71760 Federal Register / Vol. 70, No. 229 / Wednesday, November 30, 2005 / Rules and Regulations 

From To MEA MAA 

§ 95.4213 RNAV ROUTE T213 IS ADDED TO READ 

LOUISVILLE, KY VORTAC .............................................. GAMKE, IN FIX ................................................................ #3600 8000 

#NORTHBOUND EXPECT 7000 

#SOUTHBOUND EXPECT 6000 

GAMKE, IN FIX ................................................................. RICHMOND, IN VORTAC ................................................ #2800 8000 

#NORTHBOUND EXPECT 7000 

#SOUTHBOUND EXPECT 6000 

§ 95.4215 RNAV ROUTE T215 IS ADDED TO READ 

LEXINGTON, KY VORTAC .............................................. GAMKE, IN FIX ................................................................ #3000 8000 

#NORTHBOUND EXPECT 6000 

#SOUTHBOUND EXPECT 5000 

§ 95.4217 RNAV ROUTE T217 IS ADDED TO READ 

LEXINGTON, KY VORTAC .............................................. BOSTR, OH FIX ............................................................... #3000 8000 

#NORTHBOUND EXPECT 7000 

#SOUTHBOUND EXPECT 6000 

BOSTR, OH FIX ............................................................... HEDEN, OH FIX .............................................................. #2700 8000 

#NORTHBOUND EXPECT 7000 

#SOUTHBOUND EXPECT 6000 

HEDEN, OH FIX ............................................................... SPRINGFIELD, OH VOR/DME ........................................ #2800 8000 

#NORTHBOUND EXPECT 7000 

#SOUTHBOUND EXPECT 6000 

SPRINGFIELD, OH VOR/DME ......................................... BONEE, OH FIX .............................................................. #2900 8000 

#NORTHBOUND EXPECT 7000 

#SOUTHBOUND EXPECT 6000 

From To MEA 

§ 95.6001 VICTOR ROUTES—U.S. 

§ 95.6019 VOR FEDERAL AIRWAY V19 IS ADDED TO READ 

CINCINNATI, KY VORTAC ........................................................... APPLETON, OH VORTAC .......................................................... *4000 

*2800–MOCA 

§ 95.6343 VOR FEDERAL AIRWAY V343 IS AMENDED BY ADDING 

BOZEMAN, MT VOR/DME ........................................................... THESE, MT FIX ........................................................................... 8000 

THESE, MT FIX ............................................................................ SUZZY, MT FIX ........................................................................... ....................

E BND .................................................................................... ...................................................................................................... 8300 

W BND ................................................................................... ...................................................................................................... 10800 

SUZZY, MT FIX ............................................................................ EVVER, MT FIX ........................................................................... 11000 

§ 95.6536 VOR FEDERAL AIRWAY V536 IS AMENDED TO READ IN PART 

SWEDD, MT FIX ........................................................................... *MENAR, MT FIX ........................................................................ **9700 

*9200–MCA MENAR, MT FIX, NW BND 

**9100–MOCA 

[FR Doc. 05–23479 Filed 11–29–05; 8:45 am] 

BILLING CODE 4910–13–P 

DEPARTMENT OF ENERGY 

Federal Energy Regulatory 

Commission 

18 CFR Part 35 

[Docket No. RM02–12–001; Order No. 2006–

A] 

Standardization of Small Generator 

Interconnection Agreements and 

Procedures; Order on Rehearing 

Issued November 22, 2005. 

AGENCY: Federal Energy Regulatory 

Commission, DOE. 

ACTION: Order on rehearing. 

SUMMARY: The Federal Energy 

Regulatory Commission (Commission) 

grants rehearing in part, denies 

rehearing in part, and clarifies certain 

determinations in Order No. 2006. 

Order No. 2006 requires all public 

utilities that own, control, or operate 

facilities for transmitting electric energy 

in interstate commerce to file revised 

open access transmission tariffs 

containing standard small generator 

interconnection procedures and a 

standard small generator 

interconnection agreement, and to 

provide interconnection service under 

them to small generating facilities of no 

more than 20 megawatts. 

Federal Register / Vol. 70, No. 229 / Wednesday, November 30, 2005 / Rules and Regulations 71761 

1 16 U.S.C. 824d and 824e (2000). Section 205(b) 

states that ‘‘[n]o public utility shall, with respect to 

any transmission or sale subject to the jurisdiction 

of the Commission, (1) make or grant any undue 

preference or advantage to any person or subject 

any person to any undue preference or 

disadvantage. * * *’’ In addition, section 206(a) 

states that ‘‘[w]henever the Commission * * * shall 

find that any rate, charge, or classification 

demanded, observed, charged or collected by any 

public utility for any transmission or sale subject 

to the jurisdiction of the Commission, or that any 

rule, regulation, practice, or contract affecting such 

rate, charge, or classification is unjust, 

unreasonable, unduly discriminatory or 

preferential, the Commission shall determine the 

just and reasonable rate, charge, classification, rule, 

regulation, practice or contract to be thereafter 

observed and in force, and shall fix the same by 

order.’’

2Standardization of Small Generator 

Interconnection Agreements and Procedures, Order 

No. 2006, 70 FR 34190 (Jun. 13, 2005), FERC Stats. 

& Regs., Regulations Preambles, Vol. III, ¶ 31,180, 

at 31,406–31,551 (2005). 

3A public utility is a utility that owns, controls, 

or operates facilities used for transmitting electric 

energy in interstate commerce, as defined by the 

FPA. 16 U.S.C. 824(e) (2000). A non-public utility 

that seeks voluntary compliance with the 

reciprocity condition of an open access 

transmission tariff may satisfy that condition by 

adopting these procedures and agreement. 

The Energy Policy Act of 2005 establishes new 

FPA section 211A, which gives the Commission the 

option to require an unregulated transmitting utility 

to provide transmission service. Energy Policy Act 

of 2005, Pub. L. 109–58, § 1231, 119 Stat. 594, 955 

(2005). The Commission has not yet taken action 

under section 211A, but it is seeking comment on 

this new authority in Docket No. RM05–25–000, 

Preventing Undue Discrimination and Preference in 

Transmission Services, Notice of Inquiry, 70 FR 

55796 (Sep. 23, 2005), FERC Stats. & Regs. ¶ 35,553 

at P 34–36 (2005). 

4Capitalized terms used in this order have the 

meanings specified in the Glossaries of Terms or the 

text of the pro forma Small Generator 

Interconnection Procedures (SGIP) or the pro forma 

Small Generator Interconnection Agreement (SGIA). 

Small Generating Facility means the device for 

which the Interconnection Customer (the owner or 

operator of the Small Generating Facility) has 

requested interconnection. The utility with which 

the Small Generating Facility is interconnecting is 

the Transmission Provider. A Small Generating 

Facility is a device used for the production of 

electricity having a capacity of no more than 20 

MW. The interconnection process begins when the 

Interconnection Customer submits an application 

for interconnection (Interconnection Request) to the 

Transmission Provider. 

5The documents adopted in Order No. 2006 for 

inclusion in a Transmission Provider’s OATT are 

called the SGIP and SGIA. Provisions of the SGIP 

are referred to as ‘‘sections’’ and those of the SGIA 

are referred to as ‘‘articles.’’ Comparable documents 

for generators larger than 20 MW in size were 

developed in Order No. 2003 (see fn. 13) and are 

referred to as the LGIP and LGIA. 

6 16 U.S.C. 824d and 824e (2000). 

7See Appendix A for a listing of petitioner 

acronyms. 

8 16 U.S.C. 8251(a) (2003). 

9 In addition to typographical errors and errata, 

we are adding a statement in the Interconnection 

Request that documentation of site control must 

accompany the Interconnection Request, per SGIP 

section 1.5. We also: (1) Clarify in various SGIA 

articles that use the term ‘‘Affected System’’ that 

there may be more than one Affected System, or 

none; (2) clarify in SGIA article 1.3 that the 

purchase or delivery of power and other services 

that the Interconnection Customer may require will 

be covered under separate agreements, if any; (3) 

clarify in SGIA articles 1.6, 5.2.1.1, and 5.3 that 

there may be more than one system operator for the 

Transmission Provider’s Transmission System; and 

(4) clarify in SGIA article 12.2 that the SGIA may 

also be amended pursuant to article 12.12. Finally, 

the term Good Utility Practice is used and defined 

in the SGIA. It is also used in the SGIP, but the 

definition of this term was inadvertently omitted 

from the Glossary of Terms in that document. We 

are amending the SGIP to include that definition. 

EFFECTIVE DATE: December 30, 2005. 

FOR FURTHER INFORMATION CONTACT:

Kumar Agarwal (Technical 

Information), Office of Markets, 

Tariffs and Rates, Federal Energy 

Regulatory Commission, 888 First 

Street, NE., Washington, DC 20426, 

(202) 502–8923. 

Kirk F. Randall (Technical Information), 

Office of Markets, Tariffs and Rates, 

Federal Energy Regulatory 

Commission, 888 First Street, NE., 

Washington, DC 20426, (202) 502–

8092. 

Patrick Rooney (Technical Information), 

Office of Market, Tariffs and Rates, 

Federal Energy Regulatory 

Commission, 888 First Street, NE., 

Washington, DC 20426, (202) 502–

6205. 

Cordelia M. Shepherd (Technical 

Information), Office of Markets, 

Tariffs and Rates, Federal Energy 

Regulatory Commission, 888 First 

Street, NE., Washington, DC 20426, 

(202) 502–8898. 

Abraham Silverman (Legal Information), 

Office of the General Counsel, Federal 

Energy Regulatory Commission, 888 

First Street, NE., Washington, DC 

20426, (202) 502–6444. 

SUPPLEMENTARY INFORMATION: 

Before Commissioners: Joseph T. Kelliher, 

Chairman; Nora Mead Brownell, and 

Suedeen G. Kelly. 

I. Introduction 

1. Under Federal Power Act (FPA) 

sections 205 and 206,1 on May 12, 2005, 

the Commission issued a Final Rule, 

Order No. 2006,2 requiring all public 

utilities that own, control, or operate 

facilities used for transmitting electric 

energy in interstate commerce 3 to have 

on file standard procedures and a 

standard agreement for interconnecting 

Small Generating Facilities capable of 

producing no more than 20 megawatts 

(MW) of power (Small Generators) with 

their Transmission Systems.4 Order No. 

2006 requires that all public utilities 

subject to it modify their open access 

transmission tariffs (OATTs) to include 

the SGIP and SGIA.5

2. In this order, we grant rehearing in 

part, deny rehearing in part, and clarify 

certain determinations in Order No. 

2006. As the Commission noted in that 

order, adoption of the SGIP and SGIA 

will reduce interconnection time and 

costs for Interconnection Customers and 

Transmission Providers, preserve 

reliability, increase energy supply 

where needed, lower wholesale prices 

for customers by increasing the number 

and types of new generation that will 

compete in the wholesale electricity 

market, facilitate development of nonpolluting alternative energy sources, 

and help remedy undue discrimination, 

as FPA sections 205 and 206 require.6

At its core, Order No. 2006 ensures that 

generators independent of Transmission 

Providers and generators affiliated with 

Transmission Providers are offered 

interconnection service on comparable 

terms. 

II. Procedural Issues 

3. The Commission received nine 

timely requests for rehearing or for 

clarification of Order No. 2006. SoCal 

Edison also submitted a letter to the 

Commission noting typographical errors 

it had identified in the SGIP and SGIA. 

Certain of those errors are included in 

Appendix B. AWEA 7 filed a request for 

rehearing on October 25, 2005. Under 

FPA section 313(a),8 requests for 

rehearing of a Commission order were 

due within thirty days after issuance of 

Order No. 2006, i.e., no later than June 

13, 2005. Because the 30-day rehearing 

deadline is statutorily based, it cannot 

be extended. Therefore, we reject all 

requests for rehearing filed after June 13, 

2005 as a matter of law. 

4. Since Order No. 2006 was issued 

on May 12, 2005, the Commission has 

received a number of compliance filings 

by various Transmission Providers. In 

the course of evaluating those filings 

and review of the SGIP and SGIA, we 

have noted a number of typographical 

errors and minor clarifications.9 These 

revisions, and those to the SGIP and 

SGIA ordered herein, are enumerated in 

Appendix B. The revised SGIP and the 

SGIA, containing these revisions in 

Microsoft Word format, will be available 

on the Commission’s Web site, http:// 

www.ferc.gov. 

III. Discussion 

5. In Order No. 2006, the Commission 

adopted the Small Generator 

Interconnection Procedures document 

(SGIP), which describes how the 

Interconnection Customer’s 

Interconnection Request (i.e., 

application) is to be evaluated. The 

SGIP includes three alternative 

procedures for evaluating a proposed 

Interconnection Request, based on the 

size of the Small Generating Facility. 

One is the four-step Study Process. The 

71762 Federal Register / Vol. 70, No. 229 / Wednesday, November 30, 2005 / Rules and Regulations 

10Order No. 2006 at P 5. 

11The Parties are the Transmission Provider, 

Transmission Owner, Interconnection Customer or 

any combination of the above. SGIP Attachment 1. 

12Order No. 2006 at P 5. 

13Standardization of Generator Interconnection 

Agreements and Procedures, Order No. 2003, 68 FR 

49845 (Aug. 19, 2003), FERC Stats. & Regs. ¶ 31,146 

(2003) (Order No. 2003), order on reh’g, Order No. 

2003-A, 69 FR 15932 (Mar. 26, 2004), FERC Stats. 

& Regs. ¶ 31,160 (2004) (Order No. 2003-A), order 

on reh’g, Order No. 2003-B, 70 FR 265 (Jan. 4, 

2005), FERC Stats. & Regs. ¶ 31,171 (2005) (Order 

No. 2003-B), order on reh’g, Order No. 2003-C, 70 

FR 37661 (Jun. 30, 2005), FERC Stats. & Regs. 

¶ 31,190 (2005) (Order No. 2003-C). See also Notice 

Clarifying Compliance Procedures, 106 FERC 

¶ 61,009 (2004). 

14See Order No. 2003 at P 909. 

15MSAT points out that P 349 of Order No. 2006 

inadvertently refers to ‘‘Transmission Operators’’

instead of ‘‘Transmission Owners.’’ MSAT is 

correct. 

16Under Order No. 2006, a Small Generating 

Facility equipment package is considered certified 

if it has been submitted, tested, and listed by a 

nationally recognized testing and certification 

laboratory. SGIP Attachments 3 and 4. 

17The Fast Track Process for evaluating an 

Interconnection Request for a certified Small 

Generating Facility no larger than 2 MW includes 

technical screens, a customer options meeting, and 

an optional supplemental review. Order No. 2006 

at P 45. The 10 kW Inverter Process is available to 

evaluate the interconnection of a certified inverterbased generator no larger than 10 kW. The all-inone 10 kW Inverter Process document includes a 

simplified application form, interconnection 

procedures, and a brief set of terms and conditions 

(akin to an interconnection agreement). Order No. 

2006 at P 46 and P 394–405, Appendix D, and SGIP 

Attachment 5. 

18A line section is that portion of a Transmission 

Provider’s electric system connected to a customer 

bounded by automatic sectionalizing devices or the 

end of the distribution line. SGIP section 2.2.1.2. 

four steps are the scoping meeting, the 

feasibility study, the system impact 

study, and the facilities study. The SGIP 

also includes a Fast Track Process that 

uses technical screens to evaluate a 

certified Small Generating Facility no 

larger than 2 MW and a 10 kW Inverter 

Process that uses the same technical 

screens to evaluate a certified inverterbased Small Generating Facility no 

larger than 10 kW.10 These procedures 

are described in more detail below and 

are depicted in flow chart form in 

Appendices B, C, and D to Order No. 

2006. 

6. In Order No. 2006, the Commission 

also adopted the Small Generator 

Interconnection Agreement (SGIA), 

which is executed after the 

Interconnection Request has been 

successfully reviewed under the 

provisions in the SGIP. The SGIA 

(sometimes called the interconnection 

agreement or Agreement) describes the 

legal relationships of the Parties,11

including who pays for equipment 

modifications to the Transmission 

Provider’s electric system to 

accommodate the interconnection.12

A. Issues Related to Both the Small 

Generator Interconnection Procedures 

and the Small Generator 

Interconnection Agreement 

7. Disputes (SGIP Section 4.2 and 

SGIA Article 10)—Order No. 2006 

requires the Parties to attempt in good 

faith to resolve all disputes and invites 

them to contact the Commission’s 

Dispute Resolution Service for 

assistance in mediating disputes. The 

provision also requires the Parties to 

share the cost of any neutral third 

parties retained to help resolve the 

dispute. 

Rehearing Request 

8. Small Generator Coalition contends 

that requiring the Parties to split the 

costs of any dispute resolution 

disadvantages the Interconnection 

Customer because the Transmission 

Provider is likely to have significantly 

more resources than does the 

Interconnection Customer. Instead, the 

neutral party providing the dispute 

resolution service should be permitted 

to assign costs to each Party and to 

apportion greater cost responsibilities to 

a Party presenting frivolous or nonsubstantive arguments. 

Commission Conclusion 

9. We are sensitive to concerns about 

the costs of resolving disputes, and 

Order No. 2006 does not mandate that 

the Parties use a particular process to 

settle their disputes. Instead, it provides 

alternative sources of dispute resolution 

services that are available to the Parties 

at little cost, such as the Commission’s 

own Dispute Resolution Service, and 

encourages the Parties to use any state 

regulatory resources that may be 

available. By broadening the 

Commission’s approach to dispute 

resolution and giving the Parties the 

flexibility to choose alternative dispute 

resolution services, Order No. 2006 

gives the Parties the ability to limit costs 

and the problems Small Generator 

Coalition describes. Regarding frivolous 

or non-substantive arguments, the SGIA 

already requires the Parties to operate in 

good faith. Should one Party operate in 

bad faith by advancing frivolous 

arguments, the other Party may raise the 

issue with the Commission. 

10. Definition of Transmission 

Provider—The SGIP and SGIA define 

‘‘Transmission Provider’’ to include 

both the Transmission Provider and the 

Transmission Owner where they are 

different entities. This often occurs in 

RTOs or ISOs where the entity operating 

the Transmission System is 

independent of the entities that actually 

own the Transmission System. This is 

consistent with the approach taken for 

Large Generating Facilities in Order No. 

2003.13

Request for Rehearing 

11. MSAT asks the Commission to 

distinguish more clearly the roles of the 

Transmission Provider and the 

Transmission Owner. It argues that the 

lack of clarity is confusing and could 

slow down the interconnection process. 

Commission Conclusion 

12. The definition of the term 

‘‘Transmission Provider’’ in Order No. 

2006 is the same as in Order No. 2003.14

Further defining the relationship 

between the Transmission Provider and 

the Transmission Owner would restrict 

unnecessarily the flexibility that 

independent Transmission Providers 

and their stakeholders now have to 

apportion responsibilities between the 

Transmission Provider and the 

Transmission Owner. Allowing 

flexibility permits the entities in each 

region to customize the SGIP and SGIA, 

under the variations permitted to 

independent entities, to best meet their 

unique needs. Thus, we deny MSAT’s 

request for rehearing and encourage it to 

work with the Midwest ISO during the 

compliance process on apportioning 

responsibilities between the various 

entities.15

B. Issues Related to the Small Generator 

Interconnection Procedures 

13. Fast Track Process and 10 kW 

Inverter Process Screens (SGIP Section 

2.2.1)—SGIP section 2.2.1 specifies 

technical screens that are used to 

evaluate proposed interconnections of 

certified 16 Small Generating Facilities 

under the Fast Track Process and the 10 

kW Inverter Process.17 Section 2.2.1.2 

provides that, to successfully pass the 

screen, the aggregated generation, 

including the proposed Small 

Generating Facility, on a radial 

distribution circuit shall not exceed 15 

percent of the line section 18 annual 

peak load as most recently measured at 

the substation. 

Rehearing Request 

14. Southern Company proposes 

revising section 2.2.1.2 to permit 

measurement at the substation ‘‘or 

applicable automatic sectionalizing 

device.’’ It claims this is simply a 

ministerial change that permits the peak 

load to be measured at the automatic 

sectionalizing device, which may not be 

located at the substation. 

Federal Register / Vol. 70, No. 229 / Wednesday, November 30, 2005 / Rules and Regulations 71763 

19 In the Advance Notice of Proposed Rulemaking 

(ANOPR) issued in this proceeding, and published 

in the Federal Register on August 26, 2002 (67 FR 

54749), the Commission initiated a collaborative 

process where members of the public, electric 

industry participants, and federal and state agencies 

(collectively, stakeholders) were invited to draft 

proposed generator interconnection procedures and 

agreement documents. The stakeholders, called 

Joint Commenters in Order No. 2006, filed 

consensus documents in response to the ANOPR 

and also in response to a Commission invitation for 

supplemental comments. See Order No. 2006 at P 

16–25 for a narrative history of this proceeding. 

20Order No. 2006 at P 184. 

21Order No. 2003–B at P 137. 

22The feasibility study is a preliminary technical 

assessment of the proposed interconnection. The 

system impact study is a more detailed assessment 

of the effect the interconnection would have on the 

Transmission Provider’s electric system and 

Affected Systems. The facilities study determines 

what modifications to the Transmission Provider’s 

electric system are needed, including the detailed 

costs and scheduled completion dates for these 

modifications. Order No. 2006 at P 44. 

23Each Interconnection Request is assigned a 

Queue Position that is based upon the date and time 

of receipt of the valid Interconnection Request by 

the Transmission Provider. The Queue Position 

determines the order of performing interconnection 

studies, if required, and the Interconnection 

Customer’s cost responsibility for any Upgrades to 

the Transmission Provider’s electric system. Order 

No. 2006 at P 176. 

24Order No. 2006 at P 192. 

25 Id. at P 187. 

Commission Conclusion 

15. SGIP section 2.2.1.2 is a critical 

component of the screens, which were 

debated at great length in the 

stakeholder process.19 Southern 

Company’s proposed revision, raised 

here for the first time on rehearing, 

could lead to case-by-case disputes as to 

where the measurement should be 

made. The resulting delays in the 

interconnection process could adversely 

affect both the Transmission Provider 

and the Interconnection Customer. 

Accordingly, we deny Southern 

Company’s request for rehearing. 

16. Scoping Meeting (SGIP Section 

3.2)—The first step of the four-step SGIP 

Study Process for evaluating a proposed 

interconnection is the scoping meeting. 

SGIP section 3.2 requires the 

Transmission Provider and the 

Interconnection Customer to hold the 

scoping meeting within ten Business 

Days after the Interconnection Request 

is deemed complete. At the scoping 

meeting, the Parties discuss the 

proposed interconnection and review 

any existing studies that could aid in its 

evaluation. Order No. 2006 also requires 

that any scoping meeting between the 

Transmission Provider and an affiliate 

be announced publicly and transcribed, 

with the transcripts made available for 

a period of three years.20

Rehearing Request 

17. Southern Company argues that the 

special treatment afforded an affiliate of 

the Transmission Provider is 

discriminatory because it does not apply 

to other competitors. This puts the 

affiliate at a competitive disadvantage. 

The Commission is treating similarly 

situated entities differently, according to 

Southern Company, and the 

requirement should therefore be 

eliminated. 

Commission Conclusion 

18. The treatment of affiliates in Order 

No. 2006 is identical to the requirement 

for Large Generating Facilities, which 

the Commission addressed in Order No. 

2003–B.21 The Commission there 

explained, among other things, that an 

affiliated Interconnection Customer and 

one that is not an affiliate of the 

Transmission Provider are not similarly 

situated. There is no need to address 

this issue further here. We deny 

Southern Company’s request for 

rehearing. 

19. Study Deadlines, Study Cost 

Responsibility, and Restudies (SGIP 

Sections 3.3, 3.4, and 3.5)—The SGIP 

Study Process includes three standard 

engineering analyses that evaluate the 

proposed interconnection: The 

feasibility study, the system impact 

study, and the facilities study.22 The 

interconnection study agreements (SGIP 

Attachments 6, 7, and 8) require the 

Transmission Provider to complete the 

feasibility study within 30 Business 

Days of signing the feasibility study 

agreement, the distribution system 

impact study within 30 Business Days 

and the transmission system impact 

study within 45 Business Days of 

signing the system impact study 

agreement, and the facilities study 

within 30 Business Days of signing the 

facilities study agreement. The 

Interconnection Customer is responsible 

for paying the Transmission Provider’s 

actual costs for performing these 

studies. The SGIP does not contain a 

provision for restudy should system 

conditions change after a study is 

complete. 

Rehearing Requests 

20. Southern Company asserts that the 

SGIP does not give the Transmission 

Provider enough time to perform the 

interconnection studies, especially if it 

must evaluate Interconnection Requests 

for numerous generators at one time. 

21. Small Generator Coalition argues 

that the Interconnection Customer 

should pay for the feasibility study only 

if the study shows harm to the 

Transmission Provider’s electric system; 

otherwise, the Transmission Provider 

should pay for the study. Without this 

allocation of cost responsibility, the 

Interconnection Customer could be 

subject to unneeded feasibility studies 

and excessive cost responsibility. 

22. SoCal Edison seeks clarification 

that the Transmission Provider may 

restudy when a higher-queued 

Interconnection Customer drops out of 

the queue 23 or when system conditions 

change. Southern Company argues that 

the SGIP should allow restudy when the 

size of the generator or the generator’s 

queue position changes. It notes that the 

LGIP permits restudy for Large 

Generating Facilities, and argues that 

the Commission has not provided a 

strong rationale for permitting a restudy 

for a 21 MW generator under the LGIP, 

but not for a similarly situated 19 MW 

generator under the SGIP. It asserts that 

a restudy could benefit the 

Interconnection Customer at times and, 

in any event, that the Transmission 

Provider should be able to perform a 

restudy when necessary to accurately 

reflect the system conditions and to 

maintain the safety and reliability of the 

electric system. 

Commission Conclusion 

23. Southern Company repeats the 

same arguments the Commission 

rejected in Order No. 2006. There, the 

Commission stated that the SGIP 

deadlines strike a balance between 

giving the Transmission Provider 

enough time to complete the studies and 

ensuring that the Small Generating 

Facility can be interconnected within a 

reasonable time.24 We see no reason to 

change that position here. We also note 

that the deadlines were developed with 

both Interconnection Customer and 

Transmission Provider stakeholder 

input, and thus represent a balancing of 

their diverse interests. Furthermore, if a 

far greater than normal number of 

Interconnection Requests temporarily 

overwhelms the Transmission 

Provider’s resources for processing 

Interconnection Requests, the Parties 

can work under SGIP section 4.1 to set 

a new deadline and log the reasons for 

the change in the records the 

Transmission Provider maintains under 

SGIP section 4.7. 

24. Small Generator Coalition repeats 

its earlier argument that the 

Transmission Provider should pay for 

the feasibility study only if the study 

shows no adverse impact, and the 

Interconnection Customer should pay if 

it does. The Commission rejected this 

argument in Order No. 2006 and we 

deny this request for those same 

reasons.25 To repeat, the 

71764 Federal Register / Vol. 70, No. 229 / Wednesday, November 30, 2005 / Rules and Regulations 

26 Id. at P 193. 

27The fault study (also called a short circuit 

analysis) and power flow analysis are performed in 

the course of the system impact study. SGIP 

Attachment 7. 

28Order No. 2006 at P 79–86. 

29 Interconnection Facilities include all facilities 

and equipment between the Small Generating 

Facility and the Point of Interconnection, including 

any modification, additions or upgrades that are 

necessary to physically and electrically 

interconnect the Small Generating Facility with the 

Transmission Provider’s Transmission System. 

Upgrades are the required additions and 

modifications to the Transmission Provider’s 

Transmission System at or beyond the Point of 

Interconnection. SGIP Attachment 1. 

Interconnection Customer should pay 

for all interconnection studies, 

regardless of the conclusions reached. 

25. Finally, there is no reason to 

reverse the prohibition in Order No. 

2006 against the restudy of Small 

Generating Facility interconnections.26

The very purpose of the SGIP and SGIA 

is to expedite interconnections of Small 

Generating Facilities by removing 

unnecessary delays wherever possible. 

If the SGIP timelines are respected and 

Small Generators are interconnected 

promptly, there should be no need for 

restudy. 

26. System Impact Study (SGIP 

Section 3.4)—In Order No. 2006, the 

Commission ruled that the 

Interconnection Request should be 

evaluated in the system impact study 

based on the Small Generating Facility’s 

maximum rated capacity because using 

anything less than the maximum rated 

capacity would not ensure that proper 

protective equipment is designed and 

installed, and the safety and reliability 

of the Transmission Provider’s electric 

system could be jeopardized. 

Rehearing Request 

27. Small Generator Coalition argues 

that using the maximum rated capacity 

of the Small Generating Facility is 

appropriate for the fault study, but not 

for the power flow analysis.27 This is 

because the Small Generating Facility 

usually has a dedicated load that it will 

serve, and it will never send the full 

amount of power that it is capable of 

generating to the Transmission 

Provider’s electric system. 

Commission Conclusion 

28. The Commission examined the 

issue of evaluating the Small Generating 

Facility using less than its maximum 

rated capacity at great length in Order 

No. 2006.28 The Commission rejected 

arguments made by commenters that the 

evaluation should be based on less that 

the Small Generating Facility’s 

maximum rated capacity, including 

Small Generator Coalition’s proposed 

set of tests that could be used to 

determine whether these kinds of 

configurations jeopardize safety and 

reliability. Small Generator Coalition 

does not convince us to change that 

decision here and we, accordingly, deny 

rehearing. 

29. Tender of the Interconnection 

Agreement (SGIP Sections 3.5 and 

4.8)—SGIP section 3.5.7 directs the 

Transmission Provider to present the 

Interconnection Customer with an 

executable SGIA no later than five 

Business Days after the facilities study 

is complete and the Interconnection 

Customer agrees to pay for the 

Interconnection Facilities and 

Upgrades 29 identified in the facilities 

study. Under SGIP section 4.8, the 

Interconnection Customer has 30 

Business Days to execute and return the 

SGIA to the Transmission Provider. 

Rehearing Request 

30. SoCal Edison complains that five 

Business Days to prepare, review, and 

transmit an executable interconnection 

agreement to the Interconnection 

Customer is not enough time. According 

to SoCal Edison, there is no rationale for 

giving the Interconnection Customer six 

times as much time to sign and return 

the agreement as the Transmission 

Provider has to prepare it. It proposes 

that the Transmission Provider be given 

20 Business Days to tender the 

executable SGIA to the Interconnection 

Customer. 

31. SoCal Edison also complains that 

SGIP section 3.5.7 has no deadline for 

the Interconnection Customer to agree to 

pay for the Interconnection Facilities 

and Network Upgrades. It notes that the 

Transmission Provider may not tender 

the executable SGIA to the 

Interconnection Customer until the 

latter so agrees. According to SoCal 

Edison, the Interconnection Customer 

could withhold agreeing to pay for the 

Interconnection Facilities and Network 

Upgrades and keep its place in the 

queue indefinitely at the expense of 

lower-queued generators. SoCal Edison 

suggests that the Interconnection 

Customer be given 15 Business Days to 

(1) agree to pay for the Interconnection 

Facilities and Upgrades, (2) withdraw 

the Interconnection Request, or (3) ask 

the Transmission Provider to tender an 

unexecuted interconnection agreement 

with the Commission. In the alternative, 

the Commission should clarify that the 

Transmission Provider may develop 

consistent and nondiscriminatory 

internal policies to prevent stalling on 

the part of the Interconnection 

Customer. 

Commission Conclusion 

32. We deny SoCal Edison’s request to 

give the Transmission Provider 

additional time to tender an executable 

SGIA to the Interconnection Customer. 

It offers no explanation why a 

Transmission Provider cannot meet the 

deadline. In addition, the SGIA is a 

standardized document that only 

requires Attachments 2 through 6 to be 

completed before it is tendered to the 

Interconnection Customer. The 

information required in those 

attachments is readily available, being 

contained in the Interconnection 

Request and the recently-completed 

interconnection studies. 

33. We also decline to establish a 

deadline for the Interconnection 

Customer to agree to pay for the 

Interconnection Facilities and Network 

Upgrades, withdraw its Interconnection 

Request, or ask that the unexecuted 

SGIA be filed with the Commission. 

While the Interconnection Customer 

could purposefully withhold its 

agreement to pay for the facilities as 

SoCal Edison hypothesizes, it is in the 

Interconnection Customer’s best 

interests to get its project up and 

running as soon as possible. However, 

more importantly, once the facilities 

study is complete and the costs of the 

Interconnection Facilities and Upgrades 

are known, the Interconnection 

Customer needs time to evaluate the 

study results and finalize any necessary 

financing arrangements. Nonetheless, 

we expect the Parties to act in good faith 

during this phase of the interconnection 

process. If either Party believes that the 

interconnection process is not moving 

forward within a reasonable time during 

this waiting period, it may initiate 

dispute resolution or file a complaint 

with the Commission. In addition, the 

Transmission Provider may file the 

interconnection agreement in 

unexecuted form with the Commission, 

explaining that it was unable to obtain 

the Interconnection Customer’s 

agreement to pay for the Interconnection 

Facilities and Upgrades. 

C. Issues Related to the Small Generator 

Interconnection Agreement 

34. Reactive Power (SGIA Article 

1.8)—SGIA article 1.8.1 requires that, 

unless the Transmission Provider has 

established different requirements that 

apply to all similarly situated generators 

in the control area on a comparable 

basis, the Small Generating Facility 

shall be designed to maintain a 

composite power delivery at continuous 

rated power output at the Point of 

Interconnection at a power factor within 

the range of 0.95 leading to 0.95 lagging. 

Federal Register / Vol. 70, No. 229 / Wednesday, November 30, 2005 / Rules and Regulations 71765 

30 Interconnection for Wind Energy, Order No. 

661, 70 FR 34993 (Jun. 16, 2005), FERC Stats. & 

Regs. ¶ 31,186 (2005) (Order No. 661), reh’g 

pending. 

31Order No. 661 at n. 27. 32 Id. at P 50–52. 33See also Order No. 2003–A at P 291. 

The requirement that Small Generating 

Facilities be designed to meet this 

reactive power requirement does not 

apply to wind generators. 

Rehearing Requests 

35. NRECA states that exempting 

wind generators from the SGIA’s 

reactive power requirement 

inappropriately shifts the burden of 

preserving the reliability of the electric 

system to the Transmission Provider. It 

notes that Order No. 661 30 imposes the 

same reactive power requirements on 

wind powered Large Generating 

Facilities as conventional Large 

Generating Facilities, if the 

Transmission Provider demonstrates 

that reactive power capability is 

necessary. NRECA argues that the 

provisions of Order No. 661 should also 

apply to Small Generating Facilities. 

Unless the SGIA is so revised, the 

reactive power requirement does not 

apply to a 19 MW wind generator 

subject to the SGIA, whereas a slightly 

larger 21 MW wind generator subject to 

the Order No. 661 does have such a 

requirement. 

36. SoCal Edison also argues that 

wind powered Small Generating 

Facilities should have to supply reactive 

power. It argues that the Commission 

failed to consider (1) the aggregate 

reactive power effects of many windpowered Small Generating Facilities 

interconnected in one area (e.g., a ‘‘wind 

farm’’) and (2) the effect a wind 

powered Small Generating Facility may 

have on a distribution system, which 

consists of low voltage lines. 

Commission Conclusion 

37. SGIA article 1.8.1 does not 

endanger reliability or shift the burden 

of preserving the reliability of the 

electric system from the Interconnection 

Customer to the Transmission Provider. 

This provision only addresses whether 

the Small Generating Facility itself must 

be designed to provide reactive power 

within a certain band. As noted in Order 

No. 661, ‘‘conventional generators 

inherently provide reactive power, 

whereas most induction-type generators 

used by wind plants currently can only 

provide reactive power through the 

addition of external devices.’’ 31 Since 

conventional generators can normally 

provide reactive power as a matter of 

course, article 1.8.1 does not impose any 

additional requirements on them. 

However, since wind-powered Small 

Generating Facilities usually cannot 

provide reactive power, article 1.8.1 

does not impose this additional burden 

on them. This is consistent with the 

approach taken by the Commission in 

Order No. 661 for Large Generating 

Facilities.32

38. The provisions of SGIA article 

1.8.1 notwithstanding, the SGIP still 

requires the Interconnection Customer 

to mitigate any adverse safety and 

reliability effects its Small Generating 

Facility may have on the Transmission 

Provider’s Transmission System. The 

Small Generating Facility (whether 

wind-powered or not) must still pass 

either the SGIP’s Study Process or 

technical screens before 

interconnecting. If additional facilities 

are needed to safely interconnect the 

Small Generating Facility with the 

Transmission Provider’s electric system, 

whether due to safety or reliability 

(including reactive power) reasons, the 

Transmission Provider shall identify 

them and assign costs as specified in 

SGIA articles 4 and 5. This clarification 

responds to SoCal Edison’s and 

NRECA’s concerns. 

39. Equipment Testing and Inspection 

(SGIA Article 2.1)—Under SGIA article 

2.1, the Interconnection Customer shall 

test its Small Generating Facility and 

Interconnection Facilities before 

interconnection. The Transmission 

Provider may, at its own expense, send 

qualified personnel to observe the 

testing. 

Rehearing Request 

40. Southern Company claims that the 

Transmission Provider must be allowed 

to witness the testing of the Generating 

Facility and Interconnection Facilities, 

and argues that the Interconnection 

Customer should reimburse the 

Transmission Provider for its cost of 

witnessing testing; otherwise, those 

expenses will be subsidized by the 

Transmission Provider’s other 

customers. 

Commission Conclusion 

41. The SGIA provides that the 

Transmission Provider and the 

Interconnection Customer shall each be 

responsible for their own staff, 

equipment, and other costs associated 

with testing. The witnessing of testing is 

at the option of the Transmission 

Provider. While Southern Company may 

routinely witness such tests in its 

system, other Transmission Providers 

may review test reports at minimal cost 

without being actually present for the 

testing itself. We conclude that the 

witnessing of testing, if deemed 

necessary, is a routine responsibility of 

the Transmission Provider, and as such 

is an appropriate cost to be borne by all 

users of the Transmission System.33 We 

deny Southern Company’s request for 

rehearing. 

42. Authorization Required Prior to 

Parallel Operation (SGIA Article 2.2)—

SGIA article 2.2 requires the 

Interconnection Customer to follow all 

applicable parallel operation 

requirements before operating its Small 

Generating Facility in parallel with the 

Transmission Provider’s Transmission 

System. The Transmission Provider is to 

list all parallel operating requirements 

in SGIA Attachment 5 and notify the 

Interconnection Customer of any 

changes to those requirements as soon 

as they are known. This provision also 

requires the Transmission Provider to 

give the Interconnection Customer 

written approval before the Small 

Generating Facility may begin parallel 

operations. 

Rehearing Request 

43. Southern Company argues that the 

standards for parallel operation should 

be contained in the SGIA. Also, the 

Transmission Provider should not have 

to authorize the Small Generating 

Facility to begin operations without 

assurance that the Interconnection 

Customer has actually met those 

requirements. Southern Company notes 

that SGIA article 2.2.2 requires only that 

the Interconnection Customer notify the 

Transmission Provider that it has 

complied with the parallel operation 

requirements. It argues that the 

Transmission Provider should be 

allowed to reasonably confirm for itself 

that all the requirements have been met 

before it has to authorize operations. 

Commission Conclusion 

44. We agree with Southern Company 

that all parallel operation requirements 

should be listed in the SGIA when 

practicable, and article 2.2.1 already 

states that the Transmission Provider 

‘‘shall use Reasonable Efforts to list 

applicable parallel operation 

requirements in Attachment 5 of this 

Agreement.’’ Moreover, SGIA 

Attachment 5 specifies that the 

Transmission Provider ‘‘shall also 

provide requirements that must be met 

by the Interconnection Customer prior 

to initiating parallel operation with the 

Transmission Provider’s Transmission 

System.’’ We believe that the SGIA 

already addresses Southern Company’s 

concerns. 

45. Southern Company also argues 

that having the Interconnection 

Customer notify the Transmission 

71766 Federal Register / Vol. 70, No. 229 / Wednesday, November 30, 2005 / Rules and Regulations 

34SGIA article 1.5.3 already requires the 

Transmission Provider to construct, operate, and 

maintain its Transmission System and 

Interconnection Facilities in accordance with the 

SGIA and with Good Utility Practice. 

35Entergy Services, Inc. v. FERC, 391 F.3d 1240, 

1252 (D.C. Cir. 2004). 

36An Affected System is an electric system other 

than the Transmission Provider’s Transmission 

Provider that its Small Generating 

Facility complies with the parallel 

operation requirements is inadequate; 

Southern Company wants to be able to 

independently confirm that the 

requirements have been met. We do not 

find that necessary. If the Transmission 

Provider has complied with the SGIA, 

Attachment 5 should contain the 

applicable parallel operation 

requirements, and they are thus clearly 

known to all Parties. The 

Interconnection Customer’s statement 

that it has complied is sufficient. Once 

notified, the Transmission Provider 

shall not unreasonably withhold, 

condition, or delay authorization for the 

Small Generating Facility to operate in 

parallel. 

46. Termination (SGIA Article 3.3)—

SGIA article 3.3.3 provides that upon 

termination of the SGIA, the Small 

Generating Facility shall be 

disconnected from the Transmission 

Provider’s Transmission System. It also 

provides that neither Party is relieved of 

its liabilities and obligations, owed or 

continuing at the time of the 

termination. 

Rehearing Request 

47. Southern Company argues that the 

SGIA should allow the Transmission 

Provider to permanently disconnect the 

Small Generating Facility if there is a 

termination. The Interconnection 

Customer should also be held 

responsible for all reasonable expenses 

the Transmission Provider incurs when 

permanently disconnecting the Small 

Generating Facility. 

Commission Conclusion 

48. SGIA article 3.3.3 already allows 

the Transmission Provider to 

permanently disconnect the Small 

Generating Facility upon termination. 

This provision also states that 

termination does not relieve either Party 

of liabilities and obligations upon 

termination. However, Southern 

Company’s petition highlights an 

oversight in the drafting of article 3.3. 

Accordingly, we are including a 

provision, consistent with article 2.5 of 

the LGIA, that provides that all 

disconnection costs are to be borne by 

the terminating Party, unless the 

termination results from the nonterminating Party’s Default of the SGIA, 

or the non-terminating Party otherwise 

is responsible for the disconnection 

costs under the SGIA. This provision 

precludes cost recovery when the 

Transmission Provider causes the 

agreement to be terminated, because in 

those instances it may be appropriate for 

the Transmission Provider to bear some 

or all of the costs of disconnection. This 

responds to Southern Company’s 

concern. 

49. Temporary Disconnection—

Reconnection (SGIA Article 3.4.6)—

SGIA article 3.4.6 requires the Parties to 

cooperate with one another to restore 

the Small Generating Facility, the 

Interconnection Facilities, and the 

Transmission Provider’s Transmission 

System to normal operation as soon as 

reasonably practicable following a 

temporary disconnection. 

Rehearing Request 

50. Southern Company argues that 

this provision should state that the 

Small Generating Facility only has to be 

reconnected once the problem causing 

the disconnection has been fixed. 

Commission Conclusion 

51. The SGIA requires the Parties to 

cooperate to restore the Small 

Generating Facility, as well as other 

facilities, to normal operation as soon as 

reasonably practicable. We do not see 

the provision as ambiguous. To clarify, 

however, the Transmission Provider is 

required to reconnect the Small 

Generating Facility after a temporary 

disconnection as soon as it can be 

reconnected safely and reliably 

consistent with system conditions and 

Good Utility Practice.34

52. Cost Responsibility (SGIA Articles 

4 and 5)—Order No. 2006 adopts the 

same cost responsibility policy for 

Small Generator interconnections as the 

Commission did for Large Generator 

interconnections in Order No. 2003. 

Under that policy, the costs of 

Interconnection Facilities and 

Distribution Upgrades are directly 

assigned to the Interconnection 

Customer. In addition, if the 

Transmission Provider is a nonindependent entity, such as a vertically 

integrated utility, the Interconnection 

Customer initially funds the cost of any 

required Network Upgrades (i.e., 

Upgrades to the Transmission System at 

or beyond the Point of Interconnection) 

and it is then reimbursed for this 

upfront payment by the Transmission 

Provider. However, we expect that, for 

most interconnections of Small 

Generating Facilities, there will be no 

Network Upgrades. This policy grants 

greater flexibility in assigning cost 

responsibility if the Transmission 

Provider is an independent entity such 

as an RTO or ISO. 

Rehearing Requests 

53. North Carolina Commission states 

that the Commission erred by requiring 

a non-independent Transmission 

Provider to ‘‘socialize’’ Network 

Upgrades while allowing an RTO or ISO 

to use participant funding. The 

Commission should adopt a ‘‘but for’’

policy for both independent and nonindependent Transmission Providers to 

ensure that the costs of Upgrades and 

expansions that are necessary to support 

new loads or demands on the 

Transmission Provider’s Transmission 

System are borne by those causing the 

Upgrade or expansion to be undertaken. 

It asks that participant funding, 

including the use of a ‘‘but for’’

approach, not be limited to only RTOs 

or ISOs. North Carolina Commission 

states that, if the Commission is 

concerned that the cost allocation 

decisions of a non-independent entity 

could be unfair or subjective, any 

unfairness or subjectivity can be cured 

by the opportunity for review of the 

allocation process and its results by an 

independent third party, such as the 

Commission, without the involvement 

of an RTO or ISO. 

54. Southern Company raises a 

number of issues that the Commission 

has addressed in other proceedings. 

Specifically, Southern Company states 

as follows: the ‘‘at or beyond’’ test has 

been vacated by the D.C. Circuit Court 

of Appeals 35 and the Commission has 

failed to justify its change in policy; the 

Commission’s cost responsibility policy 

results in cost socialization and thus 

violates the system-wide benefit test, 

cost causation principles and the Energy 

Policy Act of 1992, and it will cause 

inefficiencies in generator siting and 

transmission system expansion, 

contrary to Commission precedent and 

the Energy Policy Act of 1992; unused 

transmission credits should not be 

subject to refund after twenty years; the 

Interconnection Customer should 

receive transmission credits only when 

transmission service is taken from the 

Small Generating Facility itself; the 

Interconnection Customer should not 

receive transmission credits for tax 

gross-up or other tax-related payments; 

the Interconnection Customer should 

not be entitled to receive interest on the 

costs of Network Upgrades; the 

Commission’s ‘‘higher of’’ policy does 

not prevent native load customers from 

subsidizing the Interconnection 

Customer; an Affected System 36 should 

Federal Register / Vol. 70, No. 229 / Wednesday, November 30, 2005 / Rules and Regulations 71767 

System that may be affected by the proposed 

interconnection. SGIP Attachment 1. 

37Order No. 2003–B at P 42. 

38Order No. 2003 at P 695–703 and Order No. 

2003–A at P 587 and 691–697. 

39See, in general, Order No. 2003 at P 683–750, 

Order No. 2003–A at P 341 and P 566–697, Order 

No. 2003–B at P 15–57 and P 103–105, and Order 

No. 2003–C at P 6–27. 

40Nevada Power Company, Order on Rehearing, 

113 FERC ¶ 61,007 (2005). 

41See Order No. 2003–A at P 424 and Order No. 

2006 at P 453–454. 

42 16 U.S.C. 824d (2000); see also 18 CFR 35.12 

(2005). 

43Order No. 2006 at P 453. 

44Order No. 2003–A at P 694. 

not have to provide credits when there 

is no system benefit; and Order No. 

2006 unlawfully discriminates against 

Transmission Providers and their 

customers that are not part of an RTO 

or ISO. Also, Southern Company argues 

that, to protect other customers and to 

place the Interconnection Customer 

appropriately at risk if the Small 

Generating Facility does not achieve 

commercial operation or retires early, 

the Interconnection Customer should be 

responsible for all operation, 

maintenance, and other expenses 

associated with the facilities that are 

required to accommodate the 

interconnection. At a minimum, the 

Interconnection Customer should pay 

the operation and maintenance 

expenses associated with these facilities 

until their costs of construction are 

reflected in transmission rates. 

55. Small Generator Coalition asks the 

Commission to provide that an 

Interconnection Customer willing to 

interconnect its Small Generating 

Facility ahead of a higher-queued 

applicant may do so without paying 

system upgrade costs until the higherqueued applicant’s interconnection 

actually makes the system upgrades 

necessary. The Final Rule should not let 

the Transmission Provider demand 

system upgrade costs from the 

Interconnection Customer when the 

interconnection is made based on a 

prior claim to system transfer capacity 

by a generator that is higher in the 

queue. Small Generator Coalition also 

asks the Commission to provide that 

when the facilities study identifies the 

Upgrades needed to interconnect the 

Small Generating Facility, the 

Transmission Provider must agree to a 

not-to-exceed estimate of those costs, 

subject if necessary to an inflation 

adjustment, so that the Interconnection 

Customer will have financial certainty 

for its project. This keeps the 

Transmission Provider from using its 

leverage to extract unreasonable 

payments when the Upgrades are not 

constructed until years after the actual 

interconnection. 

56. Small Generator Coalition also 

says that an Interconnection Customer 

interconnecting its Small Generating 

Facility with the Transmission 

Provider’s Distribution System should 

have the same protection against paying 

for Upgrades that benefit others that it 

would have if it interconnected with the 

Transmission System. The costs of 

Upgrades should be assigned based on 

the benefits from those Upgrades, 

regardless of whether the portion of the 

system on which the Upgrades are made 

is deemed to be transmission or 

distribution. Small Generator Coalition 

argues that, as with Network Upgrades, 

Distribution Upgrades may offer benefits 

to other customers or to the 

Transmission Provider’s electric system. 

57. SoCal Edison notes that, in Order 

No. 2003–B, the Commission held: ‘‘In 

the case of an Affected System that is 

jointly owned, it is the responsibility of 

the Affected System Operator to provide 

the credits and seek reimbursement for 

any amounts that it believes it is owed 

by the other owners.’’ 37 SoCal Edison 

states that it sought rehearing on this 

point in the Large Generator 

Interconnection proceeding. Although 

the Commission did not directly address 

this issue in Order No. 2006, SoCal 

Edison seeks clarification that the 

Commission did not intend that the 

operator of a jointly-owned Affected 

System must pay transmission credits 

for the portions of the facilities that it 

does not own. 

Commission Conclusion 

58. The Commission addressed North 

Carolina Commission’s arguments in 

Order Nos. 2003 and 2003–A.38 In the 

latter order, the Commission explained 

that it is not unduly discriminatory to 

let an independent Transmission 

Provider propose innovative cost 

recovery methods while requiring a 

non-independent Transmission Provider 

to continue to adhere to the 

Commission’s traditional cost 

responsibility policy. This different 

treatment is fair because the two types 

of Transmission Provider are not 

similarly situated. As the Commission 

explained, when implemented by an 

independent Transmission Provider that 

does not have an incentive to discourage 

new generation by competitors, new 

cost recovery methods such as 

participant funding can yield efficient 

competitive results. However, because 

of their inherent subjectivity, new 

approaches such as participant funding 

could allow a non-independent 

Transmission Provider to frustrate the 

development of new generating facilities 

that could compete with its own. 

59. The Commission addressed all of 

the issues raised by Southern Company 

in the Large Generator Interconnection 

proceeding and will not repeat those 

conclusions here.39 We also note that 

the Commission recently clarified its 

policy on using the ‘‘at or beyond’’ test 

to determine cost responsibility for 

Interconnection Facilities and Network 

Upgrades.40 Finally, the Commission 

addressed the recovery of operation and 

maintenance (O&M) and related 

expenses in Order Nos. 2003–A and 

2006.41 In the latter order, the 

Commission noted that the 

Transmission Provider may propose, 

under FPA section 205,42 a rate to 

recover from the Interconnection 

Customer an appropriate share of O&M 

costs associated with Interconnection 

Facilities and Distribution Upgrades. 

However, it has long been the 

Commission’s policy that O&M costs 

associated with Network Upgrades shall 

not be directly assigned to the 

Interconnection Customer, because 

Network Upgrades are part of the 

integrated transmission system from 

which all transmission users benefit.43

Although Southern Company describes 

scenarios where native load and other 

transmission customers could be placed 

at risk for the recovery of these costs, 

such scenarios are unlikely. And, even 

if they do occur, the cost to native load 

and other transmission customers 

would be de minimis. 

60. North Carolina Commission also 

contends that the Interconnection 

Customer is protected from unfair 

conduct because it has recourse to the 

Commission. However, as the 

Commission stated in Order No. 2003–

A,44 the availability of evidentiary 

proceedings, case-by-case adjudication 

of Interconnection Requests, or other 

procedures does not ensure that 

interconnections are completed in a 

timely manner by non-independent 

Transmission Providers. Administrative 

review of complex technical matters is 

costly and time-consuming. In today’s 

competitive power market environment, 

allowing a Transmission Provider that is 

also a competitor in the wholesale 

power market to use the administrative 

process to delay competitive entry, or to 

propose subjective and potentially 

discriminatory policies, is unacceptable. 

61. Small Generator Coalition seeks 

assurance that an Interconnection 

Customer willing to interconnect its 

Small Generating Facility ahead of a 

higher-queued applicant may do so 

without paying system upgrade costs 

until the higher-queued applicant’s 

interconnection actually makes the 

71768 Federal Register / Vol. 70, No. 229 / Wednesday, November 30, 2005 / Rules and Regulations 

45 Id. at P 621–622. 

46 Id. at P 320. 

47Order No. 2003 at P 697. 

48Order No. 2003–C at P 18. 

system upgrades necessary. The 

Commission addressed this issue in 

Order No. 2003–A.45 Consistent with 

that ruling, the procedure will operate 

as follows. If the lower-queued 

Interconnection Customer chooses an 

in-service date for its Small Generating 

Facility that is earlier than that of the 

higher-queued Interconnection 

Customer, the former must be allowed 

to proceed using the capacity earmarked 

for the latter, when possible. When the 

higher-queued Interconnection 

Customer is ready to proceed, required 

Network Upgrades would have to be 

built, and at that time the lower-queued 

Interconnection Customer would have 

to pay its share of the costs. The period 

during which the lower-queued 

Interconnection Customer receives 

transmission credits from the 

Transmission Provider also begins at the 

same time. However, if the higherqueued Interconnection Customer 

ultimately drops out of the queue, then 

some of the Network Upgrades would 

not have to be built. This would 

eliminate, at least in part, the need for 

funding by the lower-queued 

Interconnection Customer and for 

subsequent payment of transmission 

credits. 

62. Small Generator Coalition also 

proposes that the Transmission Provider 

commit to a not-to-exceed estimate of 

Upgrade costs. We deny this request. A 

basic tenet of the Commission’s policy 

for the recovery of interconnection costs 

is that the Interconnection Customer 

pays the actual costs of Interconnection 

Facilities and Distribution Upgrades and 

initially funds the cost of Network 

Upgrades. However, we recognize that 

postponing the construction of 

Upgrades, and the possibility that a 

generator higher in the queue could 

drop out, can create uncertainty for the 

Interconnection Customer. Therefore, as 

in the Large Generator Interconnection 

proceeding,46 we are directing the 

Transmission Provider to tell the 

Interconnection Customer its maximum 

possible funding exposure when the 

Transmission Provider tenders the 

SGIA. That estimate shall include the 

costs of Upgrades that are reasonably 

allocable to the Interconnection 

Customer at the time the estimate is 

made, and the costs of any Upgrades not 

yet constructed that were assumed in 

the interconnection studies for the 

Interconnection Customer but are, at the 

time of the estimate, an obligation of an 

entity other than the Interconnection 

Customer. 

63. Small Generator Coalition argues 

that Distribution Upgrades may offer 

benefits to other customers or to the 

Transmission Provider’s electric system 

that should be reflected by a 

contribution from other customers or 

the Transmission Provider toward the 

costs of the Upgrades. We disagree for 

several reasons. First, as stated in Order 

No. 2003, distribution facilities typically 

deliver electricity to particular 

localities, and do not serve a bulk 

delivery service for the entire system, as 

is the case for transmission facilities.47

Second, implementing a more 

complicated cost allocation policy for 

Distribution Upgrades would only slow 

interconnection while providing little 

financial benefit to the Interconnection 

Customer. Third, commenters suggest 

no reason why Small Generating 

Facilities and Large Generating 

Facilities should be treated differently 

on this issue. 

64. In response to SoCal Edison’s 

request, we clarify that the operator of 

a jointly-owned Affected System does 

not have to pay credits for the portion 

of the facilities that it does not own. The 

Commission addressed this issue in 

Order No. 2003–C,48 where it stated that 

the operator’s responsibility for flowing 

through transmission credits and 

reimbursing the Interconnection 

Customer for its upfront payment does 

not extend beyond the Affected System 

operator’s normal duties as a tariff 

administrator. We note, of course, that 

this responsibility extends only to the 

operator and owners of a jointly-owned 

system that (1) are subject to the 

Commission’s jurisdiction and (2) have 

financial responsibility under their own 

Commission-regulated tariffs to provide 

transmission credits and final 

reimbursement to the Interconnection 

Customer for the upfront payments they 

have received. 

65. Billing and Payment Procedures 

and Final Accounting (SGIA Article 

6.1)—SGIA article 6.1.2 requires the 

Transmission Provider to give the 

Interconnection Customer a final 

accounting report of the actual 

construction costs of the 

Interconnection Facilities and Upgrades 

within three months of their 

completion. 

Rehearing Request 

66. SoCal Edison argues that the 

Transmission Provider should have at 

least six months (and preferably 12 

months) to prepare the final accounting 

report because some vendors do not 

supply invoices until several months 

after the work is completed. LGIA 

article 12.2, in contrast, gives the 

Transmission Provider six months to 

prepare a final cost accounting for a 

Large Generating Facility. SoCal Edison 

contends that the final accounting 

deadline for all size projects should be 

the same. 

Commission Conclusion 

67. SGIA article 6.1 requires the 

Transmission Provider to bill the 

Interconnection Customer on a monthly 

basis as costs are incurred, or as 

otherwise agreed to by the Parties, and 

the Interconnection Customer has 30 

calendar days to pay the bill. SoCal 

Edison does not claim that it cannot 

process vendor invoices on a monthly 

basis, and we see no reason why the 

final accounting should be especially 

difficult. However, we do recognize that 

a vendor may, infrequently, cause the 

final accounting report to be delayed. As 

with all other actions under the SGIA, 

we expect the Transmission Provider to 

use Reasonable Efforts to obtain timely 

invoices from its vendors. When the 

delay is outside the Transmission 

Provider’s control, however, the Parties 

may develop a revised schedule for that 

portion of the final accounting that is 

still outstanding. Thus, there is no need 

to extend the deadline for submitting all 

final accounting reports to 

accommodate the occasional delay. 

68. Financial Security Arrangements 

(SGIA Article 6.3)—SGIA article 6.3 

requires the Interconnection Customer 

to provide the Transmission Provider 

with appropriate financial security 

before the Transmission Provider begins 

construction. Such security for payment 

shall be in an amount sufficient to cover 

the costs of constructing, designing, 

procuring, and installing the applicable 

portion of the Transmission Provider’s 

Interconnection Facilities and Upgrades 

and shall be reduced on a dollar-fordollar basis for payments made to the 

Transmission Provider under the SGIA 

during its term. 

Rehearing Request 

69. Southern Company requests that 

SGIA article 6.3 specify that the 

Interconnection Customer not just 

provide security, but maintain it for the 

duration of the Interconnection 

Agreement. Additionally, the SGIA 

should not require the Transmission 

Provider to reduce the required security 

until 90 days after the Transmission 

Provider receives payment. This, 

Southern Company argues, ‘‘is 

necessary to reflect the commercial 

reality that payments have not really 

been ‘made’ to the transmission 

provider * * * until such time as such 

Federal Register / Vol. 70, No. 229 / Wednesday, November 30, 2005 / Rules and Regulations 71769 

49Southern Company at 56–57. 

50See also Order No. 2003–B at P 125. 

51See Order No. 2003 at P 592–600. 52See Order No. 2003–A at P 672–675. 

53See SGIA article 12.1. 

54The agreement is contained in Attachment 5 to 

the SGIP. 

55Order No. 2006 at P 334. 

payments are no longer subject to being 

set aside under the Bankruptcy 

Code.’’ 49

Commission Conclusion 

70. SGIA article 6.3.2 states that any 

letter of credit or surety bond provided 

by the Interconnection Customer 

‘‘specify a reasonable expiration date.’’

Thus, Southern Company’s concern that 

the Interconnection Customer would not 

have to maintain the security is 

misplaced, as the article requires that 

‘‘sufficient’’ security be maintained for a 

‘‘reasonable’’ period of time.50 Article 

6.3 requires that the security provided 

by the Interconnection Customer be 

reduced on a dollar-for-dollar basis for 

payment made to the Transmission 

Provider. The Interconnection Customer 

does not have to provide security over 

the life of the SGIA (which 

automatically renews itself indefinitely); 

instead, the Interconnection Customer 

need only provide security until it pays 

off its obligations to the Transmission 

Provider.51

71. We are also not convinced that the 

Transmission Provider should be able to 

delay reducing the Interconnection 

Customer’s security to avoid the risk 

posed by a bankruptcy court deciding 

that a payment to the Transmission 

Provider was ‘‘preferential’’ or 

otherwise improper. The risk to the 

Transmission Provider is outweighed by 

the additional burden placed on the 

Interconnection Customer. 

72. Assignment (SGIA Article 7.1)—

SGIA article 7.1 allows either Party to 

assign the SGIA to a third party after 

giving the non-assigning Party notice 

and opportunity to object. Additionally, 

article 7.1.1 allows assignment without 

the consent of the non-assigning Party if 

the assignee has a higher credit rating 

and the legal authority and operational 

ability to carry out the interconnection. 

Request for Rehearing 

73. Southern Company proposes that 

the Interconnection Customer be 

allowed to assign the SGIA as collateral 

only with the written consent of the 

Transmission Provider. Otherwise, an 

assignee or purchaser in foreclosure 

could assume the rights under the 

agreement without also assuming the 

obligations. Southern Company also 

argues that without approval by the 

Transmission Provider, the assignee 

would not have to cure any existing 

defaults. It urges limiting assignment to 

‘‘eligible customers’’ who can carry out 

the Interconnection Customer’s 

obligations under the SGIA. 

74. Southern Company argues that the 

Transmission Provider should be 

indemnified by the Interconnection 

Customer and the Interconnection 

Customer’s assignee for any costs or 

expenses associated with the 

assignment. 

75. Southern Company also requests 

clarification of the conditions under 

which the Transmission Provider must 

recognize foreclosure rights and 

assignments, including the possibility of 

multiple assignments. It notes that the 

Uniform Commercial Code does not 

cover such a situation. The SGIA should 

specify that the Transmission Provider 

‘‘not hav[e] received a contrary court 

order or notice of an unresolved 

contrary claim’’ before being required to 

accept an assignment. It also asks that 

the Transmission Provider be able to 

stop cooperating with the assignee if the 

Transmission Provider receives a 

contrary court order or notice of 

unresolved claim. 

76. Finally, Southern Company 

proposes that the SGIA require the 

Interconnection Customer to promptly 

notify the Transmission Provider of any 

assignment. 

Commission Conclusion 

77. Southern Company argues that the 

Interconnection Customer should obtain 

the Transmission Provider’s consent 

before assigning its rights under the 

SGIA as security. As explained in Order 

No. 2003–A for Large Generating 

Facilities, such assignments are 

permitted to allow the Interconnection 

Customer to better secure financing 

because the Transmission Provider faces 

little to no risk from an assignment to 

an affiliate having an equal or superior 

credit rating.52 And, Southern Company 

has not convinced us that the rules 

governing assignments of 

interconnection agreements should be 

stricter for Small Generating Facilities 

than for Large Generating Facilities. In 

addition, SGIA article 7.1 states that the 

assignee is responsible for meeting the 

same financial, credit, and insurance 

obligations as the Interconnection 

Customer. We reject Southern 

Company’s request that assignments be 

limited to ‘‘eligible customers’’ because 

SGIA article 7.1 already requires that an 

assignee have the ‘‘legal authority and 

operational ability’’ to carry out the 

interconnection agreement. 

78. As to Southern Company’s issue 

of competing assignments or court 

orders regarding the assignment, the 

SGIA specifies that the laws of the state 

in which the Point of Interconnection is 

located govern, so any contractual 

dispute regarding foreclosure or 

assignment is to be settled under state 

contract law.53

79. Finally, Southern Company notes 

that SGIA article 7.1 does not require 

the assigning Party to notify the other 

Party of an assignment under certain 

circumstances. We agree that the 

assigning Party should notify the other 

Party of any assignment and are so 

revising SGIA article 7.1.1. This 

provision is also consistent with LGIA 

article 19.1. 

80. Insurance (SGIA Article 8)—SGIA 

article 8.1 requires the Interconnection 

Customer to obtain and maintain 

enough general liability insurance to 

insure against all reasonably foreseeable 

direct liabilities, given the type of 

equipment being used. 

Rehearing Requests 

81. Southern Company argues that the 

Interconnection Customer should have 

to maintain reasonable amounts of 

general liability, hazard, employer’s 

liability, and worker’s compensation 

insurance. It notes that several states 

where it operates do not require that 

businesses maintain such types of 

insurance. 

82. Small Generator Coalition points 

out that section 7.0 of the 10 kW 

Inverter-Based Terms and Conditions 

Document,54 which requires the Parties 

to maintain commercially reasonable 

amounts of insurance, is inconsistent 

with Order No. 2006.55 That order states 

that the Parties will follow all 

applicable insurance requirements 

imposed by the state where the Point of 

Interconnection is located. 

Commission Conclusion 

83. The SGIA’s insurance 

requirements are sufficient to protect 

the interests of the Transmission 

Provider. General liability insurance is 

the broadest type of insurance and 

supplements any insurance that may be 

mandated by state law. Additionally, 

not all types of insurance are required 

for all Small Generating Facilities. For 

instance, some facilities may not have 

any employees and, thus, not require 

certain types of insurance such as 

worker’s compensation. Finally, we 

agree that section 7.0 of the 10 kW 

Inverter-Based Interconnection 

Agreement is inconsistent with Order 

No. 2006, and are amending that 

provision accordingly. 

71770 Federal Register / Vol. 70, No. 229 / Wednesday, November 30, 2005 / Rules and Regulations 

56Order No. 2003–B at P 74–75 and Order No. 

2006 at P 390. 

57Promoting Wholesale Competition Through 

Open Access Non-Discriminatory Transmission 

Services by Public Utilities: Recovery of Stranded 

Costs by Public Utilities and Transmitting Utilities, 

Order No. 888, 61 FR 21540 (May 10, 1996), FERC 

Stats. & Regs. ¶ 31,036 (1996), order on reh’g, Order 

No. 888–A, 62 FR 12274 (Mar. 14, 1997), FERC 

Stats. & Regs. & 31,048 (1997), order on reh’g, Order 

No. 888–B, 81 FERC ¶ 61,248 (1997), order on reh’g, 

Order No. 888–C, 82 FERC ¶ 61,046 (1998), aff’d 

in part sub nom. Transmission Access Policy Study 

Group v. FERC, 225 F.3d 667 (D.C. Cir. 2000) (TAPS 

v. FERC), aff’d sub nom. New York v. FERC, 535 

U.S. 1 (2002). 

58E.g., Con Edison, CT DPUC, NARUC, North 

Carolina Commission, NRECA, and Southern 

Company. 

59 Detroit Edison v. FERC, 343 F.3d 48 (D.C. Cir. 

2003) (Detroit Edison). 

60NARUC cites Columbia Gas Transmission 

Corp. v. FERC, 404 F.3d 459, 461 (D.C. Cir. 2005) 

(Columbia), where the court held that voluntarily 

including a particular facility in a tariff does not 

automatically give the Commission jurisdiction 

over that facility that it would not otherwise have. 

61 16 U.S.C. 824(a) (2000). 

62Order No. 2006 at P 481 (quoting Order No. 

2003–A at P 700). 

63See Order No. 2003–C at P 51–53. 

84. Generator Balancing 

Requirements—The SGIA does not 

include a separate generator balancing 

service provision. 

Comment 

85. Southern Company argues that the 

SGIA should contain a generating 

balancing service provision. In the 

alternative, the Commission should 

clarify that the Transmission Provider 

may require the Interconnection 

Customer to enter into a generator 

balancing service agreement that is 

separate from the SGIA. 

Commission Conclusion 

86. We are not including a generator 

balancing provision in the SGIA for the 

reasons set forth in Order Nos. 2003–B 

and 2006.56 There is no need to repeat 

those conclusions here. However, the 

Transmission Provider may include a 

provision for generator balancing 

service arrangements in individual 

interconnection agreements. Such 

provisions should be tailored to the 

Parties’ specific standards and 

circumstances, and are subject to 

Commission approval. Regarding 

Southern Company’s alternative request, 

we clarify that the Transmission 

Provider may incorporate an 

Interconnection Customer’s balancing 

service arrangement in a separate 

agreement. 

D. Other Significant Issues 

87. Commission Jurisdiction under the 

Federal Power Act—The Commission’s 

assertion of jurisdiction in Order No. 

2006 is identical to the jurisdiction 

asserted in Order Nos. 2003 and 888.57

Order No. 2006 applies to 

interconnections with a Transmission 

Provider’s facilities that are subject to 

the Transmission Provider’s OATT at 

the time the interconnection is 

requested and that are for the purpose 

of facilitating a jurisdictional wholesale 

sale of electricity. 

Requests for Rehearing 

88. Several petitioners 58 argue that 

the Commission is improperly asserting 

jurisdiction over ‘‘local distribution’’

facilities in violation of the FPA. They 

point to both Detroit Edison 59 and FPA 

section 201 for support. Con Edison and 

CT DPUC argue that since their states 

have rules for interconnecting small 

generators with distribution systems, 

there is no need for federal standards. 

89. NARUC argues that it is not 

always clear whether a particular 

facility is covered by an OATT and that 

a Transmission Provider’s accounting 

system may not so indicate. NARUC 

notes that costs for distribution facilities 

are generally recovered under the OATT 

on a rolled-in basis. It fears that this 

may lead the Commission to find that 

all of a Transmission Provider’s 

distribution facilities are covered by the 

OATT. NARUC claims that merely 

including a facility in an OATT does not 

give the Commission jurisdiction over 

that facility.60

90. Con Edison asserts that Order No. 

2006 impermissibly bases jurisdiction 

on the ‘‘intent’’ of a generator, rather 

than its actions. Because jurisdiction 

can change based on the use of a facility 

or the generator’s intent, the Parties 

would not know whether Order No. 

2006 applies until after the fact. Con 

Edison poses a hypothetical case where 

a generator intending to sell at 

wholesale interconnects with a 

previously state jurisdictional line 

under state rules. A second generator 

interconnecting with the same line, but 

not seeking to sell power at wholesale, 

would be obliged to interconnect under 

the Commission’s rules. Thus, Con 

Edison contends, the generator seeking 

to sell at wholesale interconnects under 

state law, while the generator seeking to 

sell at retail would be forced to 

interconnect under federal law. 

Similarly, if the first generator decides 

not to sell at wholesale, the second 

generator would have to interconnect 

under state rules, even if it intends to 

sell at wholesale. 

91. Con Edison, NARUC, NRECA, and 

Southern Company also assert that 

Order No. 2006 contradicts the ‘‘seven 

factor test’’ laid out in Order No. 888 for 

distinguishing transmission facilities 

from local distribution facilities. NRECA 

argues that jurisdiction over a wholesale 

transaction does not confer jurisdiction 

over the local distribution facility itself 

or over an interconnection with such a 

facility. 

92. Southern Company argues that 

section FPA 201(a) limits the 

Commission’s jurisdiction to matters 

‘‘which are not subject to regulation by 

the States.’’ 61 Since several states have 

promulgated rules governing 

interconnection with local distribution 

facilities, Southern Company argues that 

the Commission cannot do likewise. 

93. Conversely, Small Generator 

Coalition and SoCal Edison argue that 

the Commission should exercise 

jurisdiction over all interconnections for 

selling power at wholesale and should 

not limit application of this rule to 

facilities covered by an OATT at the 

time interconnection service is 

requested. Small Generator Coalition 

argues that the Commission’s 

jurisdiction over a wholesale sale 

includes jurisdiction over the 

interconnection necessary to facilitate 

the sale. It proposes that the 

Commission clarify that if the 

Transmission Provider has an OATT, all 

interconnections made to sell power at 

wholesale are subject to Commission 

jurisdiction, whether or not the specific 

facility being interconnected with is 

jurisdictional or not. Otherwise, Small 

Generator Coalition argues, the 

Transmission Provider has unfettered 

discretion to determine which 

distribution facilities are covered by its 

OATT at the time interconnection 

service is requested. 

Commission Conclusion 

94. The Commission’s assertion of 

jurisdiction in Order No. 2006 is 

identical to the jurisdiction asserted in 

Order Nos. 2003 and 888. 

There is no intent to expand the 

jurisdiction of the Commission in any way; 

if a facility is not already subject to 

Commission jurisdiction at the time 

interconnection is requested, the Final Rule 

will not apply. Thus, only facilities that 

already are subject to the Transmission 

Provider’s OATT are covered by this rule.[62] 

95. Since the Commission issued 

Order No. 2006 in May 2005, the third 

rehearing of the Large Generator 

Interconnection final rule, Order No. 

2003–C, was issued. That order further 

discussed the Commission’s jurisdiction 

over generator interconnections.63

Because the Commission has addressed 

Federal Register / Vol. 70, No. 229 / Wednesday, November 30, 2005 / Rules and Regulations 71771 

64Ameren Services Co., 103 FERC ¶ 61,121 at P 

26 (2003); see also Order No. 888 at 31,771, 31,783–

85 and Order No. 888–A at 30,342. 

65TAPS v. FERC, 225 F.3d at 695. (‘‘[U]nder 

Order 888, when a public utility is engaged in 

wholesale transmission, FERC has jurisdiction 

regardless of the nature of the facility; but when the 

public utility is engaged in unbundled retail 

transmission, the facts and circumstances [i.e., the 

seven factor test] will determine whether the 

facilities are subject to FERC or state jurisdiction.’’) 

66See Order No. 2003–A at P 712. 

67 Id. 

68 404 F.3d at 461. 

69A QF may be either a qualifying small power 

production facility or a qualifying cogeneration 

facility under the Public Utility Regulatory Policies 

Act of 1978 (PURPA). 16 U.S.C. 824a–3 (2000). 

70See Order No. 2003 at P 813–15. 

71 16 U.S.C. 2601 et seq. (2000). 

72See Order No. 2003 at P 813–14. 

the scope of its jurisdiction in several 

orders addressing interconnection, we 

need not repeat that discussion here. 

However, petitioners raise other issues 

for the first time that we do address 

here. 

96. Several petitioners suggest that the 

Commission’s exercise of jurisdiction is 

contrary to the seven factor test laid out 

in Order No. 888 to differentiate 

transmission facilities from local 

distribution facilities. Petitioners 

misapply the seven factor test. As the 

Commission has explained, ‘‘[t]he 

discussion of transmission and [local] 

distribution classification (and the use 

of the seven factor test) in Order No. 888 

was in the context of unbundled retail 

transmission service [and] determining 

which facilities were for the local 

distribution segment of unbundled retail 

services.’’ 64 Contrary to what 

petitioners suggest, the seven factor test 

does not apply to circumstances in 

which the wholesale sale may trigger 

Commission jurisdiction over an 

interconnection, or is intended for 

application in every dispute involving 

the scope of federal and state 

jurisdiction.65

97. NARUC also argues that it may be 

unclear whether a particular facility is 

covered by an OATT. In addressing a 

similar comment in Order No. 2003–A, 

the Commission noted that ‘‘in most 

cases, there will be no controversy about 

whether a facility is under the OATT 

[and] the Transmission Provider [shall] 

make this information available to the 

Interconnection Customer during the 

Scoping Meeting or earlier.’’ 66 Should a 

disagreement arise over the proper 

classification of a facility, the Parties 

may bring the matter to the 

Commission’s attention.67

98. NARUC cites Columbia to support 

its argument that a facility is not subject 

to Commission jurisdiction simply 

because it is covered by an OATT. 

While we agree that Columbia 

concludes that a tariff cannot confer 

jurisdiction that is not granted by 

statute,68 this holding does not require 

a different conclusion on the 

applicability of Order No. 2006. The 

Commission presumes that a facility 

available for open access service under 

an OATT serves a Commissionjurisdictional transmission or delivery 

function. If the Interconnection 

Customer seeks to interconnect with a 

facility that is available for service 

under an OATT but that is not required 

to be under the OATT at the time the 

Interconnection Request is submitted, 

Order No. 2006 does not apply. We 

expect that such circumstances will be 

rare and leave it to the Parties to bring 

disagreements about the status of a 

particular facility to the Commission for 

resolution. 

99. Con Edison is correct that an 

Interconnection Customer 

interconnecting its generator with an 

electric facility used exclusively to 

make retail sales, but not currently 

available for transmission service under 

an OATT, will do so under state 

interconnection rules. It does not matter 

whether the Interconnection Customer 

intends to sell power at wholesale or 

retail. However, Con Edison appears to 

misunderstand what would happen if 

the Interconnection Customer seeks to 

interconnect with a facility carrying 

both energy sold at wholesale and 

energy sold at retail and plans to sell 

power only at retail. In that case, 

because there is no wholesale sale 

involved, the interconnection would be 

subject to the state’s rules. 

100. Qualifying Facilities—In Order 

No. 2006, the Commission stated that it 

would exercise jurisdiction over all 

qualifying facilities (QFs) 69 in the same 

manner, regardless of size, as discussed 

in Order No. 2003.70

Requests for Rehearing 

101. NARUC, supported by Con 

Edison, argues that the Commission’s 

assertion of jurisdiction over a QF 

selling power to an entity other than the 

host utility is overly broad in that it 

extends jurisdiction over QFs selling 

power, at wholesale or retail, to 

someone other than the host utility. 

Instead, the Commission should clarify 

that a QF not selling at wholesale (other 

than to the host utility) should 

interconnect under state law. 

Commission Conclusion 

102. NARUC is correct that a QF 

selling at retail is not eligible to 

interconnect under either Order No. 

2003 or Order No. 2006. Under the 

Public Utility Regulatory Policies Act of 

1978,71 such interconnections are 

governed by state law.72

103. Relationship of Order No. 2006 

to State Interconnection Programs—

While Order No. 2006 attempted to 

harmonize its provisions with existing 

state programs, the Commission 

declined to formally recognize these 

programs in Order No. 2006. 

Rehearing Requests 

104. CT DPUC, NARUC, and North 

Carolina Commission ask the 

Commission to grandfather both existing 

and future state-run interconnection 

rules. CT DPUC points to the extensive 

efforts in several states to develop and 

encourage the interconnection of small 

generators. It argues that Order No. 2006 

could be read as superseding 

Connecticut’s own small generator 

interconnection rules. NARUC and the 

North Carolina Commission express 

similar concerns and argue that Order 

No. 2006 will encourage forumshopping and inefficient siting 

decisions. They also ask the 

Commission to clarify that existing 

interconnections accomplished under 

state rules are grandfathered. Finally, 

the Commission should grant deference 

to future state interconnection rules. 

Commission Conclusion 

105. Order No. 2006 in no way affects 

rules adopted by the states for the 

interconnection of generators with statejurisdictional facilities. We expect that 

the vast majority of small generator 

interconnections will be with state 

jurisdictional facilities. The 

Commission encourages development of 

state interconnection programs, and 

interconnections with state 

jurisdictional facilities continue to be 

governed by state law. However, if an 

Interconnection Customer seeks to 

interconnection with a facility under 

federal jurisdiction, a state program 

cannot displace federal rules for 

interconnections. Furthermore, the 

Commission has attempted to minimize 

the inconstancies between federal and 

state interconnection rules by adopting 

many of the provisions suggested by 

NARUC and other state bodies, and 

encouraging the states to consider using 

the streamlined SGIP and SGIA for their 

own use. Finally, we emphasize that 

Order No. 2006 and this order do not 

affect any existing interconnection 

agreements, whether they were entered 

into under state or federal law. 

106. Creation of a Safe Harbor for 

Non-jurisdictional Utilities—In Order 

No. 2006, the Commission did not 

71772 Federal Register / Vol. 70, No. 229 / Wednesday, November 30, 2005 / Rules and Regulations 

create a safe harbor for nonjurisdictional utilities that wish to 

interconnect new generation without 

jeopardizing their non-jurisdictional 

status. 

Request for Rehearing 

107. NRECA repeats here the same 

request it made in the Large Generator 

Interconnection proceeding that the 

Commission create a safe harbor to 

allow non-jurisdictional utilities to 

avoid the sometimes cumbersome 

process of interconnecting new 

generators under FPA sections 210, 211, 

and 212. NRECA also points out that 

many cooperatives are not ‘‘transmitting 

utilities’’ as defined in the FPA and that 

section 211 only applies to 

interconnections with ‘‘transmitting 

utilities.’’ Specifically, NRECA asks the 

Commission to clarify that a cooperative 

may settle a section 211 case and agree 

to provide wheeling services without 

that settlement being considered a 

‘‘voluntary’’ service offering. 

Commission Conclusion 

108. As the Commission stated in 

Order No. 2006, FPA section 211 

already allows a non-public utility to 

safeguard its non-jurisdictional status. 

We see no need to create a second 

method of doing the same thing. NRECA 

also asks whether a cooperative may 

settle a section 211 case and agree to 

provide wheeling services without that 

settlement being considered a 

‘‘voluntary’’ service offering. That issue 

is outside the scope of this rulemaking. 

In this rulemaking proceeding, the 

Commission is acting under its FPA 

section 205 authority, and does not 

address obligations under sections 210, 

211, or 212. 

IV. Information Collection Statement 

109. Order No. 2006 contains 

information collection requirements for 

which the Commission obtained 

approval from the Office of Management 

and Budget (OMB). The OMB Control 

Number for this collection of 

information is 1902–0203. This order 

denies most rehearing requests, clarifies 

the provisions of Order No. 2006, and 

grants rehearing on only three minor 

issues. This order does not make 

substantive modifications to the 

Commission’s information collection 

requirements and, accordingly, OMB 

approval for this order is not necessary. 

However, the Commission will send a 

copy of this order to OMB for 

informational purposes. 

V. Document Availability 

110. In addition to publishing the full 

text of this document in the Federal 

Register, interested persons may obtain 

this document from the Commission’s 

Public Reference Room during normal 

business hours (8:30 a.m. to 5 p.m. 

Eastern Time) at 888 First Street, NE., 

Room 2A, Washington, DC. This 

document is also available 

electronically from the Commission’s 

eLibrary system (http://www.ferc.gov/ 

docs-filing/elibrary.asp) in PDF and 

Microsoft Word format. To access this 

document in eLibrary, type ‘‘RM02–

12–’’ in the docket number field and 

specify a date range that includes this 

document’s issuance date. User 

assistance is available for eLibrary and 

the Commission’s website during 

normal business hours from the 

Commission’s Help Line at 202–502–

8222 or the Public Reference Room at 

202–502–8371 Press 0, TTY 202–502–

8659. E-Mail the Public Reference Room 

at public.referenceroom@ferc.gov. 

VI. Effective Date 

111. Changes to Order No. 2006 made 

in this Order on Rehearing will become 

effective on December 30, 2005. 

List of Subjects in 18 CFR Part 35 

Electric power rates, Electric utilities, 

Reporting and recordkeeping 

requirements. 

By the Commission. 

Magalie R. Salas, 

Secretary. 

The Appendices will not be published in 

the Federal Register or the Code of Federal 

Regulations. 

[FR Doc. 05–23461 Filed 11–29–05; 8:45 am] 

BILLING CODE 6717–01–P 

DEPARTMENT OF VETERANS 

AFFAIRS 

38 CFR Part 17 

RIN 2900–AJ28 

Medical: Advance Health Care 

Planning 

AGENCY: Department of Veterans Affairs. 

ACTION: Final rule. 

SUMMARY: This document amends VA 

medical regulations to codify VA policy 

regarding advance health care planning. 

The final rule sets forth a mechanism for 

the use of written advance directives, 

i.e., a VA living will, a VA durable 

power of attorney for health care, and a 

State-authorized advance directive. The 

final rule also sets forth a mechanism 

for honoring verbal or non-verbal 

instructions from a patient when the 

patient is admitted to care when 

critically ill and loss of capacity may be 

imminent and the patient is not 

physically able to sign an advance 

directive form, or the appropriate form 

is not readily available. This is intended 

to help ensure that VA acts in 

compliance with patients’ wishes 

concerning future health care. 

DATES: Effective Date: December 30, 

2005. 

FOR FURTHER INFORMATION CONTACT: 

Ruth Cecire, Ph.D., Policy Analyst, 

Ethics Policy Service, National Center 

for Ethics in Health Care (10E), Veterans 

Health Administration, Department of 

Veterans Affairs, 810 Vermont Avenue, 

NW., Washington, DC 20420; 202–501–

0364 (this is not a toll-free number). 

SUPPLEMENTARY INFORMATION: In a 

document published in the Federal 

Register on November 2, 1998 (63 FR 

58677), the Department of Veterans 

Affairs (VA) proposed to amend its 

medical regulations (38 CFR part 17) to 

codify VA policy concerning advance 

health care planning. Advance health 

care planning provides an opportunity 

for patients to give guidance to their 

caregivers regarding their treatment 

preferences for the future should they 

become incapable of participating fully 

in the decision-making process. We 

requested comments for a 60-day period 

that ended January 4, 1999. We received 

three comments. Based on the rationale 

set forth in the proposed rule and this 

document, we are adopting the 

proposed rule as a final rule with the 

changes indicated below. 

This final rule sets forth a mechanism 

for the use of written advance 

directives, i.e., a VA living will, a VA 

durable power of attorney for health 

care, and a State-authorized advance 

directive. The rule also sets forth a 

mechanism for honoring verbal or nonverbal instructions from a patient when 

the patient is admitted to care when 

critically ill and loss of capacity may be 

imminent and the patient is not 

physically able to sign an advance 

directive form, or the appropriate form 

is not readily available. The advance 

health care planning discussion and 

completion of a written advance 

directive ideally would take place prior 

to a patient being admitted to care in a 

crisis situation. However, we recognize 

that this is not always the case. The 

mechanism for honoring the verbal and 

non-verbal instructions of patients in 

this circumstance enables such patients 

to communicate their preferences 

regarding their future health care and 

ensures this information will be 

carefully documented in the patient’s 

health record and available to guide 

caregivers should the patient lose 

capacity. The final rule also states that