Energy Secretary Chris Wright’s directive to the Federal Energy Regulatory Commission to standardize large load interconnections landed last month with a bang.
The unusual move — delivered via advanced notice of proposed rulemaking — would dramatically expand FERC’s authority over interconnection to the transmission system, which has traditionally been left up to the states. And it bolstered the industry’s growing enthusiasm for load flexibility for data centers by encouraging FERC to offer expedited interconnection for curtailable loads (as well as colocated facilities that agree to be both curtailable and dispatchable).
But the ANOPR leaves open many critical questions. And with the ambitious — arguably to the point of improbable — six-month timeline that Wright set for the rulemaking, FERC doesn’t have much time to answer them.
Allison Clements, former FERC commissioner and current partner with digital infrastructure advisory firm ASG, and Tyler Norris, a researcher at Duke University who authored a seminal paper on load flexibility last February, unpacked some of these considerations on a recent episode of the Catalyst podcast with Shayle Kann. For instance: What are the technical parameters of flexibility? How many total hours of curtailment will be required each year? How will FERC value different approaches to flexibility, from batteries to backup generation? And how to ensure loads actually curtail when they’ve committed to doing so?
One of Clements’ primary concerns is that answering these questions with sufficient specificity will be impossible, given both FERC’s typical approach to these kinds of rulemakings, and the timeline at play.
“Ever since standard market design failed in 2000, the agency has been really skittish about requiring standardized anything across the board….So my instinct, without getting into the politics, is they’re not going to get that specific on first take,” Clements told Kann. “And that’s my biggest concern here. We don’t want something rushed that ends up failing to really take advantage of the opportunity that these flexibility alternatives provide and incentivize them in a way that works for the providers.”
For more of Allison Clements and Tyler Norris’ takes on the ANOPR, listen to this recent episode of Catalyst with Shayle Kann:
In the next five and a half months, FERC will have to take comments on the ANOPR, then write its own notice of proposed rulemaking — an outline of the proposed regulation — then take comments on that NOPR, all before issuing a final rule. According to Clements, accomplishing that by the April deadline would be “rocket speed in FERC world.”
The rulemaking process for FERC’s Order 1920, a landmark long-term transmission planning and cost allocation rule, Clements added, took four years and was 1,200 pages long. The Wright ANOPR, in contrast, was 14 pages. “It’s not realistic,” Clements said of the April deadline. And Wright’s authority to require that six-month speed rulemaking, she added, is simply “the bully pulpit, political pressure.”
“But I think when that letter came out, there were a lot of FERC staffers who were thinking, oh no, my Thanksgiving and holiday plans,” she added.
What kind of load flexibility?
There’s also the question of what kind of load flexibility FERC should push for. The concept has gathered steam in the last year, but there are several ways a large load could be flexible: for instance either throttling down their use during moments of peak demand (as Google has done for several years) or relying on backup generation or batteries. However, there is also a growing move to redesign data centers themselves to serve as flexible grid assets, as the startup Verrus is doing.
Norris argues, however, that ideally FERC would structure its regulation to cover any approach to flexibility that a large load may want to take, rather than picking winners by endorsing a particular one.
“Ultimately you want it to be as sort of generalizable as possible so that you can sort of represent any load that is utilizing this type of flexibility for all these purposes,” he said. “Then we can actually create a market where a variety of different options can compete either onsite — or even to some extent offsite.” While it’s even more nascent, there is a move toward procuring flexibility from other loads in the same balancing authority, he added, including via a virtual power plant program announced by WattCarbon last week.
But the technical specifications still need to be worked out. In the wake of the proposal, a collection of researchers at the Duke Nicholas Institute for Energy, Environment, and Sustainability joined Clements and the lawyers of Roselle LP in outlining FERC’s considerations for the rulemaking.
The brief argued that if FERC wants to make the most of large load flexibility — and ideally free up grid capacity at the same time — the commission will need to structure flexibility commitments “as transactions with clearly defined terms.” And in doing so, the group said FERC will need to evaluate rules that:
- Enable large load flexibility commitments to avoid or defer transmission upgrades
- Enable large load flexibility commitments to reduce capacity procurements
- Enable flexible large loads to obtain non-firm withdrawal and, as applicable, injection rights
- Clarify study timelines, queue priority, and interconnection process for large load customers, as well as load-supply hybrid facilities and pairings
The response so far
The docket for the proposal is open now; in light of stakeholder requests, the comment period has already been extended from November 14 to November 21, with reply comments due December 5.
So far, most respondents have filed motions to intervene — essentially requests to become an official party to the proceeding, via arguing that they will be directly impacted by the outcome. This group includes both the PJM Power Providers Group and the organization of PJM states, the New Jersey Board of Public Utilities, and Southwest Power Pool Market Monitoring Unit, as well as companies like Mainspring Energy and Vitol. No company or organization has yet expressed opposition or support for the specifics of the ANOPR.
Utilities, some of the most important stakeholders in this rulemaking, have yet to weigh in.
One of the trickiest questions for FERC to iron out is whether it actually has the authority to regulate interconnection to the transmission system. Clements said on Catalyst that the legal arguments that Wright makes in his filing are strong, but said “I’m not sure if it’s by tradition, by culture, experience or practice that it actually hasn’t been asserted in the past.” Norris added that he anticipates concerns on the jurisdictional question especially from some state commission officials “and certainly the investor-owned utilities.”
So far, the Edison Electric Institute, the trade group representing the country’s large, investor-owned utilities, has remained mostly quiet on the ANOPR. The group’s sole statement on the proposal could be characterized as damning-with-faint-praise: “We share the Administration’s commitment to American energy dominance and appreciate their leadership to accelerate energy to win the AI race and fuel our economy,” EEI president and CEO Drew Maloney said. “We look forward to working with FERC to strengthen the grid, drive down costs for customers, and improve reliability across our country.”
