CAISO pursuing straw proposal to clear interconnection logjam as FERC ruling delays recent cluster studies
The California ISO (CAISO) is pursuing solutions to ease the backlog in its interconnection queue, starting by pausing its Cluster 15 review to give itself more time to go through Cluster 14 and evaluate its transmission zone proposal.
Lilly McKenna, counsel with law firm Stoel Rives, told NPM that CAISO submitted a tariff filing with the Federal Energy Regulatory Commission (FERC) on June 2. That filing sought approval to put its latest interconnection Cluster 15 study on pause while CAISO still grapples with Cluster 14. FERC approved the filing in August, but CAISO is still seeking solutions to deal with the interconnection backlog. This included continued stakeholder meetings, including one held on September 28.
CAISO sought to pause the Cluster 15 study to also work on broader improvements that could be used in the future study process. The filing stated that it would complete the evaluation for Cluster 15 in September 2024.
The proposal involved extending the Phase II study results in Cluster 14 to January 31, 2024, from November 24, amongst other milestone extensions, while pausing Cluster 15 for at least a year and allowing applicants in that study a refund of study deposits and any site exclusivity deposits if bids are pulled before April 1, 2024.
On August 1, FERC authorized CAISO to pause the Cluster 15 review and allow more time on Cluster 14. The approval gave CAISO a two-month extension on Cluster 14 and additionally for the transmission deliverability to be finished May 2024 and a second financial security posting in July 2024.
The proposal discussed at the September 28 meeting, or what is being called the “Straw Proposal,” is attempting to address the “unprecedented” interconnection request volumes that are “unsustainable in the ISO’s current process.”
Straw Proposal
The Straw Proposal is meant to reform the interconnection process emphasizing project viability and competition for resources in a local and state resource planning effort. If approved, the plan would create a “zonal approach” encouraging interconnections in transmission zones with available and approved transmission only.
Before the interconnection request window opening, CAISO would provide data about transmission constraints by zone. This is the “transmission plan deliverability (TPD), which would include constraint, identification of priority zones, and an interconnection heat map. The TPD is FERC ordered.
Projects that seek to interconnect in zones that have no TPD available would only proceed as Option B projects.
The Straw Proposal is also seeking to score each interconnection request based on criteria to rank the project for progression to the study process. If excess capacity exists after applying the criteria, CAISO will then conduct a “market-clearing, sealed-bid auction for the right to be prioritized and studied in a specific zone.”
“Only projects deemed equal in viability rating and cause the total MW for a zone to cross the capacity limit for a zone would participate in the auction,” the proposal read, adding that successful projects would move on to a single-phase study process and after then then compete to secure TPD for each zone.
CAISO also proposed to construct a multi-year interim deliverability bridge to gap between in-service dates of a Local Delivery Network Upgrade (LDNU) and a project’s requested commercial operation date (COD).
The Straw Proposal also put forward suggested changes to the contract and queue management process to allow projects the chance to either withdraw from the queue or advance to COD. There would be a one-time opportunity to withdraw and receive any unused portion of the interconnection financial security postings, as well.
The backlog
CAISO said the applications in Cluster 14 amounted to a 241% increase above the previous record-high cluster. The initial overflow required CAISO to revise its interconnection study deadlines for Cluster 14, which FERC approved in September 2021, before Cluster 14 began. After CAISO and its transmission owners completed Phase I of the Cluster 14 studies in the fall of 2022, the grid operator said less than 40% of Cluster 14 interconnection customers withdrew after phase 1 compared to 60% that typically withdraw after Phase I.
This was due to “high levels of generation procurement in California and financial strength in the industry,” notes CAISO, adding that this problem is intensified “because the majority of the interconnection customers remaining in the queue are in the single transmission owner territory of Pacific Gas & Electric.”
CAISO stated in Cluster 15, it implemented enhancements to reduce queue volumes, which included increased site exclusivity and third-party interconnection facility requirements. Despite these enhancements, CAISO states that Cluster 14 received 541 interconnection requests, a 45% increase above Cluster 14 interconnection requests.
CAISO said conducting both Phase II studies for Cluster 14 and Phase I studies for Cluster 15 is premised on a manageable number of requests going into Cluster 14’s Phase II.
The grid operator “conducting meaningful scoping meetings for 541 interconnection requests could take several months before Cluster 15 studies commence, diverting valuable resources from Cluster 14 study work.”
McKenna added that the backlog was seen in Cluster 14, and that it was worse in Cluster 15.
“It’s coming to a head and stakeholders in CAISO see there needs to be a broader overhaul,” she said.
To see the Cluster 15 applications on the NPM site, navigate to Interconnection Queues and select CAISO. Then under Application Tags select Cluster 15 to view application data.
*This story was originally published exclusively for NPM subscribers last month.
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