On November 29, 2022, FERC conditionally accepted PJM Interconnection, L.L.C.’s (“PJM”) tariff revisions to transition from a serial first-come, first-served generator interconnection queue process to a first-ready, first-served clustered cycle approach. FERC found that the revisions will help reduce interconnection queue backlogs and delays.

Order No. 2003 required all public utilities that own, control, or operate jurisdictional transmission facilities to adopt standardized procedures and agreements to govern the interconnection of generating facilities larger than 20 MW, known as the pro forma large generator interconnection procedures (“LGIP”) and pro forma large generator interconnection agreement (“LGIA”), respectively. Despite this standardization, Order No. 2003 allows regional transmission organizations (“RTOs”) and independent system operators (“ISOs”) to modify these pro forma procedures if such modifications satisfy the “independent entity variation” standard. The independent entity variation standard is met when the RTO/ISO demonstrates that the proposed variation (1) is just and reasonable, and not unduly discriminatory or preferential, and (2) accomplishes Order No. 2003’s general purpose.

On June 14, 2022, PJM filed to revise its pro forma interconnection process. The proposed move to a first-ready, first-served clustered cycle approach will group projects in three-phase cluster cycles for the purposes of studying and allocating costs. In support of the revisions, PJM explained that the reforms would (1) “reduce the current request backlog,” (2) “increase process efficiency to prevent a future backlog,” and (3) “decrease uncertainty for all affected entities by separating out projects that are not ready to proceed to commercial operation or that are otherwise too speculative to complete the interconnection process.”

In accepting PJM’s filing, FERC found that PJM’s first-ready, first-served cluster approach satisfies the first prong of the independent entity variation standard because it will enable PJM to reduce the current backlog quicker than its current rules and will allow for a more efficient and timely processing of New Service Requests. FERC also found the revisions consistent with the purposes of Order No. 2003 because they encourage project developers to complete generation projects in a timely manner. FERC reasoned that PJM’s first-ready, first-served clustered cycle approach and other reforms directed at minimizing the number of speculative and non-ready projects entering the queue would improve PJM’s ability to address queue backlogs. The Commission emphasized that it has, and will continue to afford RTOs/ISOs “considerable flexibility in the chosen approach to address region-specific queue processing challenges.” As a condition of accepting the revisions, the Commission also required PJM, within 30 days from the date of its order, to add tariff language indicating that New Service Requests that do not result in network upgrades or subsequent studies may bypass certain intermediary steps and accelerate to a final interconnection-related agreement (one of the last steps in the interconnection process).

A copy of the order can be found here.