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Frontlines

Those new merchant gen plants must wait in line to get on the grid, and they don't like it.
Fortnightly Magazine - May 1 2000
  • multiple projects for a single site to proceed together through the queue, each relying on the same chunk of grid capacity.
  • . Developers may lose early slots to "gaming" behavior.

In particular, Dynegy cited the threat of "leap-frogging," which forces a higher-ranked and more promising project to accept onerous terms to protect its slot in the queue. Otherwise, a lower-ranking and less viable project could sign a final agreement quickly, forcing a revision of grid assumptions that could sabotage the first project. That threat exists because under the Entergy tariff, it would take the signing of a final interconnection agreement to trigger any revision in the models of grid system availability that are used to conduct feasibility studies. A coalition of large-volume energy users, Shell, Chevron, Conoco, DuPont, and Monsanto, echoed Dynegy's concern:

"One of the generators could sign its interconnection agreement one day before the second generator, yet this would be enough to invalidate the facility study of the second generator. This risk is intolerable."

Were the feds taken by surprise? Within two weeks of Entergy's move, the FERC already was guarding its turf. In an obscure case on another issue (involving wires charges for the use of lines with distribution-level voltages) the commission took great pains to insist that the question of interconnection falls under the umbrella of transmission service regulation: "In order to alleviate any uncertainty, we will explain how [to apply FERC rules] when interconnection requests are received."

Meanwhile, Entergy said it needed the tariff because the "surge in requests by new generators" had "severely taxed" its ability to process interconnection requests. "As a result," said Entergy, "there is a large and growing backlog."

DOES INTERCONNECTION TODAY RESERVE ACCESS TOMORROW? Suppose a project owner signs an interconnection agreement and nothing more - let's assume the plant sits idle for years, so it needs no transmission service. Now suppose the plant ramps up at a time when grid capacity is short. Would the plant then enjoy a preference over a power marketer that requested the same grid capacity?

On March 22, EPSA weighed in on the Entergy proposal, offering its own nine-point "Bill of Rights for New Generation Interconnection." In that document, EPSA addressed a curious paragraph in Entergy's tariff that seemed especially threatening to power producers. In that paragraph, the Entergy tariff implied that as a condition of interconnection, a plant owner must agree that later-constructed plants could "adversely affect" grid resources and thus lower the first owner's output. The tariff added that the transmission customer (the plant owner) "acknowledges and agrees that [Entergy] has no obligation under this Agreement to disclose any information with respect to third-party developments."

To counter that, EPSA argued that a plant owner ought to be able to request interconnection rights only, without any bundled transmission service, and yet preserve future transmission rights. In that case, the generator would have a right of first refusal to obtain transmission service at any time in the future, to the same extent and quantity as if the generator had asked for bundled transmission at the same