FERC's Order No. 2023, issued in July 2023, is now moving from rulebook to practice. Transmission providers had until 3 April 2024 to file compliance plans, extended to 16 May 2024 for the rehearing changes in Order No. 2023-A, and the Commission has been acting on those filings through the year. By the fall, the first cluster studies under the new rules are being set up across the regions FERC regulates.
The problem the rule was written for
FERC's own explainer sets out the scale. At the end of 2022 there were more than 10,000 active interconnection requests in U.S. queues, representing over 2,000 GW of potential generation and storage. That works out to an average of about 200 MW per request, on our division. Of the 2,179 interconnection studies completed in 2022, 68 percent were issued late, which by our arithmetic is roughly 1,480 late studies in a single year.
Under the old rules, transmission providers studied requests one at a time, first come, first served, and were held only to a "reasonable efforts" standard on deadlines. Developers had every reason to file speculative requests at many sites, since holding a queue position was cheap and dropping out cost little. Each withdrawal could force restudies for everyone behind it.
What changes on the ground
The rule replaces serial studies with clusters. Providers must run a 150-day cluster study, followed by a facilities study, and must allocate shared network upgrade costs among projects in the cluster using a proportional impact method. Missed deadlines now carry penalties, which is a first. Neighboring "affected systems" must also run their own 150-day cluster studies under firm notice deadlines and standard agreements, which addresses one of the most common causes of late-stage withdrawals: upgrade costs on an adjacent network that surfaced only after a project was nearly ready.
The readiness rules are the part developers feel most. Applicants must show 90 percent site control when they file and 100 percent by the facilities study agreement. Study deposits scale with project size. A commercial readiness deposit is due at each stage and later rises with the project's share of identified upgrade costs. Withdrawals that materially affect other projects trigger penalties. Projects already in the queue were offered a transition: a transitional serial study, a transitional cluster study, or withdrawal without penalty.
The rule also requires providers to publish heatmaps of available transmission capacity, to allow several resources such as solar and storage to share one interconnection request, and to evaluate advanced transmission technologies such as advanced conductors and power flow control in cluster studies.
Our view
We expect the first effect of Order No. 2023 to be a sharp fall in queue volume, as speculative projects withdraw rather than post deposits. That will look like success in the statistics and may be read as one. It is not the same thing as faster connections. The binding constraint for many viable projects is the network upgrade itself, the transformers, breakers and new lines that take years to permit and build. A cluster study that correctly identifies a costly upgrade does not shorten the time to build it.
The cluster approach can also hurt small projects. When upgrade costs are shared across a cluster, a single large project's needs can set the bill for everyone, and a small solar or storage developer may face a cost allocation it cannot carry. Regional variations approved under the "independent entity variation" standard will decide how severe that is.
The right measure of the rule's success is the time from request to commercial operation for projects that are actually built. FERC should ask providers to report that figure, by technology, every year.