Interconnection customers: be on notice. Your interconnection agreement may not be just a transmission provider service agreement that allows your project to interconnect with the transmission system. It may also be a rate schedule–your rate schedule–that you must file with FERC or suffer the consequences for violating the Federal Power Act.
At last week’s open meeting, FERC issued a decision in Chehalis Power Generating, LP where FERC recapped the longstanding requirement that public utilities must file the rates, terms, and conditions for the jurisdictional services they provide. So far, so good. But the Chehalis decision focuses on an interconnection customer who, for some time, provided uncompensated reactive power service under its interconnection agreement–a service that is provided by all interconnection customers who are required to operate their projects within a specified power factor range. (If you’re keeping track, that’s everyone but wind projects.) In fact, FERC’s pro forma interconnection agreement even requires interconnection customers to operate their projects in this way in order to maintain reliability.
In Chehalis, FERC said the following: “In order to clarify the Commission’s policy related to reactive power service provided without compensation, the Commission finds that, on a prospective basis, for any jurisdictional reactive power service (including within dead-the-deadband reactive power service [i.e., the service that nearly all interconnection customers supply]) provided by both existing and new generators, the rates, terms, and conditions for such service must be pursuant to a rate schedule on file with the Commission, even though the rate schedule would provide no compensation for such service.” (brackets added)
In other words, interconnection customers who have not offered to provide any service but who instead operate their projects pursuant to the requirements that have been imposed by FERC, and who do so without compensation, must file their interconnection agreements as a rate schedule. But what regulatory purpose does this serve?
As a result of the Chehalis decision, FERC will be holding a workshop to explore the mechanics of filing reactive power rate schedules for which there is no compensation. At a minimum, I hope that FERC exempts all interconnection customers who provide uncompensated reactive power services from any filing requirement. If not, FERC Staff will be very busy.