On January 30, 2009, FERC issued an order approving ISO-NE tariff revisions to integrate the FCM and the generator interconnection process. The modified OATT provisions will offer two levels of interconnection service, one of which will have a deliverability requirement. The new procedures will also create a new option for generators seeking to qualify for participation in a Forward Capacity Auction (“Auction”).

Order No. 2003 established a first-come, first-served queue process for interconnection requests. It directed transmission providers to offer two levels of service: (1) energy resource interconnection and (2) network resource interconnection. Energy resource service allows a generator to interconnect and deliver power using existing firm and non-firm transmission capacity on an as-available basis. Under network resource service, a transmission provider must integrate the requesting generator into the grid in a manner comparable to the way it integrates its own generation to serve its native load.

On June 16, 2006, the Commission approved a contested settlement to create the FCM in ISO-NE. Under current FCM market rules, new generators must undergo an interconnection analysis by the ISO-NE to determine the impact of the proposed project on the transmission system. Once a generator qualifies for participation in the Auction, it enters the interconnection queue and is subject to the first-come, first-served rule. On October 31, 2008, ISO-NE, the Participating Transmission Owners Administrative Committee, and the NEPOOL Participants Committee filed proposed revisions to the ISO-NE OATT to address the relationship between the FCM and generator interconnection procedures.

FERC approved the modified procedures, which incorporate the FCM’s deliverability standard as the intra-zonal deliverability standard in the interconnection procedures. This standard ensures that the proposed resource (either alone or in combination with other resources) can provide incremental capacity to the system. Specifically, the revised OATT creates two levels of interconnection service: (1) capacity service available to interconnection customers that satisfy the deliverability standard, and (2) energy-only service available to all interconnection customers that satisfy the Minimum Interconnection Standard. The new procedures also allocate interconnection rights and obligations based on the result of the Auction by adding a “first-cleared, first served” approach to the interconnection queue process. FERC stated that the revisions advance the goals of Order No. 2003 by creating the second level of interconnection service and will promote deliverability of resources in the market.

FERC also approved tariff revisions that will create a Conditional New Qualified Generating Capacity Resource option for generators seeking to qualify for participation in an Auction. Under this new provision, a generator with a lower queue position with the same overlapping interconnection impacts as a generator with a higher queue position can conditionally qualify for the FSM along with the primary generator, instead of being disqualified solely because of its lower queue position. The Commission found that these revisions address concerns that a higher-queued resource can effectively block out other resources that would be able to provide capacity at a lower price, thereby promoting market efficiency.

The new tariff provisions became effective on February 1, 2009.