On April 5, 2019, FERC accepted PJM Interconnection, L.L.C.’s (“PJM”) proposed revisions to its Open Access Transmission Tariff (“Tariff”) regarding Incremental Capacity Transfer Rights (“ICTRs”).  ICTRs are created whenever customer-funded upgrades increase transmission import capability into a Locational Deliverability Area (“LDA”) in PJM’s system.  Specifically, PJM proposed: (1) to revise the procedures to determine ICTRs; (2) to limit customers to specifying no more than three LDAs in which to determine ICTRs; and (3) to allow customers to request PJM to determine ICTRs, rather than making such determination automatic.  In accepting PJM’s proposal, FERC determined that the requested revisions balanced customer needs with the efficient processing of PJM’s interconnection queue.

As PJM explained, an impetus for its proposal was a previous FERC order, prompted by a wind generator’s complaint, in which FERC interpreted PJM’s Tariff to require ICTR determinations at the system impact study stage, as opposed to a later and more manageable point in the interconnection process.  Concerned that such a requirement could cause “substantial delay[s]” in issuing system impact studies, thereby creating a “cascading effect” on subsequent queues, PJM filed the present ICTR reforms on February 4, 2019.

In its filing, PJM first proposed moving the point of ICTR determinations to just after the execution of a facility study agreement, but before the issuance of an interconnection service agreement or construction service agreement.  As PJM argued, it was unnecessary and inefficient to make ICTR determinations any earlier because only a portion of customers executing facility study agreements go into commercial operation, and PJM often must repeat system impact studies to account for changes caused by the removal of higher-queued projects, potentially changing or eliminating the originally determined customer-funded upgrades.  Second, PJM proposed limiting the number of LDAs to three for ICTR determinations, arguing that additional analyses are unnecessary as it is unlikely for generator interconnection requests to impact more than three LDAs.  Finally, PJM proposed obligating ICTR determinations only upon a customer’s request, which could, as PJM asserted, promote the efficient processing of PJM’s interconnection queue.

In its order approving the changes, FERC found that PJM’s proposed revisions appropriately balanced the needs of new customers seeking ICTRs that may result from customer-funded upgrades with efficient processing of PJM’s interconnection queue.

In response to two protesters’ clarification request regarding upgrades resulting from an affected system study, FERC found that under PJM’s proposal, new customers that are interconnecting to a neighboring region and are responsible for affected system upgrades would be able to request an ICTR determination after executing the facilities study agreement.

Click here to read the full Order.