Media April–June 2007
News Release: April 19, 2007 | View Printable PDF Version |
Docket No: EL07-33-000 |
Commission acts to remove regulatory barriers to renewable energy development in California
The Federal Energy Regulatory Commission today approved the California
Independent System Operator's (CAISO) proposed mechanism for financing facilities to
interconnect location-constrained renewable resources such as wind, geothermal and
solar generation to the CAISO's transmission grid.
The Commission found that the CAISO's proposal strikes a reasonable balance
that addresses barriers impeding the development of location-constrained resources while
at the same time including appropriate ratepayer protections so as to ensure that rates are
just and reasonable and not unduly discriminatory. Electric generation resources become
location constrained because of location, relative size and immobility of their fuel source.
Commission Chairman Joseph T. Kelliher observed: "This order will encourage
greater fuel diversity in our electricity supply and help California meet its renewable
energy targets. We recognize unique characteristics of renewable energy projects, but
have been careful not to grant an undue preference. A large and growing number of
states have established renewable portfolio standards and National Energy Policy
promotes renewable energy. Our action today is fully consistent with both federal and
state policy."
The CAISO proposal would initially roll in the costs of interconnection facilities
for location-constrained resources to all users of the system through the transmission
revenue requirement of the Participating Transmission Owner that constructs the facility,
as reflected in the CAISO Transmission Access Charge.
Each generator that interconnects would be responsible for paying its pro rata share of the going-forward costs of the line. All users of the transmission grid would pay
the costs of any unsubscribed portion of the line through their inclusion in the
Transmission Access Charge until the line is fully subscribed.
To be eligible for this rate treatment, the interconnection facility must be approved
in the CAISO's transmission planning process as providing needed system benefits.
Once the facility is constructed, generators of any fuel type would be eligible to
interconnect and contract for unsubscribed capacity, consistent with the Commission's
open access requirements.
"The difficulties faced by generation developers seeking to interconnect locationconstrained
resources are real, are distinguishable from those faced by other generation
developers, and such impediments can thwart the efficient development of infrastructure.
In this regard, we find that the CAISO's proposal is an appropriate mechanism to
accommodate the unique characteristics of location-constrained resources and that doing
so does not constitute undue discrimination against other generators," the Commission
said.
In today's declaratory order, the Commission said its current interconnection
policy focuses on generators who have the ability to choose where to interconnect,
allowing costs associated with the interconnection to be minimized. The interconnection
policy was established before recent developments in the area of renewable resources
and, according to the Commission, the CAISO needs flexibility when accommodating
renewable resources. There is evidence that insufficient interconnection capacity may be
preventing the development of location-constrained resources. The CAISO's proposal is
intended to overcome this hurdle.
The Commission also found that the CAISO's proposal includes several
mechanisms that protect ratepayers. These include a rate impact cap and a requirement
that before a facility could be constructed, the sponsoring Participating Transmission
Owner must demonstrate a sufficient level of interest from location-constrained
generators in the facility's capacity.
The Commission also noted that the CAISO's proposal aids in the goal of state,
regional and federal initiatives to encourage renewable resources.
R-07-28
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