United States: FERC Rejects MISO's Proposed Restrictions On Joining The Development Queue

Securing interconnection and transmission rights and completing related upgrades is often the longest lead-time item in an electric generator's development timeline. At the same time, many potential new power plants are being developed and vying for access to the electric transmission grid. The policy of most grid operators is to address interconnection requests on a "first come first served" basis. As a result, developers/interconnection customers are incentivized to submit their interconnection requests as early in the development process as possible in order to save their projects' place in line. Over the last two years, Midcontinent Independent System Operator, Inc. ("MISO") experienced record-high interconnection requests, and yet nearly 80% of these submissions ultimately were withdrawn prior to commercial operation of the project. MISO attributed this trend to developers submitting multiple requests for the same proposed project to test (and quickly withdraw) multiple interconnection concepts, many of which the developers knew they were not going to support through the entire queue process.

In an effort to reduce the number of requests in its interconnection queue that will ultimately be withdrawn, MISO requested that the Federal Energy Regulatory Commission ("FERC") approve revisions to MISO's interconnection request procedures related to milestone payments and site control requirements, which revisions would place substantially higher hurdles to a potential new power plant joining MISO's generator interconnection queue. In Midcontinent Independent System Operator, Inc., 166 F.E.R.C. ¶ 61,187 (2019), FERC rejected MISO's request, but FERC's ruling leaves open the possibility that it might approve a similar set of heightened requirements, so long as MISO makes modifications to its proposal to account for interconnection customers that might be disproportionately disadvantaged.

MISO proposes to make joining its generator interconnection queue substantially more difficult

The Definitive Planning Phase ("DPP") is the final stage of MISO's generator interconnection study process, during which MISO conducts a variety of studies that determine whether there is available transmission capacity to accommodate the interconnection of a new generation facility. There are three phases to the DPP, and MISO requires each interconnection customer to make a milestone payment prior to entering each phase (the M2 payment is required to enter DPP Phase I, the M3 payment is required to enter DPP Phase II, and the M4 payment is required to enter DPP Phase III).

As it has experienced record numbers of submissions into DPP, MISO has found it difficult to estimate network upgrade costs and to gauge cost allocations. MISO claimed that the high number of entrants artificially inflated network upgrade cost estimates, and these high estimates discouraged developers from staying in the crowded queue.

MISO hoped that its proposed revisions would discourage developers from introducing duplicate and nascent projects into the queue, improve the accuracy of upgrade cost estimates and make the queue process more efficient. MISO chiefly proposed three changes to its generator interconnection procedures: (1) stricter site control benchmarks prior to entering the queue; (2) higher M2 milestone payments; and (3) higher forfeiture rates of M2 and M3 payments.

FERC: New site control measurements do not account for some customers

MISO's first proposed change was to raise its site control benchmarks, and in the process, lower the number of projects in the queue. MISO asserted that the current site control requirements do not incentivize customers to commit to site control early in the DPP process. MISO's proposals were designed to require interconnection customers to make more significant commitments earlier in the process so that the projects entering the queue are more likely to be viable.

First, MISO sought to change the definition of control in its procedures, for purposes of establishing site control, such that a customer must have the "documented right to exclusive use" of the site, meaning one of the following: (1) ownership of, (2) a leasehold interest in, (3) an option to purchase or acquire a leasehold interest in, or (4) any other contractual or legal right to possess or occupy the site.

Second, MISO proposed a change to the standard for completeness of the required site control. Whereas, at present, customers only need to demonstrate 75% control of the proposed generation facility site at the start of DPP, MISO's proposal would require 100% generation site control of a variable, MISO-proscribed acreage that is dependent on the project size and resource type (i.e. wind, solar, etc.).

Third, the proposal would also remove the option for customers to put down a $100,000 deposit in lieu of having site control for the proposed generation facility during DPP Phase II. MISO believes that many developers are willing to risk losing the $100,000 deposit on projects with less than 75% site control. Instead of the current option to deposit $100,000, MISO proposed adding an option to deposit $10,000/MW at DPP commencement, with a floor of $500,000 and a ceiling of $2 million. In addition, MISO's proposal would limit this deposit in-lieu-of site control option to customers demonstrating that regulatory delay was preventing full site control.

FERC rejected these proposals. FERC stated that MISO's requirement for "exclusive use" with respect to site control did not readily apply itself to situations where co-located generating facilities share sites, and it was also in conflict with facilities that operate with multiple primary fuel sources. FERC also found that MISO had not explained with sufficient specificity how it would address interconnection customer requests for exceptions to the baseline requirement for site control completeness or deposit in-lieu-of site control completeness.

Nonetheless, FERC's reasoning leaves open the possibility that, if MISO can address these three issues (co-located facilities, multiple primary fuel source facilities, and exceptions to site control percentages), then MISO can make the site control standards in its generator interconnection procedures substantially more difficult to satisfy.

FERC: Increased amount of and risk of loss of milestone payments was improperly balanced

MISO also proposed three major changes to its current milestone payment structure, all of which were rejected by FERC.

MISO's first proposal was to change its M2 payment amount. Currently, MISO gates entrance into DPP Phase I with an M2 milestone payment of $4,000/MW, based on the size of the project. MISO proposed revising the M2 payment so that, instead of being based on a fixed rate dependent on the project size, it would be 10% of the per megawatt average network upgrade costs of the three most recent DPP studies. FERC rejected this proposed change. Average network upgrade costs vary widely over time, from $20,000 in some DPP cycles to $300,000 in others, resulting in a milestone payment of approximately $10,000/MW. FERC was concerned that, under some scenarios, the M2 payment calculation in MISO's proposal would cause the same customer to pay more than double the M2 amount under the present calculation. FERC found that MISO had not shown how requiring a higher, variable, and non-sub-region specific M2 payment would lead to lower rates of speculative projects, and FERC advised MISO to resubmit with such an explanation.

MISO's second proposal was to change its milestone payment requirements to put at risk a percentage of the M2 and M3 milestone deposits, in order to make developers bear more risk when placing speculative projects in its queue. Currently, interconnection customers can receive refunds on their M2 and M3 payments if they withdraw before certain decision points in the DPP. FERC found that under the appropriate circumstances, such a change would be just and reasonable, but ultimately decided there were problems with MISO's proposal. FERC found that the M3 milestone payments were artificially high due to the number of projects in the queue and MISO's observed withdrawal rate of such projects. A high number of non-viable projects entering and exiting the queue leads to a variable and inflated upgrade cost estimate, which in turn leads to variable and inflated M3 payment amounts. FERC found it unfair to customers that the proposal required customers to risk forfeiting an M3 amount that they could not predict. In its decision, FERC stated that MISO would need to set a ceiling amount for M2 and M3 payments so that customers could understand what they were risking.

MISO's third proposal was for it to retain milestone payments until a project's commercial operation date, instead of 45 days after an interconnection agreement becomes effective, as is the current scheme. FERC rejected this proposal and stated that MISO must show how this revision would prevent overpopulation of the queue and would not result in tying up interconnection customers' capital for an overly extended period of time.

Bottom Line

While FERC rejected nearly all of MISO's proposals to revise its development queue process, FERC based its decision on specific and addressable concerns that it identified in its decision. Notably, FERC did not disagree with MISO's position that its current standards ineffectively incentivize project developers and result in inaccurate cost estimates for network upgrades and an inefficient generation interconnection process. We expect that MISO will revise its proposal in order to address FERC's concerns and will continue to pursue changes to its development queue process that will make the DPP standards substantially more difficult for potential projects to satisfy.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Events from this Firm
6 Aug 2019, Seminar, Los Angeles, United States

The semi-annual seminar addressing changes and developments in state and federal wage and hour laws is a unique one-day program and hundreds of California employers, personnel managers, controllers, attorneys, payroll managers, and supervisors attend each year.

10 Sep 2019, Other, New York, United States

This unique one-day program addresses the New York and federal wage and hour laws, including changes and developments in the field.

17 Sep 2019, Other, San Francisco, United States


Learn everything you need to know about Digital Identity! #digitalidentity

In association with
Related Topics
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions