing that interconnection of the Small
Generating Facility is authorized. If the witness test is not satisfactory, the Company has
the right to disconnect the Small Generating Facility. The Customer has no right to
operate in parallel until a witness test has been performed, or previously waived on the
Application. The Company is obligated to complete this witness test within ten Business
Days of the receipt of the Certificate of Completion. If the Company does not inspect
within ten Business Days or by mutual agreement of the Parties, the witness test is
deemed waived.

7.0

Contact Information – The Customer must provide the contact information for the legal
applicant (i.e., the Interconnection Customer). If another entity is responsible for
interfacing with the Company, that contact information must be provided on the
Application.

Small Generator 10 kW Inverter Process

-1-

8.0

Ownership Information – Enter the legal names of the owner(s) of the Small Generating
Facility. Include the percentage ownership (if any) by any utility or public utility holding
company, or by any entity owned by either.

9.0

UL1741 Listed – This standard ("Inverters, Converters, and Controllers for Use in
Independent Power Systems") addresses the electrical interconnection design of various
forms of generating equipment. Many manufacturers submit their equipment to a
Nationally Recognized Testing Laboratory (NRTL) that verifies compliance with
UL1741. This "listing" is then marked on the equipment and supporting documentation.

Small Generator 10 kW Inverter Process

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Application for Interconnecting a Certified Inverter-Based Small Generating
Facility No Larger than 10kW
This Application is considered complete when it provides all applicable and correct information required
below. Additional information to evaluate the Application may be required.
Processing Fee
A non-refundable processing fee of $100 must accompany this Application.
Interconnection Customer
Name: _______________________________________________________________________
Contact Person:
Address:
City:

State:

Zip:

Telephone (Day):

(Evening):

Fax:

E-Mail Address:

Contact (if different from Interconnection Customer)
Name:
Address:
City:

State:

Zip:

Telephone (Day):

(Evening):

Fax:

E-Mail Address:

Owner of the facility (include % ownership by any electric utility):
Small Generating Facility Information
Location (if different from above):
Electric Service Company:
Account Number:

Small Generator 10 kW Inverter Process

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Inverter Manufacturer:
Nameplate Rating:

Model
(kW)

(kVA)

(AC Volts)

Single Phase _______ Three Phase
System Design Capacity: _________ (kW) _______ (kVA)
Reciprocating Engine

Prime Mover: Photovoltaic
Other

Turbine
Energy Source: Solar

Fuel Cell

Wind

Fuel Oil

Hydro

Diesel

Natural Gas

Other (describe) _______________________________

Is the equipment UL1741 Listed?
Yes
No
If Yes, attach manufacturer’s cut-sheet showing UL1741 listing
Estimated Installation Date: _____________

Estimated In-Service Date: ____________

The 10 kW Inverter Process is available only for inverter-based Small Generating Facilities no larger than
10 kW that meet the codes, standards, and certification requirements of Attachments 3 and 4 of the Small
Generator Interconnection Procedures (SGIP), or the Transmission Provider has reviewed the design or
tested the proposed Small Generating Facility and is satisfied that it is safe to operate.
List components of the Small Generating Facility equipment package that are currently certified:
Equipment Type
1.
2.
3.
4.
5.

Certifying Entity

Interconnection Customer Signature
I hereby certify that, to the best of my knowledge, the information provided in this Application is true. I
agree to abide by the Terms and Conditions for Interconnecting an Inverter-Based Small Generating
Facility No Larger than 10kW and return the Certificate of Completion when the Small Generating
Facility has been installed.
Signed: ___________________________________________________________________
Date:

Title:

Contingent Approval to Interconnect the Small Generating Facility
(For Company use only)
Interconnection of the Small Generating Facility is approved contingent upon the Terms and Conditions
for Interconnecting an Inverter-Based Small Generating Facility No Larger than 10kW and return of the
Certificate of Completion.

Small Generator 10 kW Inverter Process

-4-

Company Signature: __________________________________________________
Title:

Date:

Application ID number: __________________
Company waives inspection/witness test? Yes___No___

Small Generator 10 kW Inverter Process

-5-

Small Generating Facility Certificate of Completion
Is the Small Generating Facility owner-installed? Yes______ No ______
Interconnection Customer: _____________________________________________________________
Contact Person:
Address:
Location of the Small Generating Facility (if different from above):
___________________________________________________________________________________
City:

State:

Zip Code:

Telephone (Day):

(Evening):

Fax:

E-Mail Address:

Electrician:
Name:
Address:
City:

State:

Zip Code:

Telephone (Day):

(Evening):

Fax:

E-Mail Address:

License number: ____________________________________
Date Approval to Install Facility granted by the Company: ___________________
Application ID number: ______________________________

Inspection:
The Small Generating Facility has been installed and inspected in compliance with the local
building/electrical code of
Signed (Local electrical wiring inspector, or attach signed electrical inspection):
______________________________________________________________________________
Print Name:
Date: ___________

Small Generator 10 kW Inverter Process

-6-

As a condition of interconnection, you are required to send/fax a copy of this form along with a copy of
the signed electrical permit to (insert Company information below):
Name: _______________________________________________
Company: ____________________________________________
Address:______________________________________________
_____________________________________________________
City, State ZIP: ________________________________________
Fax:
Approval to Energize the Small Generating Facility (For Company use only)
Energizing the Small Generating Facility is approved contingent upon the Terms and Conditions for
Interconnecting an Inverter-Based Small Generating Facility No Larger than 10kW
Company Signature:
Title:

Small Generator 10 kW Inverter Process

Date:

-7-

Terms and Conditions for Interconnecting an Inverter-Based
Small Generating Facility No Larger than 10kW
1.0

Construction of the Facility
The Interconnection Customer (the "Customer") may proceed to construct (including operational
testing not to exceed two hours) the Small Generating Facility when the Transmission Provider
(the "Company") approves the Interconnection Request (the "Application") and returns it to the
Customer.

2.0

Interconnection and Operation
The Customer may operate Small Generating Facility and interconnect with the Company’s
electric system once all of the following have occurred:

3.0

2.1

Upon completing construction, the Customer will cause the Small Generating Facility to
be inspected or otherwise certified by the appropriate local electrical wiring inspector
with jurisdiction, and

2.2

The Customer returns the Certificate of Completion to the Company, and

2.3

The Company has either:
2.3.1

Completed its inspection of the Small Generating Facility to ensure that all
equipment has been appropriately installed and that all electrical connections
have been made in accordance with applicable codes. All inspections must be
conducted by the Company, at its own expense, within ten Business Days after
receipt of the Certificate of Completion and shall take place at a time agreeable to
the Parties. The Company shall provide a written statement that the Small
Generating Facility has passed inspection or shall notify the Customer of what
steps it must take to pass inspection as soon as practicable after the inspection
takes place; or

2.3.2

If the Company does not schedule an inspection of the Small Generating Facility
within ten business days after receiving the Certificate of Completion, the
witness test is deemed waived (unless the Parties agree otherwise); or

2.3.3

The Company waives the right to inspect the Small Generating Facility.

2.4

The Company has the right to disconnect the Small Generating Facility in the event of
improper installation or failure to return the Certificate of Completion.

2.5

Revenue quality metering equipment must be installed and tested in accordance with
applicable ANSI standards.

Safe Operations and Maintenance

Small Generator 10 kW Inverter Process

-8-

The Customer shall be fully responsible to operate, maintain, and repair the Small Generating
Facility as required to ensure that it complies at all times with the interconnection standards to
which it has been certified.
4.0

Access
The Company shall have access to the disconnect switch (if the disconnect switch is required) and
metering equipment of the Small Generating Facility at all times. The Company shall provide
reasonable notice to the Customer when possible prior to using its right of access.

5.0

Disconnection
The Company may temporarily disconnect the Small Generating Facility upon the following
conditions:
5.1

For scheduled outages upon reasonable notice.

5.2

For unscheduled outages or emergency conditions.

5.3

If the Small Generating Facility does not operate in the manner consistent with these
Terms and Conditions.

5.4

The Company shall inform the Customer in advance of any scheduled disconnection, or
as is reasonable after an unscheduled disconnection.

6.0

Indemnification
The Parties shall at all times indemnify, defend, and save the other Party harmless from, any and
all damages, losses, claims, including claims and actions relating to injury to or death of any
person or damage to property, demand, suits, recoveries, costs and expenses, court costs, attorney
fees, and all other obligations by or to third parties, arising out of or resulting from the other
Party's action or inactions of its obligations under this agreement on behalf of the indemnifying
Party, except in cases of gross negligence or intentional wrongdoing by the indemnified Party.

7. 0

Insurance
The Parties each agree to maintain commercially reasonable amounts of insurance.

8.0

Limitation of Liability
Each party’s liability to the other party for any loss, cost, claim, injury, liability, or expense,
including reasonable attorney’s fees, relating to or arising from any act or omission in its
performance of this Agreement, shall be limited to the amount of direct damage actually incurred.
In no event shall either party be liable to the other party for any indirect, incidental, special,
consequential, or punitive damages of any kind whatsoever, except as allowed under paragraph
6.0.

9.0

Termination
The agreement to operate in parallel may be terminated under the following conditions:
9.1

By the Customer
By providing written notice to the Company.

Small Generator 10 kW Inverter Process

-9-

10.0

9.2

By the Company
If the Small Generating Facility fails to operate for any consecutive 12 month
period or the Customer fails to remedy a violation of these Terms and
Conditions.

9.3

Permanent Disconnection
In the event this Agreement is terminated, the Company shall have the right to
disconnect its facilities or direct the Customer to disconnect its Small Generating
Facility.

9.4

Survival Rights
This Agreement shall continue in effect after termination to the extent necessary
to allow or require either Party to fulfill rights or obligations that arose under the
Agreement.

Assignment/Transfer of Ownership of the Facility
This Agreement shall survive the transfer of ownership of the Small Generating Facility to a new
owner when the new owner agrees in writing to comply with the terms of this Agreement and so
notifies the Company.

Small Generator 10 kW Inverter Process

- 10 -

Attachment 6

Feasibility Study Agreement
THIS AGREEMENT is made and entered into this_____day of______________
20___ by and between_____________________________________________________,
a____________________________organized and existing under the laws of the State of
__________________________________________, ("Interconnection Customer,") and
_____________________________________________________, a________________
existing under the laws of the State of________________________________________,
("Transmission Provider"). Interconnection Customer and Transmission Provider each may be
referred to as a "Party," or collectively as the "Parties."
RECITALS
WHEREAS, Interconnection Customer is proposing to develop a Small Generating Facility or
generating capacity addition to an existing Small Generating Facility consistent with the
Interconnection Request completed by Interconnection Customer
on_________________________; and
WHEREAS, Interconnection Customer desires to interconnect the Small Generating Facility
with the Transmission Provider's Transmission System; and
WHEREAS, Interconnection Customer has requested the Transmission Provider to perform a
feasibility study to assess the feasibility of interconnecting the proposed Small Generating
Facility with the Transmission Provider's Transmission System, and of any Affected Systems;
NOW, THEREFORE, in consideration of and subject to the mutual covenants contained herein
the Parties agreed as follows:
1.0

When used in this Agreement, with initial capitalization, the terms specified shall have
the meanings indicated or the meanings specified in the standard Small Generator
Interconnection Procedures.

2.0

The Interconnection Customer elects and the Transmission Provider shall cause to be
performed an interconnection feasibility study consistent the standard Small Generator
Interconnection Procedures in accordance with the Open Access Transmission Tariff.

3.0

The scope of the feasibility study shall be subject to the assumptions set forth in
Attachment A to this Agreement.

4.0

The feasibility study shall be based on the technical information provided by the
Interconnection Customer in the Interconnection Request, as may be modified as the
result of the scoping meeting. The Transmission Provider reserves the right to request

SGIP Feasibility Study Agreement

-1-

additional technical information from the Interconnection Customer as may reasonably
become necessary consistent with Good Utility Practice during the course of the
feasibility study and as designated in accordance with the standard Small Generator
Interconnection Procedures. If the Interconnection Customer modifies its Interconnection
Request, the time to complete the feasibility study may be extended by agreement of the
Parties.
5.0

In performing the study, the Transmission Provider shall rely, to the extent reasonably
practicable, on existing studies of recent vintage. The Interconnection Customer shall not
be charged for such existing studies; however, the Interconnection Customer shall be
responsible for charges associated with any new study or modifications to existing studies
that are reasonably necessary to perform the feasibility study.

6.0

The feasibility study report shall provide the following analyses for the purpose of
identifying any potential adverse system impacts that would result from the
interconnection of the Small Generating Facility as proposed:
6.1

Initial identification of any circuit breaker short circuit capability limits exceeded
as a result of the interconnection;

6.2

Initial identification of any thermal overload or voltage limit violations resulting
from the interconnection;

6.3

Initial review of grounding requirements and electric system protection; and

6.4

Description and non-bonding estimated cost of facilities required to interconnect
the proposed Small Generating Facility and to address the identified short circuit
and power flow issues.

7.0

The feasibility study shall model the impact of the Small Generating Facility regardless
of purpose in order to avoid the further expense and interruption of operation for
reexamination of feasibility and impacts if the Interconnection Customer later changes
the purpose for which the Small Generating Facility is being installed.

8.0

The study shall include the feasibility of any interconnection at a proposed project site
where there could be multiple potential Points of Interconnection, as requested by the
Interconnection Customer and at the Interconnection Customer's cost.

9.0

A deposit of the lesser of 50 percent of good faith estimated feasibility study costs or
earnest money of $1,000 may be required from the Interconnection Customer.

10.0

Once the feasibility study is completed, a feasibility study report shall be prepared and
transmitted to the Interconnection Customer. Barring unusual circumstances, the
feasibility study must be completed and the feasibility study report transmitted within 30

SGIP Feasibility Study Agreement

-2-

Business Days of the Interconnection Customer's agreement to conduct a feasibility
study.
11.0

Any study fees shall be based on the Transmission Provider's actual costs and will be
invoiced to the Interconnection Customer after the study is completed and delivered and
will include a summary of professional time.

12.0

The Interconnection Customer must pay any study costs that exceed the deposit without
interest within 30 calendar days on receipt of the invoice or resolution of any dispute. If
the deposit exceeds the invoiced fees, the Transmission Provider shall refund such excess
within 30 calendar days of the invoice without interest.

IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly executed by their
duly authorized officers or agents on the day and year first above written.

[Insert name of Transmission Provider]

[Insert name of Interconnection Customer]

___________________________________ _________________________________

Signed______________________________ Signed___________________________
Name (Printed):

Name (Printed):

___________________________________ ________________________________

Title_______________________________ Title____________________________

SGIP Feasibility Study Agreement

-3-

Attachment A to
Feasibility Study Agreement

Assumptions Used in Conducting the Feasibility Study
The feasibility study will be based upon the information set forth in the Interconnection Request
and agreed upon in the scoping meeting held on _____________________:
1)

Designation of Point of Interconnection and configuration to be studied.

2)

Designation of alternative Points of Interconnection and configuration.

1) and 2) are to be completed by the Interconnection Customer. Other assumptions (listed
below) are to be provided by the Interconnection Customer and the Transmission Provider.

SGIP Feasibility Study Agreement

-4-

Attachment 7

System Impact Study Agreement
THIS AGREEMENT is made and entered into this_____day of______________
20___ by and between_____________________________________________________,
a____________________________organized and existing under the laws of the State of
__________________________________________, ("Interconnection Customer,") and
_____________________________________________________, a________________
existing under the laws of the State of________________________________________,
("Transmission Provider"). Interconnection Customer and Transmission Provider each may be
referred to as a "Party," or collectively as the "Parties."
RECITALS
WHEREAS, the Interconnection Customer is proposing to develop a Small Generating Facility
or generating capacity addition to an existing Small Generating Facility consistent with the
Interconnection Request completed by the Interconnection Customer
on________________________; and
WHEREAS, the Interconnection Customer desires to interconnect the Small Generating Facility
with the Transmission Provider's Transmission System;
WHEREAS, the Transmission Provider has completed a feasibility study and provided the
results of said study to the Interconnection Customer (This recital to be omitted if the Parties
have agreed to forego the feasibility study.); and
WHEREAS, the Interconnection Customer has requested the Transmission Provider to perform
a system impact study(s) to assess the impact of interconnecting the Small Generating Facility
with the Transmission Provider's Transmission System, and of any Affected Systems;
NOW, THEREFORE, in consideration of and subject to the mutual covenants contained herein
the Parties agreed as follows:
1.0

When used in this Agreement, with initial capitalization, the terms specified shall have
the meanings indicated or the meanings specified in the standard Small Generator
Interconnection Procedures.

2.0

The Interconnection Customer elects and the Transmission Provider shall cause to be
performed a system impact study(s) consistent with the standard Small Generator
Interconnection Procedures in accordance with the Open Access Transmission Tariff.

3.0

The scope of a system impact study shall be subject to the assumptions set forth in
Attachment A to this Agreement.

SGIP System Impact Study Agreement

-1-

4.0

A system impact study will be based upon the results of the feasibility study and the
technical information provided by Interconnection Customer in the Interconnection
Request. The Transmission Provider reserves the right to request additional technical
information from the Interconnection Customer as may reasonably become necessary
consistent with Good Utility Practice during the course of the system impact study. If the
Interconnection Customer modifies its designated Point of Interconnection,
Interconnection Request, or the technical information provided therein is modified, the
time to complete the system impact study may be extended.

5.0

A system impact study shall consist of a short circuit analysis, a stability analysis, a
power flow analysis, voltage drop and flicker studies, protection and set point
coordination studies, and grounding reviews, as necessary. A system impact study shall
state the assumptions upon which it is based, state the results of the analyses, and provide
the requirement or potential impediments to providing the requested interconnection
service, including a preliminary indication of the cost and length of time that would be
necessary to correct any problems identified in those analyses and implement the
interconnection. A system impact study shall provide a list of facilities that are required
as a result of the Interconnection Request and non-binding good faith estimates of cost
responsibility and time to construct.

6.0

A distribution system impact study shall incorporate a distribution load flow study, an
analysis of equipment interrupting ratings, protection coordination study, voltage drop
and flicker studies, protection and set point coordination studies, grounding reviews, and
the impact on electric system operation, as necessary.

7.0

Affected Systems may participate in the preparation of a system impact study, with a
division of costs among such entities as they may agree. All Affected Systems shall be
afforded an opportunity to review and comment upon a system impact study that covers
potential adverse system impacts on their electric systems, and the Transmission Provider
has 20 additional Business Days to complete a system impact study requiring review by
Affected Systems.

8.0

If the Transmission Provider uses a queuing procedure for sorting or prioritizing projects
and their associated cost responsibilities for any required Network Upgrades, the system
impact study shall consider all generating facilities (and with respect to paragraph 8.3
below, any identified Upgrades associated with such higher queued interconnection) that,
on the date the system impact study is commenced –
8.1

Are directly interconnected with the Transmission Provider's electric
system; or

8.2

Are interconnected with Affected Systems and may have an impact on the
proposed interconnection; and

SGIP System Impact Study Agreement

-2-

8.3

Have a pending higher queued Interconnection Request to interconnect
with the Transmission Provider's electric system.

9.0

A distribution system impact study, if required, shall be completed and the results
transmitted to the Interconnection Customer within 30 Business Days after this
Agreement is signed by the Parties. A transmission system impact study, if required,
shall be completed and the results transmitted to the Interconnection Customer within 45
Business Days after this Agreement is signed by the Parties, or in accordance with the
Transmission Provider's queuing procedures.

10.0

A deposit of the equivalent of the good faith estimated cost of a distribution system
impact study and the one half the good faith estimated cost of a transmission system
impact study may be required from the Interconnection Customer.

11.0

Any study fees shall be based on the Transmission Provider's actual costs and will be
invoiced to the Interconnection Customer after the study is completed and delivered and
will include a summary of professional time.

12.0

The Interconnection Customer must pay any study costs that exceed the deposit without
interest within 30 calendar days on receipt of the invoice or resolution of any dispute. If
the deposit exceeds the invoiced fees, the Transmission Provider shall refund such excess
within 30 calendar days of the invoice without interest.

IN WITNESS THEREOF, the Parties have caused this Agreement to be duly executed by their
duly authorized officers or agents on the day and year first above written.

[Insert name of Transmission Provider]

[Insert name of Interconnection Customer]

___________________________________ _________________________________

Signed______________________________ Signed___________________________
Name (Printed):

Name (Printed):

___________________________________ ________________________________

Title_______________________________ Title____________________________
SGIP System Impact Study Agreement

-3-

Attachment A to System
Impact Study Agreement

Assumptions Used in Conducting the System Impact Study
The system impact study shall be based upon the results of the feasibility study, subject to any
modifications in accordance with the standard Small Generator Interconnection Procedures, and
the following assumptions:
1)

Designation of Point of Interconnection and configuration to be studied.

2)

Designation of alternative Points of Interconnection and configuration.

1) and 2) are to be completed by the Interconnection Customer. Other assumptions (listed
below) are to be provided by the Interconnection Customer and the Transmission Provider.

SGIP System Impact Study Agreement

-4-

Attachment 8

Facilities Study Agreement
THIS AGREEMENT is made and entered into this_____day of______________
20___ by and between_____________________________________________________,
a____________________________organized and existing under the laws of the State of
__________________________________________, ("Interconnection Customer,") and
_____________________________________________________, a________________
existing under the laws of the State of________________________________________,
("Transmission Provider"). Interconnection Customer and Transmission Provider each may be
referred to as a "Party," or collectively as the "Parties."
RECITALS
WHEREAS, the Interconnection Customer is proposing to develop a Small Generating Facility
or generating capacity addition to an existing Small Generating Facility consistent with the
Interconnection Request completed by the Interconnection Customer
on______________________; and
WHEREAS, the Interconnection Customer desires to interconnect the Small Generating Facility
with the Transmission Provider's Transmission System;
WHEREAS, the Transmission Provider has completed a system impact study and provided the
results of said study to the Interconnection Customer; and
WHEREAS, the Interconnection Customer has requested the Transmission Provider to perform
a facilities study to specify and estimate the cost of the equipment, engineering, procurement and
construction work needed to implement the conclusions of the system impact study in
accordance with Good Utility Practice to physically and electrically connect the Small
Generating Facility with the Transmission Provider's Transmission System.
NOW, THEREFORE, in consideration of and subject to the mutual covenants contained herein
the Parties agreed as follows:
1.0

When used in this Agreement, with initial capitalization, the terms specified shall have
the meanings indicated or the meanings specified in the standard Small Generator
Interconnection Procedures.

2.0

The Interconnection Customer elects and the Transmission Provider shall cause a
facilities study consistent with the standard Small Generator Interconnection Procedures
to be performed in accordance with the Open Access Transmission Tariff.

3.0

The scope of the facilities study shall be subject to data provided in Attachment A to this

SGIP Facilities Study Agreement

-1-

Agreement.
4.0

The facilities study shall specify and estimate the cost of the equipment, engineering,
procurement and construction work (including overheads) needed to implement the
conclusions of the system impact study(s). The facilities study shall also identify (1) the
electrical switching configuration of the equipment, including, without limitation,
transformer, switchgear, meters, and other station equipment, (2) the nature and estimated
cost of the Transmission Provider's Interconnection Facilities and Upgrades necessary to
accomplish the interconnection, and (3) an estimate of the time required to complete the
construction and installation of such facilities.

5.0

The Transmission Provider may propose to group facilities required for more than one
Interconnection Customer in order to minimize facilities costs through economies of
scale, but any Interconnection Customer may require the installation of facilities required
for its own Small Generating Facility if it is willing to pay the costs of those facilities.

6.0

A deposit of the good faith estimated facilities study costs may be required from the
Interconnection Customer.

7.0

In cases where Upgrades are required, the facilities study must be completed within 45
Business Days of the receipt of this Agreement. In cases where no Upgrades are
necessary, and the required facilities are limited to Interconnection Facilities, the
facilities study must be completed within 30 Business Days.

8.0

Once the facilities study is completed, a facilities study report shall be prepared and
transmitted to the Interconnection Customer. Barring unusual circumstances, the
facilities study must be completed and the facilities study report transmitted within 30
Business Days of the Interconnection Customer's agreement to conduct a facilities study.

9.0

Any study fees shall be based on the Transmission Provider's actual costs and will be
invoiced to the Interconnection Customer after the study is completed and delivered and
will include a summary of professional time.

10.0

The Interconnection Customer must pay any study costs that exceed the deposit without
interest within 30 calendar days on receipt of the invoice or resolution of any dispute. If
the deposit exceeds the invoiced fees, the Transmission Provider shall refund such excess
within 30 calendar days of the invoice without interest.

IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly executed by their
duly authorized officers or agents on the day and year first above written.

[Insert name of Transmission Provider]

[Insert name of Interconnection Customer]

SGIP Facilities Study Agreement

-2-

___________________________________ _________________________________

Signed______________________________ Signed___________________________
Name (Printed):

Name (Printed):

___________________________________ ________________________________

Title_______________________________ Title____________________________

SGIP Facilities Study Agreement

-3-

Attachment A to
Facilities Study Agreement

Data to Be Provided by the Interconnection Customer
with the Facilities Study Agreement
Provide location plan and simplified one-line diagram of the plant and station facilities. For
staged projects, please indicate future generation, transmission circuits, etc.
On the one-line diagram, indicate the generation capacity attached at each metering
location. (Maximum load on CT/PT)
On the one-line diagram, indicate the location of auxiliary power. (Minimum load on
CT/PT) Amps
One set of metering is required for each generation connection to the new ring bus or existing
Transmission Provider station. Number of generation connections: _____________
Will an alternate source of auxiliary power be available during CT/PT maintenance?
No ______
Yes
Will a transfer bus on the generation side of the metering require that each meter set be designed
for the total plant generation?
Yes
No _____
(Please indicate on the one-line diagram).
What type of control system or PLC will be located at the Small Generating Facility?
______________________________________________________________________________
______________________________________________________________________________
What protocol does the control system or PLC use?
______________________________________________________________________________
______________________________________________________________________________
Please provide a 7.5-minute quadrangle map of the site. Indicate the plant, station, transmission
line, and property lines.
Physical dimensions of the proposed interconnection station:
SGIP Facilities Study Agreement

-4-

______________________________________________________________________________
Bus length from generation to interconnection station:
______________________________________________________________________________
Line length from interconnection station to Transmission Provider's Transmission System.
______________________________________________________________________________
Tower number observed in the field. (Painted on tower leg)*:
______________________________________________________________________________
Number of third party easements required for transmission lines*:
______________________________________________________________________________
* To be completed in coordination with Transmission Provider.
Is the Small Generating Facility located in Transmission Provider’s service area?
Yes

No

If No, please provide name of local provider:

______________________________________________________________________________
Please provide the following proposed schedule dates:
Begin Construction

Date:____________________________

Generator step-up transformers
receive back feed power

Date:____________________________

Generation Testing

Date:____________________________

Commercial Operation

Date:____________________________

SGIP Facilities Study Agreement

-5-

Appendix F to the Small
Generator Interconnection Final Rule

SMALL GENERATOR
INTERCONNECTION AGREEMENT (SGIA)

(For Generating Facilities No Larger Than 20 MW)

TABLE OF CONTENTS
Page No.
Article 1. Scope and Limitations of Agreement. ...................................................................- 1 1.5
1.6
1.7
1.8

Responsibilities of the Parties.............................................................................- 2 Parallel Operation Obligations............................................................................- 2 Metering..............................................................................................................- 3 Reactive Power ...................................................................................................- 3 -

Article 2. Inspection, Testing, Authorization, and Right of Access.....................................- 4 2.1
2.2
2.3

Equipment Testing and Inspection......................................................................- 4 Authorization Required Prior to Parallel Operation. ..........................................- 4 Right of Access ...................................................................................................- 4 -

Article 3. Effective Date, Term, Termination, and Disconnection ......................................- 5 3.1
3.2
3.3
3.4

Effective Date .....................................................................................................- 5 Term of Agreement.............................................................................................- 5 Termination.........................................................................................................- 5 Temporary Disconnection...................................................................................- 6 3.4.1 Emergency Conditions............................................................................- 6 3.4.2 Routine Maintenance, Construction, and Repair ....................................- 6 3.4.3 Forced Outages .......................................................................................- 7 3.4.4 Adverse Operating Effects......................................................................- 7 3.4.5 Modification of the Small Generating Facility .......................................- 7 3.4.6 Reconnection...........................................................................................- 7 -

Article 4. Cost Responsibility for Interconnection Facilities and Distribution
Upgrades ........................................................................................................................- 7 4.1
4.2

Interconnection Facilities....................................................................................- 7 Distribution Upgrades.........................................................................................- 8 -

Article 5. Cost Responsibility for Network Upgrades ..........................................................- 8 5.1
5.2
5.3
5.4

Applicability .......................................................................................................- 8 Network Upgrades ..............................................................................................- 8 5.2.1 Repayment of Amounts Advanced for Network Upgrades ....................- 8 Special Provisions for Affected Systems............................................................- 9 Rights Under Other Agreements.........................................................................- 9 -

Article 6. Billing, Payment, Milestones, and Financial Security .......................................- 10 6.1
6.2
6.3

Billing and Payment Procedures and Final Accounting ...................................- 10 Milestones. ........................................................................................................- 10 Financial Security Arrangements......................................................................- 11 -

Article 7. Assignment, Liability, Indemnity, Force Majeure, Consequential
Damages, and Default.................................................................................................- 11 -i-

7.1
7.2
7.3
7.4
7.5
7.6

Assignment .......................................................................................................- 11 Limitation of Liability.......................................................................................- 12 Indemnity ..........................................................................................................- 12 Consequential Damages....................................................................................- 13 Force Majeure. ..................................................................................................- 13 Default...............................................................................................................- 13 -

Article 8. Insurance................................................................................................................- 14 Article 9. Confidentiality .......................................................................................................- 15 Article 10. Disputes ................................................................................................................- 16 Article 11. Taxes.....................................................................................................................- 16 Article 12. Miscellaneous.......................................................................................................- 16 12.1
12.2
12.3
12.4
12.5
12.6
12.7
12.8
12.9
12.10
12.11
12.12

Governing Law, Regulatory Authority, and Rules ...........................................- 16 Amendment.......................................................................................................- 17 No Third-Party Beneficiaries............................................................................- 17 Waiver...............................................................................................................- 17 Entire Agreement ..............................................................................................- 17 Multiple Counterparts. ......................................................................................- 17 No Partnership ..................................................................................................- 17 Severability .......................................................................................................- 18 Security Arrangements......................................................................................- 18 Environmental Releases....................................................................................- 18 Subcontractors...................................................................................................- 18 Reservation of Rights........................................................................................- 19 -

Article 13. Notices ..................................................................................................................- 19 13.1
13.2
13.3
13.4
13.5

General..............................................................................................................- 19 Billing and Payment..........................................................................................- 20 Alternative Forms of Notice .............................................................................- 20 Designated Operating Representative...............................................................- 20 Changes to the Notice Information ...................................................................- 21 -

Article 14. Signatures.............................................................................................................- 21 Attachment 1 – Glossary of Terms
Attachment 2 – Description and Costs of the Small Generating Facility, Interconnection
Facilities, and Metering Equipment
Attachment 3 – One-line Diagram Depicting the Small Generating Facility, Interconnection
Facilities, Metering Equipment, and Upgrades
Attachment 4 – Milestones
Attachment 5 – Additional Operating Requirements for the Transmission Provider's
Transmission System and Affected Systems Needed to Support the Interconnection Customer’s
Needs
Attachment 6 – Transmission Provider's Description of its Upgrades and Best Estimate of
- ii -

Upgrade Costs

- iii -

This Interconnection Agreement ("Agreement") is made and entered into this ________ day of
________________, 20__, by ___________________________________________________
("Transmission Provider"), and _________________________________________________
("Interconnection Customer") each hereinafter sometimes referred to individually as "Party" or
both referred to collectively as the "Parties."
Transmission Provider Information
Transmission Provider: ______________________________________________
Attention: _________________________________________________________
Address: __________________________________________________________
City: _______________________________ State: ______________ Zip: ______
Phone: ________________
Fax: _________________
Interconnection Customer Information
Interconnection Customer: ____________________________________________
Attention: _________________________________________________________
Address: __________________________________________________________
City: _______________________________ State: ______________ Zip: ______
Phone: ________________
Fax: _________________
Interconnection Customer Application No: _____________
In consideration of the mutual covenants set forth herein, the Parties agree as follows:
Article 1. Scope and Limitations of Agreement
1.1

This Agreement shall be used for all Interconnection Requests submitted under the Small
Generator Interconnection Procedures (SGIP) except for those submitted under the 10
kW Inverter Process contained in SGIP Attachment 5.

1.2

This Agreement governs the terms and conditions under which the Interconnection
Customer’s Small Generating Facility will interconnect with, and operate in parallel with,
the Transmission Provider's Transmission System.

1.3

This Agreement does not constitute an agreement to purchase or deliver the
Interconnection Customer's power. The purchase or delivery of power and other services
that the Interconnection Customer may require will be covered under separate
agreements. The Interconnection Customer will be responsible for separately making all
necessary arrangements (including scheduling) for delivery of electricity with the
applicable Transmission Provider.

1.4

Nothing in this Agreement is intended to affect any other agreement between the
Transmission Provider and the Interconnection Customer.

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1.5

1.6

Responsibilities of the Parties
1.5.1

The Parties shall perform all obligations of this Agreement in accordance with all
Applicable Laws and Regulations, Operating Requirements, and Good Utility
Practice.

1.5.2

The Interconnection Customer shall construct, interconnect, operate and maintain
its Small Generating Facility and construct, operate, and maintain its
Interconnection Facilities in accordance with the applicable manufacturer's
recommended maintenance schedule, in accordance with this Agreement, and
with Good Utility Practice.

1.5.3

The Transmission Provider shall construct, operate, and maintain its Transmission
System and Interconnection Facilities in accordance with this Agreement, and
with Good Utility Practice.

1.5.4

The Interconnection Customer agrees to construct its facilities or systems in
accordance with applicable specifications that meet or exceed those provided by
the National Electrical Safety Code, the American National Standards Institute,
IEEE, Underwriter's Laboratory, and Operating Requirements in effect at the time
of construction and other applicable national and state codes and standards. The
Interconnection Customer agrees to design, install, maintain, and operate its Small
Generating Facility so as to reasonably minimize the likelihood of a disturbance
adversely affecting or impairing the system or equipment of the Transmission
Provider or Affected Systems.

1.5.5

Each Party shall operate, maintain, repair, and inspect, and shall be fully
responsible for the facilities that it now or subsequently may own unless
otherwise specified in the Attachments to this Agreement. Each Party shall be
responsible for the safe installation, maintenance, repair and condition of their
respective lines and appurtenances on their respective sides of the point of change
of ownership. The Transmission Provider and the Interconnection Customer, as
appropriate, shall provide Interconnection Facilities that adequately protect the
Transmission Provider's Transmission System, personnel, and other persons from
damage and injury. The allocation of responsibility for the design, installation,
operation, maintenance and ownership of Interconnection Facilities shall be
delineated in the Attachments to this Agreement.

1.5.6

The Transmission Provider shall coordinate with all Affected Systems to support
the interconnection.

Parallel Operation Obligations
Once the Small Generating Facility has been authorized to commence parallel operation,
the Interconnection Customer shall abide by all rules and procedures pertaining to the

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parallel operation of the Small Generating Facility in the applicable control area,
including, but not limited to; 1) the rules and procedures concerning the operation of
generation set forth in the Tariff or by the system operator for the Transmission
Provider's Transmission System and; 2) the Operating Requirements set forth in
Attachment 5 of this Agreement.
1.7

Metering
The Interconnection Customer shall be responsible for the Transmission Provider's
reasonable and necessary cost for the purchase, installation, operation, maintenance,
testing, repair, and replacement of metering and data acquisition equipment specified in
Attachments 2 and 3 of this Agreement. The Interconnection Customer's metering (and
data acquisition, as required) equipment shall conform to applicable industry rules and
Operating Requirements.

1.8

Reactive Power

1.9

1.8.1

The Interconnection Customer shall design its Small Generating Facility to
maintain a composite power delivery at continuous rated power output at the
Point of Interconnection at a power factor within the range of 0.95 leading to 0.95
lagging, unless the Transmission Provider has established different requirements
that apply to all similarly situated generators in the control area on a comparable
basis. The requirements of this paragraph shall not apply to wind generators.

1.8.2

The Transmission Provider is required to pay the Interconnection Customer for
reactive power that the Interconnection Customer provides or absorbs from the
Small Generating Facility when the Transmission Provider requests the
Interconnection Customer to operate its Small Generating Facility outside the
range specified in article 1.8.1. In addition, if the Transmission Provider pays its
own or affiliated generators for reactive power service within the specified range,
it must also pay the Interconnection Customer.

1.8.3

Payments shall be in accordance with the Interconnection Customer's applicable
rate schedule then in effect unless the provision of such service(s) is subject to a
regional transmission organization or independent system operator FERCapproved rate schedule. To the extent that no rate schedule is in effect at the time
the Interconnection Customer is required to provide or absorb reactive power
under this Agreement, the Parties agree to expeditiously file such rate schedule
and agree to support any request for waiver of the Commission's prior notice
requirement in order to compensate the Interconnection Customer from the time
service commenced.

Capitalized terms used herein shall have the meanings specified in the Glossary of Terms
in Attachment 1 or the body of this Agreement.

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Article 2. Inspection, Testing, Authorization, and Right of Access
2.1

2.2

2.3

Equipment Testing and Inspection
2.1.1

The Interconnection Customer shall test and inspect its Small Generating Facility
and Interconnection Facilities prior to interconnection. The Interconnection
Customer shall notify the Transmission Provider of such activities no fewer than
five Business Days (or as may be agreed to by the Parties) prior to such testing
and inspection. Testing and inspection shall occur on a Business Day. The
Transmission Provider may, at its own expense, send qualified personnel to the
Small Generating Facility site to inspect the interconnection and observe the
testing. The Interconnection Customer shall provide the Transmission Provider a
written test report when such testing and inspection is completed.

2.1.2

The Transmission Provider shall provide the Interconnection Customer written
acknowledgment that it has received the Interconnection Customer's written test
report. Such written acknowledgment shall not be deemed to be or construed as
any representation, assurance, guarantee, or warranty by the Transmission
Provider of the safety, durability, suitability, or reliability of the Small Generating
Facility or any associated control, protective, and safety devices owned or
controlled by the Interconnection Customer or the quality of power produced by
the Small Generating Facility.

Authorization Required Prior to Parallel Operation
2.2.1

The Transmission Provider shall use Reasonable Efforts to list applicable parallel
operation requirements in Attachment 5 of this Agreement. Additionally, the
Transmission Provider shall notify the Interconnection Customer of any changes
to these requirements as soon as they are known. The Transmission Provider
shall make Reasonable Efforts to cooperate with the Interconnection Customer in
meeting requirements necessary for the Interconnection Customer to commence
parallel operations by the in-service date.

2.2.2

The Interconnection Customer shall not operate its Small Generating Facility in
parallel with the Transmission Provider's Transmission System without prior
written authorization of the Transmission Provider. The Transmission Provider
will provide such authorization once the Transmission Provider receives
notification that the Interconnection Customer has complied with all applicable
parallel operation requirements. Such authorization shall not be unreasonably
withheld, conditioned, or delayed.

Right of Access
2.3.1

Upon reasonable notice, the Transmission Provider may send a qualified person to
the premises of the Interconnection Customer at or immediately before the time

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the Small Generating Facility first produces energy to inspect the interconnection,
and observe the commissioning of the Small Generating Facility (including any
required testing), startup, and operation for a period of up to three Business Days
after initial start-up of the unit. In addition, the Interconnection Customer shall
notify the Transmission Provider at least five Business Days prior to conducting
any on-site verification testing of the Small Generating Facility.
2.3.2

Following the initial inspection process described above, at reasonable hours, and
upon reasonable notice, or at any time without notice in the event of an
emergency or hazardous condition, the Transmission Provider shall have access to
the Interconnection Customer's premises for any reasonable purpose in connection
with the performance of the obligations imposed on it by this Agreement or if
necessary to meet its legal obligation to provide service to its customers.

2.3.3

Each Party shall be responsible for its own costs associated with following this
article.

Article 3. Effective Date, Term, Termination, and Disconnection
3.1

Effective Date
This Agreement shall become effective upon execution by the Parties subject to
acceptance by FERC (if applicable), or if filed unexecuted, upon the date specified by the
FERC. The Transmission Provider shall promptly file this Agreement with the FERC
upon execution, if required.

3.2

Term of Agreement
This Agreement shall become effective on the Effective Date and shall remain in effect
for a period of ten years from the Effective Date or such other longer period as the
Interconnection Customer may request and shall be automatically renewed for each
successive one-year period thereafter, unless terminated earlier in accordance with article
3.3 of this Agreement.

3.3

Termination
No termination shall become effective until the Parties have complied with all Applicable
Laws and Regulations applicable to such termination, including the filing with FERC of a
notice of termination of this Agreement (if required), which notice has been accepted for
filing by FERC.
3.3.1

The Interconnection Customer may terminate this Agreement at any time by
giving the Transmission Provider 20 Business Days written notice.

3.3.2

Either Party may terminate this Agreement after Default pursuant to article 7.6.

3.3.3

Upon termination of this Agreement, the Small Generating Facility will be

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disconnected from the Transmission Provider's Transmission System. The
termination of this Agreement shall not relieve either Party of its liabilities and
obligations, owed or continuing at the time of the termination.
3.3.4

3.4

This provisions of this article shall survive termination or expiration of this
Agreement.

Temporary Disconnection
Temporary disconnection shall continue only for so long as reasonably necessary under
Good Utility Practice.
3.4.1

Emergency Conditions -- "Emergency Condition" shall mean a condition or
situation: (1) that in the judgment of the Party making the claim is imminently
likely to endanger life or property; or (2) that, in the case of the Transmission
Provider, is imminently likely (as determined in a non-discriminatory manner) to
cause a material adverse effect on the security of, or damage to the Transmission
System, the Transmission Provider's Interconnection Facilities or the
Transmission Systems of others to which the Transmission System is directly
connected; or (3) that, in the case of the Interconnection Customer, is imminently
likely (as determined in a non-discriminatory manner) to cause a material adverse
effect on the security of, or damage to, the Small Generating Facility or the
Interconnection Customer's Interconnection Facilities. Under Emergency
Conditions, the Transmission Provider may immediately suspend interconnection
service and temporarily disconnect the Small Generating Facility. The
Transmission Provider shall notify the Interconnection Customer promptly when
it becomes aware of an Emergency Condition that may reasonably be expected to
affect the Interconnection Customer's operation of the Small Generating Facility.
The Interconnection Customer shall notify the Transmission Provider promptly
when it becomes aware of an Emergency Condition that may reasonably be
expected to affect the Transmission Provider's Transmission System or other
Affected Systems. To the extent information is known, the notification shall
describe the Emergency Condition, the extent of the damage or deficiency, the
expected effect on the operation of both Parties' facilities and operations, its
anticipated duration, and the necessary corrective action.

3.4.2

Routine Maintenance, Construction, and Repair
The Transmission Provider may interrupt interconnection service or curtail the
output of the Small Generating Facility and temporarily disconnect the Small
Generating Facility from the Transmission Provider's Transmission System when
necessary for routine maintenance, construction, and repairs on the Transmission
Provider's Transmission System. The Transmission Provider shall provide the
Interconnection Customer with five Business Days notice prior to such
interruption. The Transmission Provider shall use Reasonable Efforts to
coordinate such reduction or temporary disconnection with the Interconnection
Customer.

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3.4.3

Forced Outages
During any forced outage, the Transmission Provider may suspend
interconnection service to effect immediate repairs on the Transmission Provider's
Transmission System. The Transmission Provider shall use Reasonable Efforts to
provide the Interconnection Customer with prior notice. If prior notice is not
given, the Transmission Provider shall, upon request, provide the Interconnection
Customer written documentation after the fact explaining the circumstances of the
disconnection.

3.4.4

Adverse Operating Effects
The Transmission Provider shall notify the Interconnection Customer as soon as
practicable if, based on Good Utility Practice, operation of the Small Generating
Facility may cause disruption or deterioration of service to other customers served
from the same electric system, or if operating the Small Generating Facility could
cause damage to the Transmission Provider's Transmission System or Affected
Systems. Supporting documentation used to reach the decision to disconnect shall
be provided to the Interconnection Customer upon request. If, after notice, the
Interconnection Customer fails to remedy the adverse operating effect within a
reasonable time, the Transmission Provider may disconnect the Small Generating
Facility. The Transmission Provider shall provide the Interconnection Customer
with five Business Day notice of such disconnection, unless the provisions of
article 3.4.1 apply.

3.4.5

Modification of the Small Generating Facility
The Interconnection Customer must receive written authorization from the
Transmission Provider before making any change to the Small Generating Facility
that may have a material impact on the safety or reliability of the Transmission
System. Such authorization shall not be unreasonably withheld. Modifications
shall be done in accordance with Good Utility Practice. If the Interconnection
Customer makes such modification without the Transmission Provider's prior
written authorization, the latter shall have the right to temporarily disconnect the
Small Generating Facility.

3.4.6

Reconnection
The Parties shall cooperate with each other to restore the Small Generating
Facility, Interconnection Facilities, and the Transmission Provider's Transmission
System to their normal operating state as soon as reasonably practicable following
a temporary disconnection.

Article 4. Cost Responsibility for Interconnection Facilities and Distribution Upgrades
4.1

Interconnection Facilities

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4.2

4.1.1

The Interconnection Customer shall pay for the cost of the Interconnection
Facilities itemized in Attachment 2 of this Agreement. The Transmission
Provider shall provide a best estimate cost, including overheads, for the purchase
and construction of its Interconnection Facilities and provide a detailed
itemization of such costs. Costs associated with Interconnection Facilities may be
shared with other entities that may benefit from such facilities by agreement of
the Interconnection Customer, such other entities, and the Transmission Provider.

4.1.2

The Interconnection Customer shall be responsible for its share of all reasonable
expenses, including overheads, associated with (1) owning, operating,
maintaining, repairing, and replacing its own Interconnection Facilities, and (2)
operating, maintaining, repairing, and replacing the Transmission Provider's
Interconnection Facilities.

Distribution Upgrades
The Transmission Provider shall design, procure, construct, install, and own the
Distribution Upgrades described in Attachment 6 of this Agreement. If the Transmission
Provider and the Interconnection Customer agree, the Interconnection Customer may
construct Distribution Upgrades that are located on land owned by the Interconnection
Customer. The actual cost of the Distribution Upgrades, including overheads, shall be
directly assigned to the Interconnection Customer.

Article 5. Cost Responsibility for Network Upgrades
5.1

Applicability
No portion of this article 5 shall apply unless the interconnection of the Small Generating
Facility requires Network Upgrades.

5.2

Network Upgrades
The Transmission Provider or the Transmission Owner shall design, procure, construct,
install, and own the Network Upgrades described in Attachment 6 of this Agreement. If
the Transmission Provider and the Interconnection Customer agree, the Interconnection
Customer may construct Network Upgrades that are located on land owned by the
Interconnection Customer. Unless the Transmission Provider elects to pay for Network
Upgrades, the actual cost of the Network Upgrades, including overheads, shall be borne
initially by the Interconnection Customer.
5.2.1

Repayment of Amounts Advanced for Network Upgrades
The Interconnection Customer shall be entitled to a cash repayment, equal to the
total amount paid to the Transmission Provider and Affected System operator, if
any, for Network Upgrades, including any tax gross-up or other tax-related
payments associated with the Network Upgrades, and not otherwise refunded to
the Interconnection Customer, to be paid to the Interconnection Customer on a
dollar-for-dollar basis for the non-usage sensitive portion of transmission charges,

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as payments are made under the Transmission Provider's Tariff and Affected
System's Tariff for transmission services with respect to the Small Generating
Facility. Any repayment shall include interest calculated in accordance with the
methodology set forth in FERC=s regulations at 18 C.F.R. '35.19a(a)(2)(iii) from
the date of any payment for Network Upgrades through the date on which the
Interconnection Customer receives a repayment of such payment pursuant to this
subparagraph. The Interconnection Customer may assign such repayment rights
to any person.
5.2.1.1

Notwithstanding the foregoing, the Interconnection Customer, the
Transmission Provider, and Affected System operator may adopt
any alternative payment schedule that is mutually agreeable so
long as the Transmission Provider and Affected System operator
take one of the following actions no later than five years from the
Commercial Operation Date: (1) return to the Interconnection
Customer any amounts advanced for Network Upgrades not
previously repaid, or (2) declare in writing that the Transmission
Provider or Affected System operator will continue to provide
payments to the Interconnection Customer on a dollar-for-dollar
basis for the non-usage sensitive portion of transmission charges,
or develop an alternative schedule that is mutually agreeable and
provides for the return of all amounts advanced for Network
Upgrades not previously repaid; however, full reimbursement shall
not extend beyond twenty (20) years from the commercial
operation date.

5.2.1.2

If the Small Generating Facility fails to achieve commercial
operation, but it or another generating facility is later constructed
and requires use of the Network Upgrades, the Transmission
Provider and Affected System operator shall at that time reimburse
the Interconnection Customer for the amounts advanced for the
Network Upgrades. Before any such reimbursement can occur, the
Interconnection Customer, or the entity that ultimately constructs
the generating facility, if different, is responsible for identifying
the entity to which reimbursement must be made.

5.3

Special Provisions for Affected Systems
Unless the Transmission Provider provides, under this Agreement, for the repayment of
amounts advanced to Affected System operator for Network Upgrades, the
Interconnection Customer and Affected System operator shall enter into an agreement
that provides for such repayment. The agreement shall specify the terms governing
payments to be made by the Interconnection Customer to Affected System operator as
well as the repayment by Affected System operator.

5.4

Rights Under Other Agreements

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Notwithstanding any other provision of this Agreement, nothing herein shall be construed
as relinquishing or foreclosing any rights, including but not limited to firm transmission
rights, capacity rights, transmission congestion rights, or transmission credits, that the
Interconnection Customer shall be entitled to, now or in the future, under any other
agreement or tariff as a result of, or otherwise associated with, the transmission capacity,
if any, created by the Network Upgrades, including the right to obtain cash
reimbursements or transmission credits for transmission service that is not associated
with the Small Generating Facility.

Article 6. Billing, Payment, Milestones, and Financial Security
6.1

6.2

Billing and Payment Procedures and Final Accounting
6.1.1

The Transmission Provider shall bill the Interconnection Customer for the design,
engineering, construction, and procurement costs of Interconnection Facilities and
Upgrades contemplated by this Agreement on a monthly basis, or as otherwise
agreed by the Parties. The Interconnection Customer shall pay each bill within 30
calendar days of receipt, or as otherwise agreed to by the Parties.

6.1.2

Within three months of completing the construction and installation of the
Transmission Provider's Interconnection Facilities and/or Upgrades described in
the Attachments to this Agreement, the Transmission Provider shall provide the
Interconnection Customer with a final accounting report of any difference
between (1) the Interconnection Customer's cost responsibility for the actual cost
of such facilities or Upgrades, and (2) the Interconnection Customer's previous
aggregate payments to the Transmission Provider for such facilities or Upgrades.
If the Interconnection Customer's cost responsibility exceeds its previous
aggregate payments, the Transmission Provider shall invoice the Interconnection
Customer for the amount due and the Interconnection Customer shall make
payment to the Transmission Provider within 30 calendar days. If the
Interconnection Customer's previous aggregate payments exceed its cost
responsibility under this Agreement, the Transmission Provider shall refund to the
Interconnection Customer an amount equal to the difference within 30 calendar
days of the final accounting report.

Milestones
The Parties shall agree on milestones for which each Party is responsible and list them in
Attachment 4 of this Agreement. A Party's obligations under this provision may be
extended by agreement. If a Party anticipates that it will be unable to meet a milestone
for any reason other than a Force Majeure Event, it shall immediately notify the other
Party of the reason(s) for not meeting the milestone and (1) propose the earliest
reasonable alternate date by which it can attain this and future milestones, and (2)
requesting appropriate amendments to Attachment 4. The Party affected by the failure to
meet a milestone shall not unreasonably withhold agreement to such an amendment

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unless it will suffer significant uncompensated economic or operational harm from the
delay, (2) attainment of the same milestone has previously been delayed, or (3) it has
reason to believe that the delay in meeting the milestone is intentional or unwarranted
notwithstanding the circumstances explained by the Party proposing the amendment.
6.3

Financial Security Arrangements
At least 20 Business Days prior to the commencement of the design, procurement,
installation, or construction of a discrete portion of the Transmission Provider's
Interconnection Facilities and Upgrades, the Interconnection Customer shall provide the
Transmission Provider, at the Interconnection Customer's option, a guarantee, a surety
bond, letter of credit or other form of security that is reasonably acceptable to the
Transmission Provider and is consistent with the Uniform Commercial Code of the
jurisdiction where the Point of Interconnection is located. Such security for payment
shall be in an amount sufficient to cover the costs for constructing, designing, procuring,
and installing the applicable portion of the Transmission Provider's Interconnection
Facilities and Upgrades and shall be reduced on a dollar-for-dollar basis for payments
made to the Transmission Provider under this Agreement during its term. In addition:
6.3.1

The guarantee must be made by an entity that meets the creditworthiness
requirements of the Transmission Provider, and contain terms and
conditions that guarantee payment of any amount that may be due from
the Interconnection Customer, up to an agreed-to maximum amount.

6.3.2

The letter of credit or surety bond must be issued by a financial institution
or insured reasonably acceptable to the Transmission Provider and must
specify a reasonable expiration date.

Article 7. Assignment, Liability, Indemnity, Force Majeure, Consequential Damages, and
Default
7.1

Assignment
This Agreement may be assigned by either Party upon 15 Business Days prior written
notice and opportunity to object by the other Party; provided that:
7.1.1

Either Party may assign this Agreement without the consent of the other Party to
any affiliate of the assigning Party with an equal or greater credit rating and with
the legal authority and operational ability to satisfy the obligations of the
assigning Party under this Agreement;

7.1.2

The Interconnection Customer shall have the right to assign this Agreement,
without the consent of the Transmission Provider, for collateral security purposes
to aid in providing financing for the Small Generating Facility, provided that the
Interconnection Customer will promptly notify the Transmission Provider of any
such assignment.

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7.1.3

Any attempted assignment that violates this article is void and ineffective.
Assignment shall not relieve a Party of its obligations, nor shall a Party's
obligations be enlarged, in whole or in part, by reason thereof. An assignee is
responsible for meeting the same financial, credit, and insurance obligations as
the Interconnection Customer. Where required, consent to assignment will not be
unreasonably withheld, conditioned or delayed.

7.2

Limitation of Liability
Each Party's liability to the other Party for any loss, cost, claim, injury, liability, or
expense, including reasonable attorney's fees, relating to or arising from any act or
omission in its performance of this Agreement, shall be limited to the amount of direct
damage actually incurred. In no event shall either Party be liable to the other Party for
any indirect, special, consequential, or punitive damages, except as authorized by this
Agreement.

7.3

Indemnity
7.3.1

This provision protects each Party from liability incurred to third parties as a
result of carrying out the provisions of this Agreement. Liability under this
provision is exempt from the general limitations on liability found in article 7.2.

7.3.2

The Parties shall at all times indemnify, defend, and hold the other Party harmless
from, any and all damages, losses, claims, including claims and actions relating to
injury to or death of any person or damage to property, demand, suits, recoveries,
costs and expenses, court costs, attorney fees, and all other obligations by or to
third parties, arising out of or resulting from the other Party's action or failure to
meet its obligations under this Agreement on behalf of the indemnifying Party,
except in cases of gross negligence or intentional wrongdoing by the indemnified
Party.

7.3.3

If an indemnified person is entitled to indemnification under this article as a result
of a claim by a third party, and the indemnifying Party fails, after notice and
reasonable opportunity to proceed under this article, to assume the defense of
such claim, such indemnified person may at the expense of the indemnifying
Party contest, settle or consent to the entry of any judgment with respect to, or pay
in full, such claim.

7.3.4

If an indemnifying party is obligated to indemnify and hold any indemnified
person harmless under this article, the amount owing to the indemnified person
shall be the amount of such indemnified person's actual loss, net of any insurance
or other recovery.

7.3.5

Promptly after receipt by an indemnified person of any claim or notice of the
commencement of any action or administrative or legal proceeding or

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investigation as to which the indemnity provided for in this article may apply, the
indemnified person shall notify the indemnifying party of such fact. Any failure
of or delay in such notification shall not affect a Party's indemnification
obligation unless such failure or delay is materially prejudicial to the
indemnifying party.
7.4

Consequential Damages
Other than as expressly provided for in this Agreement, neither Party shall be liable under
any provision of this Agreement for any losses, damages, costs or expenses for any
special, indirect, incidental, consequential, or punitive damages, including but not limited
to loss of profit or revenue, loss of the use of equipment, cost of capital, cost of
temporary equipment or services, whether based in whole or in part in contract, in tort,
including negligence, strict liability, or any other theory of liability; provided, however,
that damages for which a Party may be liable to the other Party under another agreement
will not be considered to be special, indirect, incidental, or consequential damages
hereunder.

7.5

Force Majeure

7.6

7.5.1

As used in this article, a Force Majeure Event shall mean "any act of God, labor
disturbance, act of the public enemy, war, insurrection, riot, fire, storm or flood,
explosion, breakage or accident to machinery or equipment, any order, regulation
or restriction imposed by governmental, military or lawfully established civilian
authorities, or any other cause beyond a Party’s control. A Force Majeure Event
does not include an act of negligence or intentional wrongdoing."

7.5.2

If a Force Majeure Event prevents a Party from fulfilling any obligations under
this Agreement, the Party affected by the Force Majeure Event (Affected Party)
shall promptly notify the other Party, either in writing or via the telephone, of the
existence of the Force Majeure Event. The notification must specify in
reasonable detail the circumstances of the Force Majeure Event, its expected
duration, and the steps that the Affected Party is taking to mitigate the effects of
the event on its performance. The Affected Party shall keep the other Party
informed on a continuing basis of developments relating to the Force Majeure
Event until the event ends. The Affected Party will be entitled to suspend or
modify its performance of obligations under this Agreement (other than the
obligation to make payments) only to the extent that the effect of the Force
Majeure Event cannot be mitigated by the use of Reasonable Efforts. The
Affected Party will use Reasonable Efforts to resume its performance as soon as
possible.

Default
7.6.1

No Default shall exist where such failure to discharge an obligation (other than
the payment of money) is the result of a Force Majeure Event as defined in this

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Agreement or the result of an act or omission of the other Party. Upon a Default,
the non-defaulting Party shall give written notice of such Default to the defaulting
Party. Except as provided in article 7.6.2, the defaulting Party shall have 60
calendar days from receipt of the Default notice within which to cure such
Default; provided however, if such Default is not capable of cure within 60
calendar days, the defaulting Party shall commence such cure within 20 calendar
days after notice and continuously and diligently complete such cure within six
months from receipt of the Default notice; and, if cured within such time, the
Default specified in such notice shall cease to exist.
7.6.2

If a Default is not cured as provided in this article, or if a Default is not capable of
being cured within the period provided for herein, the non-defaulting Party shall
have the right to terminate this Agreement by written notice at any time until cure
occurs, and be relieved of any further obligation hereunder and, whether or not
that Party terminates this Agreement, to recover from the defaulting Party all
amounts due hereunder, plus all other damages and remedies to which it is
entitled at law or in equity. The provisions of this article will survive termination
of this Agreement.

Article 8. Insurance
8.1

The Interconnection Customer shall, at its own expense, maintain in force general
liability insurance without any exclusion for liabilities related to the interconnection
undertaken pursuant to this Agreement. The amount of such insurance shall be sufficient
to insure against all reasonably foreseeable direct liabilities given the size and nature of
the generating equipment being interconnected, the interconnection itself, and the
characteristics of the system to which the interconnection is made. The Interconnection
Customer shall obtain additional insurance only if necessary as a function of owning and
operating a generating facility. Such insurance shall be obtained from an insurance
provider authorized to do business in the State where the interconnection is located.
Certification that such insurance is in effect shall be provided upon request of the
Transmission Provider, except that the Interconnection Customer shall show proof of
insurance to the Transmission Provider no later than ten Business Days prior to the
anticipated commercial operation date. An Interconnection Customer of sufficient creditworthiness may propose to self-insure for such liabilities, and such a proposal shall not be
unreasonably rejected.

8.2

The Transmission Provider agrees to maintain general liability insurance or selfinsurance consistent with the Transmission Provider’s commercial practice. Such
insurance or self-insurance shall not exclude coverage for the Transmission Provider's
liabilities undertaken pursuant to this Agreement.

8.3

The Parties further agree to notify each other whenever an accident or incident occurs
resulting in any injuries or damages that are included within the scope of coverage of

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such insurance, whether or not such coverage is sought.

Article 9. Confidentiality
9.1

Confidential Information shall mean any confidential and/or proprietary information
provided by one Party to the other Party that is clearly marked or otherwise designated
"Confidential." For purposes of this Agreement all design, operating specifications, and
metering data provided by the Interconnection Customer shall be deemed Confidential
Information regardless of whether it is clearly marked or otherwise designated as such.

9.2

Confidential Information does not include information previously in the public domain,
required to be publicly submitted or divulged by Governmental Authorities (after notice
to the other Party and after exhausting any opportunity to oppose such publication or
release), or necessary to be divulged in an action to enforce this Agreement. Each Party
receiving Confidential Information shall hold such information in confidence and shall
not disclose it to any third party nor to the public without the prior written authorization
from the Party providing that information, except to fulfill obligations under this
Agreement, or to fulfill legal or regulatory requirements.

9.3

9.2.1

Each Party shall employ at least the same standard of care to protect Confidential
Information obtained from the other Party as it employs to protect its own
Confidential Information.

9.2.2

Each Party is entitled to equitable relief, by injunction or otherwise, to enforce its
rights under this provision to prevent the release of Confidential Information
without bond or proof of damages, and may seek other remedies available at law
or in equity for breach of this provision.

Notwithstanding anything in this article to the contrary, and pursuant to 18 CFR § 1b.20,
if FERC, during the course of an investigation or otherwise, requests information from
one of the Parties that is otherwise required to be maintained in confidence pursuant to
this Agreement, the Party shall provide the requested information to FERC, within the
time provided for in the request for information. In providing the information to FERC,
the Party may, consistent with 18 CFR § 388.112, request that the information be treated
as confidential and non-public by FERC and that the information be withheld from public
disclosure. Parties are prohibited from notifying the other Party to this Agreement prior
to the release of the Confidential Information to FERC. The Party shall notify the other
Party to this Agreement when it is notified by FERC that a request to release Confidential
Information has been received by FERC, at which time either of the Parties may respond
before such information would be made public, pursuant to 18 CFR § 388.112. Requests
from a state regulatory body conducting a confidential investigation shall be treated in a
similar manner if consistent with the applicable state rules and regulations.

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Article 10. Disputes
10.1

The Parties agree to attempt to resolve all disputes arising out of the interconnection
process according to the provisions of this article.

10.2

In the event of a dispute, either Party shall provide the other Party with a written Notice
of Dispute. Such Notice shall describe in detail the nature of the dispute.

10.3

If the dispute has not been resolved within two Business Days after receipt of the Notice,
either Party may contact FERC's Dispute Resolution Service (DRS) for assistance in
resolving the dispute.

10.4

The DRS will assist the Parties in either resolving their dispute or in selecting an
appropriate dispute resolution venue (e.g., mediation, settlement judge, early neutral
evaluation, or technical expert) to assist the Parties in resolving their dispute. DRS can
be reached at 1-877-337-2237 or via the internet at http://www.ferc.gov/legal/adr.asp.

10.5

Each Party agrees to conduct all negotiations in good faith and will be responsible for
one-half of any costs paid to neutral third-parties.

10.6

If neither Party elects to seek assistance from the DRS, or if the attempted dispute
resolution fails, then either Party may exercise whatever rights and remedies it may have
in equity or law consistent with the terms of this Agreement.

Article 11. Taxes
11.1

The Parties agree to follow all applicable tax laws and regulations, consistent with FERC
policy and Internal Revenue Service requirements.

11.2

Each Party shall cooperate with the other to maintain the other Party's tax status. Nothing
in this Agreement is intended to adversely affect the Transmission Provider's tax exempt
status with respect to the issuance of bonds including, but not limited to, local furnishing
bonds.

Article 12. Miscellaneous
12.1

Governing Law, Regulatory Authority, and Rules
The validity, interpretation and enforcement of this Agreement and each of its provisions
shall be governed by the laws of the state of __________________ (where the Point of
Interconnection is located), without regard to its conflicts of law principles. This
Agreement is subject to all Applicable Laws and Regulations. Each Party expressly
reserves the right to seek changes in, appeal, or otherwise contest any laws, orders, or
regulations of a Governmental Authority.

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12.2

Amendment
The Parties may amend this Agreement by a written instrument duly executed by both
Parties.

12.3

No Third-Party Beneficiaries
This Agreement is not intended to and does not create rights, remedies, or benefits of any
character whatsoever in favor of any persons, corporations, associations, or entities other
than the Parties, and the obligations herein assumed are solely for the use and benefit of
the Parties, their successors in interest and where permitted, their assigns.

12.4

Waiver
12.4.1 The failure of a Party to this Agreement to insist, on any occasion, upon strict
performance of any provision of this Agreement will not be considered a waiver
of any obligation, right, or duty of, or imposed upon, such Party.
12.4.2 Any waiver at any time by either Party of its rights with respect to this Agreement
shall not be deemed a continuing waiver or a waiver with respect to any other
failure to comply with any other obligation, right, duty of this Agreement.
Termination or default of this Agreement for any reason by Interconnection
Customer shall not constitute a waiver of the Interconnection Customer's legal
rights to obtain an interconnection from the Transmission Provider. Any waiver
of this Agreement shall, if requested, be provided in writing.

12.5

Entire Agreement
This Agreement, including all Attachments, constitutes the entire agreement between the
Parties with reference to the subject matter hereof, and supersedes all prior and
contemporaneous understandings or agreements, oral or written, between the Parties with
respect to the subject matter of this Agreement. There are no other agreements,
representations, warranties, or covenants which constitute any part of the consideration
for, or any condition to, either Party's compliance with its obligations under this
Agreement.

12.6

Multiple Counterparts
This Agreement may be executed in two or more counterparts, each of which is deemed
an original but all constitute one and the same instrument.

12.7

No Partnership
This Agreement shall not be interpreted or construed to create an association, joint
venture, agency relationship, or partnership between the Parties or to impose any
partnership obligation or partnership liability upon either Party. Neither Party shall have
any right, power or authority to enter into any agreement or undertaking for, or act on
behalf of, or to act as or be an agent or representative of, or to otherwise bind, the other
Party.

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12.8

Severability
If any provision or portion of this Agreement shall for any reason be held or adjudged to
be invalid or illegal or unenforceable by any court of competent jurisdiction or other
Governmental Authority, (1) such portion or provision shall be deemed separate and
independent, (2) the Parties shall negotiate in good faith to restore insofar as practicable
the benefits to each Party that were affected by such ruling, and (3) the remainder of this
Agreement shall remain in full force and effect.

12.9

Security Arrangements
Infrastructure security of electric system equipment and operations and control hardware
and software is essential to ensure day-to-day reliability and operational security. FERC
expects all Transmission Providers, market participants, and Interconnection Customers
interconnected to electric systems to comply with the recommendations offered by the
President's Critical Infrastructure Protection Board and, eventually, best practice
recommendations from the electric reliability authority. All public utilities are expected
to meet basic standards for system infrastructure and operational security, including
physical, operational, and cyber-security practices.

12.10 Environmental Releases
Each Party shall notify the other Party, first orally and then in writing, of the release of
any hazardous substances, any asbestos or lead abatement activities, or any type of
remediation activities related to the Small Generating Facility or the Interconnection
Facilities, each of which may reasonably be expected to affect the other Party. The
notifying Party shall (1) provide the notice as soon as practicable, provided such Party
makes a good faith effort to provide the notice no later than 24 hours after such Party
becomes aware of the occurrence, and (2) promptly furnish to the other Party copies of
any publicly available reports filed with any governmental authorities addressing such
events.
12.11 Subcontractors
Nothing in this Agreement shall prevent a Party from utilizing the services of any
subcontractor as it deems appropriate to perform its obligations under this Agreement;
provided, however, that each Party shall require its subcontractors to comply with all
applicable terms and conditions of this Agreement in providing such services and each
Party shall remain primarily liable to the other Party for the performance of such
subcontractor.
12.11.1

The creation of any subcontract relationship shall not relieve the
hiring Party of any of its obligations under this Agreement. The
hiring Party shall be fully responsible to the other Party for the acts
or omissions of any subcontractor the hiring Party hires as if no
subcontract had been made; provided, however, that in no event
shall the Transmission Provider be liable for the actions or
inactions of the Interconnection Customer or its subcontractors

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with respect to obligations of the Interconnection Customer under
this Agreement. Any applicable obligation imposed by this
Agreement upon the hiring Party shall be equally binding upon,
and shall be construed as having application to, any subcontractor
of such Party.
12.11.2

The obligations under this article will not be limited in any way by
any limitation of subcontractor’s insurance.

12.12 Reservation of Rights
The Transmission Provider shall have the right to make a unilateral filing with FERC to
modify this Agreement with respect to any rates, terms and conditions, charges,
classifications of service, rule or regulation under section 205 or any other applicable
provision of the Federal Power Act and FERC's rules and regulations thereunder, and the
Interconnection Customer shall have the right to make a unilateral filing with FERC to
modify this Agreement under any applicable provision of the Federal Power Act and
FERC's rules and regulations; provided that each Party shall have the right to protest any
such filing by the other Party and to participate fully in any proceeding before FERC in
which such modifications may be considered. Nothing in this Agreement shall limit the
rights of the Parties or of FERC under sections 205 or 206 of the Federal Power Act and
FERC's rules and regulations, except to the extent that the Parties otherwise agree as
provided herein.

Article 13. Notices
13.1

General
Unless otherwise provided in this Agreement, any written notice, demand, or request
required or authorized in connection with this Agreement ("Notice") shall be deemed
properly given if delivered in person, delivered by recognized national currier service, or
sent by first class mail, postage prepaid, to the person specified below:
If to the Interconnection Customer:
Interconnection Customer: ____________________________________________
Attention: _________________________________
Address: __________________________________________________________
City: _______________________________ State:______________ Zip:_______
Phone: ________________
Fax: _________________
If to the Transmission Provider:
Transmission Provider: _____________________________________________
Attention: _________________________________
Address: __________________________________________________________
City: _______________________________ State:______________ Zip:_______
Phone: ________________
Fax: _________________

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13.2

Billing and Payment
Billings and payments shall be sent to the addresses set out below:
Interconnection Customer: ____________________________________________
Attention: _________________________________
Address: __________________________________________________________
City: _______________________________ State:______________ Zip:_______
Transmission Provider: _____________________________________________
Attention: _________________________________
Address: __________________________________________________________
City: _______________________________ State:______________ Zip:_______

13.3

Alternative Forms of Notice
Any notice or request required or permitted to be given by either Party to the other and
not required by this Agreement to be given in writing may be so given by telephone,
facsimile or e-mail to the telephone numbers and e-mail addresses set out below:
If to the Interconnection Customer:
Interconnection Customer: ____________________________________________
Attention: _________________________________
Address: __________________________________________________________
City: _______________________________ State:______________ Zip:_______
Phone: ________________
Fax: _________________
If to the Transmission Provider:
Transmission Provider: _____________________________________________
Attention: _________________________________
Address: __________________________________________________________
City: _______________________________ State:______________ Zip:_______
Phone: ________________
Fax: _________________

13.4

Designated Operating Representative
The Parties may also designate operating representatives to conduct the communications
which may be necessary or convenient for the administration of this Agreement. This
person will also serve as the point of contact with respect to operations and maintenance
of the Party’s facilities.
Interconnection Customer’s Operating Representative:
Interconnection Customer: ____________________________________________
Attention: _________________________________

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Address: __________________________________________________________
City: _______________________________ State:______________ Zip:_______
Phone: ________________
Fax: _________________
Transmission Provider’s Operating Representative:
Transmission Provider: _____________________________________________
Attention: _________________________________
Address: __________________________________________________________
City: _______________________________ State:______________ Zip:_______
Phone: ________________
Fax: _________________

13.5

Changes to the Notice Information
Either Party may change this information by giving five Business Days written notice
prior to the effective date of the change.

Article 14. Signatures
IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed by their
respective duly authorized representatives.
For the Transmission Provider

Name: ___________________________________________
Title: ___________________________________________
Date: ___________________

For the Interconnection Customer

Name: ___________________________________________
Title: ___________________________________________
Date: ___________________

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Attachment 1

Glossary of Terms
Affected System – An electric system other than the Transmission Provider's Transmission
System that may be affected by the proposed interconnection.
Applicable Laws and Regulations – All duly promulgated applicable federal, state and local
laws, regulations, rules, ordinances, codes, decrees, judgments, directives, or judicial or
administrative orders, permits and other duly authorized actions of any Governmental Authority.
Business Day – Monday through Friday, excluding Federal Holidays.
Default – The failure of a breaching Party to cure its Breach under the Small Generator
Interconnection Agreement.
Distribution System – The Transmission Provider's facilities and equipment used to transmit
electricity to ultimate usage points such as homes and industries directly from nearby generators
or from interchanges with higher voltage transmission networks which transport bulk power over
longer distances. The voltage levels at which Distribution Systems operate differ among areas.
Distribution Upgrades – The additions, modifications, and upgrades to the Transmission
Provider's Distribution System at or beyond the Point of Interconnection to facilitate
interconnection of the Small Generating Facility and render the transmission service necessary to
effect the Interconnection Customer's wholesale sale of electricity in interstate commerce.
Distribution Upgrades do not include Interconnection Facilities.
Good Utility Practice – Any of the practices, methods and acts engaged in or approved by a
significant portion of the electric industry during the relevant time period, or any of the practices,
methods and acts which, in the exercise of reasonable judgment in light of the facts known at the
time the decision was made, could have been expected to accomplish the desired result at a
reasonable cost consistent with good business practices, reliability, safety and expedition. Good
Utility Practice is not intended to be limited to the optimum practice, method, or act to the
exclusion of all others, but rather to be acceptable practices, methods, or acts generally accepted
in the region.
Governmental Authority – Any federal, state, local or other governmental regulatory or
administrative agency, court, commission, department, board, or other governmental subdivision,
legislature, rulemaking board, tribunal, or other governmental authority having jurisdiction over
the Parties, their respective facilities, or the respective services they provide, and exercising or
entitled to exercise any administrative, executive, police, or taxing authority or power; provided,
however, that such term does not include the Interconnection Customer, the Interconnection
Provider, or any Affiliate thereof.
Interconnection Customer – Any entity, including the Transmission Provider, the Transmission
Owner or any of the affiliates or subsidiaries of either, that proposes to interconnect its Small

Glossary of Terms

-1-

Generating Facility with the Transmission Provider's Transmission System.
Interconnection Facilities – The Transmission Provider's Interconnection Facilities and the
Interconnection Customer's Interconnection Facilities. Collectively, Interconnection Facilities
include all facilities and equipment between the Small Generating Facility and the Point of
Interconnection, including any modification, additions or upgrades that are necessary to
physically and electrically interconnect the Small Generating Facility to the Transmission
Provider's Transmission System. Interconnection Facilities are sole use facilities and shall not
include Distribution Upgrades or Network Upgrades.
Interconnection Request – The Interconnection Customer's request, in accordance with the
Tariff, to interconnect a new Small Generating Facility, or to increase the capacity of, or make a
Material Modification to the operating characteristics of, an existing Small Generating Facility
that is interconnected with the Transmission Provider’s Transmission System.
Material Modification – A modification that has a material impact on the cost or timing of any
Interconnection Request with a later queue priority date.
Network Upgrades – Additions, modifications, and upgrades to the Transmission Provider's
Transmission System required at or beyond the point at which the Small Generating Facility
interconnects with the Transmission Provider’s Transmission System to accommodate the
interconnection of the Small Generating Facility with the Transmission Provider’s Transmission
System. Network Upgrades do not include Distribution Upgrades.
Operating Requirements – Any operating and technical requirements that may be applicable
due to Regional Transmission Organization, Independent System Operator, control area, or the
Transmission Provider's requirements, including those set forth in the Small Generator
Interconnection Agreement.
Party or Parties – The Transmission Provider, Transmission Owner, Interconnection Customer
or any combination of the above.
Point of Interconnection – The point where the Interconnection Facilities connect with the
Transmission Provider's Transmission System.
Reasonable Efforts – With respect to an action required to be attempted or taken by a Party
under the Small Generator Interconnection Agreement, efforts that are timely and consistent with
Good Utility Practice and are otherwise substantially equivalent to those a Party would use to
protect its own interests.
Small Generating Facility – The Interconnection Customer's device for the production of
electricity identified in the Interconnection Request, but shall not include the Interconnection
Customer's Interconnection Facilities.
Tariff – The Transmission Provider or Affected System's Tariff through which open access
transmission service and Interconnection Service are offered, as filed with the FERC, and as

Glossary of Terms

-2-

amended or supplemented from time to time, or any successor tariff.
Transmission Owner – The entity that owns, leases or otherwise possesses an interest in the
portion of the Transmission System at the Point of Interconnection and may be a Party to the
Small Generator Interconnection Agreement to the extent necessary.
Transmission Provider – The public utility (or its designated agent) that owns, controls, or
operates transmission or distribution facilities used for the transmission of electricity in interstate
commerce and provides transmission service under the Tariff. The term Transmission Provider
should be read to include the Transmission Owner when the Transmission Owner is separate
from the Transmission Provider.
Transmission System – The facilities owned, controlled or operated by the Transmission
Provider or the Transmission Owner that are used to provide transmission service under the
Tariff.
Upgrades – The required additions and modifications to the Transmission Provider's
Transmission System at or beyond the Point of Interconnection. Upgrades may be Network
Upgrades or Distribution Upgrades. Upgrades do not include Interconnection Facilities.

Glossary of Terms

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Attachment 2

Description and Costs of the Small Generating Facility,
Interconnection Facilities, and Metering Equipment
Equipment, including the Small Generating Facility, Interconnection Facilities, and metering
equipment shall be itemized and identified as being owned by the Interconnection Customer, the
Transmission Provider, or the Transmission Owner. The Transmission Provider will provide a
best estimate itemized cost, including overheads, of its Interconnection Facilities and metering
equipment, and a best estimate itemized cost of the annual operation and maintenance expenses
associated with its Interconnection Facilities and metering equipment.

Attachment 3

One-line Diagram Depicting the Small Generating Facility, Interconnection
Facilities, Metering Equipment, and Upgrades

Attachment 4

Milestones
In-Service Date:

___________________

Critical milestones and responsibility as agreed to by the Parties:
Milestone/Date

Responsible Party

(1)

_______________________________________

______________________

(2)

_______________________________________

______________________

(3)

_______________________________________

______________________

(4)

_______________________________________

______________________

(5)

_______________________________________

______________________

(6)

_______________________________________

______________________

(7)

_______________________________________

______________________

(8)

_______________________________________

______________________

(9)

_______________________________________

______________________

(10)

_______________________________________

______________________

Agreed to by:
For the Transmission Provider__________________________ Date______________
For the Transmission Owner (If Applicable) ________________________ Date_____________
For the Interconnection Customer________________________ Date______________

Attachment 5

Additional Operating Requirements for the Transmission Provider's
Transmission System and Affected Systems Needed to Support
the Interconnection Customer's Needs

The Transmission Provider shall also provide requirements that must be met by the
Interconnection Customer prior to initiating parallel operation with the Transmission Provider's
Transmission System.

Attachment 6

Transmission Provider's Description of its Upgrades
and Best Estimate of Upgrade Costs

The Transmission Provider shall describe Upgrades and provide an itemized best estimate of the
cost, including overheads, of the Upgrades and annual operation and maintenance expenses
associated with such Upgrades. The Transmission Provider shall functionalize Upgrade costs
and annual expenses as either transmission or distribution related.