Law360 reports on legal challenges to FERC Order No. 2023, quoting United's Caitlin Marquis about how clean energy organizations support the groundbreaking rule and FERC offering incremental improvement.
The Federal Energy Regulatory Commission's revised policy on hooking up new power projects to the grid unlawfully imposes a punitive, one-size-fits-all system on transmission owners, regional grid operators and transmission companies told the D.C. Circuit Wednesday.
FERC is facing challenges over Order No. 2023, which rewrites the agency's standard generator interconnection procedures and agreements. The rule, finalized in July 2023 and affirmed in March, is aimed at reducing ballooning interconnection backlogs that have emerged in response to the U.S. electricity grid's increasing shift to one powered by zero-carbon energy.
The rule requires utilities and other transmission owners to study interconnection requests from multiple power projects at once instead of one project at a time, and puts pressure on both transmission owners and power project owners to keep the process moving by imposing penalties on transmission providers when they fail to finish a study on time.
But in a Wednesday brief, dozens of transmission providers, including regional grid operators and utilities, said the strict liability penalties violate their due process rights. It also flouts both the Federal Power Act and Administrative Procedure Act, because FERC hasn't shown that transmission providers are to blame for the interconnection backlog and that imposing penalties will lead to just and reasonable rates, they said.
Clean energy advocates that had pushed FERC to update its generator interconnection policies are largely happy with Order No. 2023, but not completely.
In a Wednesday brief, trade groups Advanced Energy United, American Clean Power and the Solar Energy Industries Association said FERC's decision to narrow the ability for generation projects to withdraw from interconnection queues when grid upgrade costs increase without incurring a financial penalty departs from agency precedent and contradicts Order No. 2023's goal of bringing greater transparency and cost certainty to the interconnection process.
"In establishing the need for the final rule, FERC found that cost uncertainty contributed to the increase in interconnection request withdrawals, hindering 'the timely development of new generation and thereby stifle competition in the wholesale electric markets resulting in rates, terms, and conditions that are unjust, unreasonable, and unduly discriminatory or preferential,'" the groups said in their brief. "Yet, with respect to withdrawal penalties, FERC now requires interconnection customers to secure financing to account for that cost uncertainty."
A FERC spokesperson said Thursday that the agency doesn't comment on court proceedings. A representative for the transmission providers couldn't be immediately reached for comment.
"Penalties are appropriate to deter late withdrawals, but when withdrawals are caused by unexpected cost increases late in the process, projects should not be doubly penalized by facing a penalty for dropping out," Advanced Energy United managing director Caitlin Marquis said in a statement Thursday. "This isolated issue can easily be fixed by a remand to the commission that keeps the rest of the order intact."
The transmission providers are represented by Troutman Pepper Hamilton Sanders LLP and Hunton Andrews Kurth LLP, among others.
Advanced Energy United is represented by managing director and general counsel Jeremy McDiarmid.
American Clean Power is represented by assistant general counsel Gabriel Tabak.
The Solar Energy Industries Association is represented by vice president of regulatory affairs and counsel Ben Norris and senior director of energy markets and counsel Melissa Alfano.
The lead case is Advanced Energy United et al. v. FERC, case number 23-1282 in the U.S. Court of Appeals for the District of Columbia Circuit.
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