By Kennedy Maize
conundrum noun
uk /kəˈnʌn.drəm/ us /kəˈnʌn.drəm/
a problem that is difficult to deal with
A unanimous Federal Energy Regulatory Commission yesterday (June 18) took ground-breaking action to try to create some order out of the chaotic and controversial problem of how to connect large electric data center loads created by the burgeoning artificial intelligence industry to the nation’s aging, fragile, and balkanized high voltage interstate electric grid.
The commission issued six separate but interconnected show-cause orders to the nation’s wholesale independent grid system operators to justify or fix how they and other large energy users can connect to the grid without jeopardizing reliability or shifting costs to other grid users.
Speaking to reporters following the morning meeting, FERC Chairman Laura Swett said the agency’s action was “bold but transformative for our energy future” and described it as a “watershed moment.”
According to the commission, the six orders affect some 200 million Americans, or about two-thirds of the electric load that’s under FERC’s jurisdiction. Swett also stressed that the orders do not infringe on the regulatory powers of the states, an issue that immediately occurred when the push to get data centers quickly connected to the grid arose last October.
At that time, the Department of Energy sent FERC a potential “notice of proposed rulemaking” stating that “it has become necessary to standardize interconnection procedures and agreements for such loads, including those seeking to share a point of interconnection with new or existing generation facilities (hybrid facilities).” FERC issued the notice.
That opened a can of jurisdictional, regulatory, economic, and even political worms that FERC has had to wrangle with during the current rulemaking over the next eight months. The commission said it has received “over 3,500 pages” of comments in response to the notice of proposed rulemaking.
FERC’s actions are far more substantive and sophisticated than the original, blunt fast-track proposal from DOE.
At the time of the DOE proposal, a skeptical former FERC Chairman Mark Christie raised three serious questions about it:
- “1. Will reliable power service be threatened by FERC-mandated interconnection of large load customers without sufficient generation capacity available to the grid operator?”
- “2. Will residential and other customers be forced to bear the costs of FERC-mandated large-load interconnections?”
- “3. Does this proposal represent an unprecedented expansion of federal control and intrusion on the states’ historic retail regulatory authority?”
FERC’s orders to the PJM Interconnection (PJM), Midcontinent Independent System Operator, Inc. (MISO), Southwest Power Pool, Inc. (SPP), California Independent System Operator Corporation (CAISO), ISO New England Inc. (ISO-NE), and New York Independent System Operator, Inc. (NYISO) appear to address Christie’s questions.
FERC had considered an enormous blanket order on the grid connection conundrum but decided it made more sense to address the regional transmission operators/independent system operators [for practical purposes, there is no significant difference between a RTO and an ISO] separately.
In a fact sheet, FERC said, “The Commission recognizes that regional differences exist in the procedures and strategies implemented by grid operators to date and will continue to shape future proposals. The orders have been designed to reflect these variations.” At the news conference, Swett elaborated a bit, observing that the markets “are in different places and take different times” to get where FERC wants them to be. “SPP is probably 90% there already,” she said.
According to FERC, “The six U.S. regional grid operators and their transmission owners must provide justification within 60 days on why their current tariffs remain just and reasonable in the absence of clear and consistent provisions for large load customers—or alternatively to propose changes.”
In opening remarks at the FERC meeting, Swett outlined five categories of reforms the commission is ordering:
- “Developing efficient transmission service application and study processes, including consideration of alternative transmission technologies
- “Preventing cost shifting and requiring transparency into transmission costs
- “Accommodating co-location arrangements and behind the meter generation
- “Providing new transmission services for flexible large loads
- “Developing a process to study generating facilities serving electrically proximate large loads and large co-located loads”
Swett addressed the issue of jurisdiction, which she noted is “the elephant in the room.” She said the FERC action does “nothing to hurt state authority” and that “states have the responsibility” to prevent “rate shifting among retail customers.” She called on the states to take action. “You have to protect retail customers because we can’t.”
The commission is moving rapidly on implementing its reforms of the grid interconnection policy. While the RTOs and ISOs must respond to the draft order, including “briefing questions,” within 60 days, they must file “an informational report regarding resource adequacy within 30 days.” Also, “Interested parties may respond to RTO/ISO and transmission owner filings within 30 days.”
The Quad Report, covering energy policy and politics