[Federal Register Volume 70, Number 229 (Wednesday, November 30, 2005)]
[Rules and Regulations]
[Pages 71760-71772]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 05-23461]


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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.

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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.

[[Page 71761]]


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\
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    \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.''
    \2\ Standardization 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).
    \3\ A 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, Sec.  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).
    \4\ Capitalized 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.
    \5\ The 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.
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    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 non-polluting 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.
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    \6\ 16 U.S.C. 824d and 824e (2000).
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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.
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    \7\ See Appendix A for a listing of petitioner acronyms.
    \8\ 16 U.S.C. 8251(a) (2003).
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    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.
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    \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.
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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

[[Page 71762]]

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 inverter-
based 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.
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    \10\ Order No. 2006 at P 5.
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    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\
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    \11\ The Parties are the Transmission Provider, Transmission 
Owner, Interconnection Customer or any combination of the above. 
SGIP Attachment 1.
    \12\ Order No. 2006 at P 5.
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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 non-substantive 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\
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    \13\ Standardization 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).
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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\
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    \14\ See Order No. 2003 at P 909.
    \15\ MSAT points out that P 349 of Order No. 2006 inadvertently 
refers to ``Transmission Operators'' instead of ``Transmission 
Owners.'' MSAT is correct.
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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.
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    \16\ Under 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.
    \17\ The 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 inverter-based generator no larger than 10 kW. The all-in-
one 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.
    \18\ A 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.
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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.

[[Page 71763]]

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.
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    \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.
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    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\
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    \20\ Order No. 2006 at P 184.
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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.
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    \21\ Order No. 2003-B at P 137.
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    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.
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    \22\ The 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.
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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.
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    \23\ Each 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.
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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.
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    \24\ Order No. 2006 at P 192.
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    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

[[Page 71764]]

Interconnection Customer should pay for all interconnection studies, 
regardless of the conclusions reached.
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    \25\ Id. at P 187.
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    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.
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    \26\ Id. at P 193.
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    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.
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    \27\ The 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.
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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.
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    \28\ Order No. 2006 at P 79-86.
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    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.
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    \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.
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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.

[[Page 71765]]

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.
---------------------------------------------------------------------------

    \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.
---------------------------------------------------------------------------

    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 wind-powered 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\
---------------------------------------------------------------------------

    \31\ Order No. 661 at n. 27.
    \32\ Id. at P 50-52.
---------------------------------------------------------------------------

    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.
---------------------------------------------------------------------------

    \33\ See also Order No. 2003-A at P 291.
---------------------------------------------------------------------------

    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

[[Page 71766]]

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 non-terminating 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\
---------------------------------------------------------------------------

    \34\ SGIA 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.
---------------------------------------------------------------------------

    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 non-independent 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 non-independent 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

[[Page 71767]]

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.
---------------------------------------------------------------------------

    \35\ Entergy Services, Inc. v. FERC, 391 F.3d 1240, 1252 (D.C. 
Cir. 2004).
    \36\ An Affected System is an electric system other than the 
Transmission Provider's Transmission System that may be affected by 
the proposed interconnection. SGIP Attachment 1.
---------------------------------------------------------------------------

    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 higher-queued 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.
---------------------------------------------------------------------------

    \37\ Order No. 2003-B at P 42.
---------------------------------------------------------------------------

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.
---------------------------------------------------------------------------

    \38\ Order No. 2003 at P 695-703 and Order No. 2003-A at P 587 
and 691-697.
---------------------------------------------------------------------------

    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.
---------------------------------------------------------------------------

    \39\ See, 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.
    \40\ Nevada Power Company, Order on Rehearing, 113 FERC ] 61,007 
(2005).
    \41\ See 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).
    \43\ Order No. 2006 at P 453.
---------------------------------------------------------------------------

    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.
---------------------------------------------------------------------------

    \44\ Order No. 2003-A at P 694.
---------------------------------------------------------------------------

    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

[[Page 71768]]

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 
higher-queued 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.
---------------------------------------------------------------------------

    \45\ Id. at P 621-622.
---------------------------------------------------------------------------

    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.
---------------------------------------------------------------------------

    \46\ Id. at P 320.
---------------------------------------------------------------------------

    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.
---------------------------------------------------------------------------

    \47\ Order No. 2003 at P 697.
---------------------------------------------------------------------------

    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.
---------------------------------------------------------------------------

    \48\ Order No. 2003-C at P 18.
---------------------------------------------------------------------------

    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-for-dollar 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

[[Page 71769]]

payments are no longer subject to being set aside under the Bankruptcy 
Code.'' \49\
---------------------------------------------------------------------------

    \49\ Southern Company at 56-57.
---------------------------------------------------------------------------

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\
---------------------------------------------------------------------------

    \50\ See also Order No. 2003-B at P 125.
    \51\ See Order No. 2003 at P 592-600.
---------------------------------------------------------------------------

    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.
---------------------------------------------------------------------------

    \52\ See Order No. 2003-A at P 672-675.
---------------------------------------------------------------------------

    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\
---------------------------------------------------------------------------

    \53\ See SGIA article 12.1.
---------------------------------------------------------------------------

    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.
---------------------------------------------------------------------------

    \54\ The agreement is contained in Attachment 5 to the SGIP.
    \55\ Order No. 2006 at P 334.
---------------------------------------------------------------------------

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.

[[Page 71770]]

    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.
---------------------------------------------------------------------------

    \56\ Order No. 2003-B at P 74-75 and Order No. 2006 at P 390.
---------------------------------------------------------------------------

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.
---------------------------------------------------------------------------

    \57\ Promoting 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).
---------------------------------------------------------------------------

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.
---------------------------------------------------------------------------

    \58\ E.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).
---------------------------------------------------------------------------

    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\
---------------------------------------------------------------------------

    \60\ NARUC 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.
---------------------------------------------------------------------------

    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.
---------------------------------------------------------------------------

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

    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\]

    \62\ Order No. 2006 at P 481 (quoting Order No. 2003-A at P 
700).
---------------------------------------------------------------------------

    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

[[Page 71771]]

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.
---------------------------------------------------------------------------

    \63\ See Order No. 2003-C at P 51-53.
---------------------------------------------------------------------------

    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\
---------------------------------------------------------------------------

    \64\ Ameren 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.
    \65\ TAPS 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.'')
---------------------------------------------------------------------------

    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\
---------------------------------------------------------------------------

    \66\ See Order No. 2003-A at P 712.
    \67\ Id.
---------------------------------------------------------------------------

    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 Commission-jurisdictional 
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.
---------------------------------------------------------------------------

    \68\ 404 F.3d at 461.
---------------------------------------------------------------------------

    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\
---------------------------------------------------------------------------

    \69\ A 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).
    \70\ See Order No. 2003 at P 813-15.
---------------------------------------------------------------------------

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\
---------------------------------------------------------------------------

    \71\ 16 U.S.C. 2601 et seq. (2000).
    \72\ See Order No. 2003 at P 813-14.
---------------------------------------------------------------------------

    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 forum-shopping 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 state-jurisdictional 
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

[[Page 71772]]

create a safe harbor for non-jurisdictional 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 
<a href="/cdn-cgi/l/email-protection#cbbbbea9a7a2a8e5b9aeadaeb9aea5a8aeb9a4a4a68badaeb9a8e5aca4bd"><span class="__cf_email__" data-cfemail="59292c3b35303a772b3c3f3c2b3c373a3c2b363634193f3c2b3a773e362f">[email protected]</span></a>.

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


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