
[Federal Register Volume 81, Number 121 (Thursday, June 23, 2016)]
[Rules and Regulations]
[Pages 40793-40809]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-14764]


=======================================================================
-----------------------------------------------------------------------

DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

18 CFR Part 35

[Docket No. RM16-1-000; Order No. 827]


Reactive Power Requirements for Non-Synchronous Generation

AGENCY: Federal Energy Regulatory Commission, DOE.

ACTION: Final rule.

-----------------------------------------------------------------------

SUMMARY: The Federal Energy Regulatory Commission (Commission) is 
eliminating the exemptions for wind generators from the requirement to 
provide reactive power by revising the pro forma Large Generator 
Interconnection Agreement (LGIA), Appendix G to the pro forma LGIA, and 
the pro forma Small Generator Interconnection Agreement (SGIA). As a 
result, all newly interconnecting non-synchronous generators will be 
required to provide reactive power at the high-side of the generator 
substation as a condition of interconnection as set forth in their LGIA 
or SGIA as of the effective date of this Final Rule.

DATES: This Final Rule will become effective September 21, 2016.

FOR FURTHER INFORMATION CONTACT: Brian Bak (Technical Information), 
Office of Energy Policy and Innovation, Federal Energy Regulatory 
Commission, 888 First Street NE., Washington, DC 20426, (202) 502-6574, 
brian.bak@ferc.gov.
    Gretchen Kershaw (Legal Information), Office of the General 
Counsel, Federal Energy Regulatory Commission, 888 First Street NE., 
Washington, DC 20426, (202) 502-8213, gretchen.kershaw@ferc.gov.

SUPPLEMENTARY INFORMATION: 

Table of Contents

 
                                                               Paragraph
 
I. Background...............................................           6
II. Need for Reform.........................................          11
III. Discussion.............................................          13
    A. Reactive Power Requirement for Non-Synchronous                 16
     Generators.............................................
        1. NOPR Proposal....................................          16
        2. Comments.........................................          17
        3. Commission Determination.........................          21
    B. Power Factor Range, Point of Measurement, and Dynamic          26
     Reactive Power Capability Requirements.................
        1. NOPR Proposal....................................          26
        2. Comments.........................................          27
        3. Commission Determination.........................          34
    C. Real Power Output Level..............................          41
        1. NOPR Proposal....................................          41
        2. Comments.........................................          42
        3. Commission Determination.........................          47
    D. Compensation.........................................          50
        1. NOPR Proposal....................................          50
        2. Comments.........................................          51

[[Page 40794]]

 
        3. Commission Determination.........................          52
    E. Application of the Final Rule........................          53
        1. NOPR Proposal....................................          53
        2. Comments.........................................          54
        3. Commission Determination.........................          59
            a. Newly Interconnecting Non-Synchronous                  60
             Generators.....................................
            b. Upgrades to Existing Non-Synchronous                   64
             Generators.....................................
    F. Regional Flexibility.................................          68
    G. Miscellaneous Comments...............................          70
IV. Compliance and Implementation...........................          74
V. Information Collection Statement.........................          78
VI. Regulatory Flexibility Act Certification................          83
VII. Environmental Analysis.................................          86
VIII. Document Availability.................................          87
IX. Effective Date and Congressional Notification...........          90
 

Order No. 827

Final Rule

    1. The Federal Energy Regulatory Commission (Commission) is 
eliminating the exemptions for wind generators from the requirement to 
provide reactive power by revising the pro forma Large Generator 
Interconnection Agreement (LGIA), Appendix G to the pro forma LGIA, and 
the pro forma Small Generator Interconnection Agreement (SGIA). Under 
this Final Rule, newly interconnecting non-synchronous generators that 
have not yet executed a Facilities Study Agreement as of the effective 
date of this Final Rule will be required to provide dynamic reactive 
power within the range of 0.95 leading to 0.95 lagging at the high-side 
of the generator substation. This Final Rule revises the pro forma LGIA 
and pro forma SGIA to establish reactive power requirements for non-
synchronous generation. Specifically, the pro forma LGIA will include 
the following (the pro forma SGIA will include similar language): \1\
---------------------------------------------------------------------------

    \1\ See Section IV of this Final Rule, Compliance and 
Implementation, for the specific changes to the pro forma LGIA and 
pro forma SGIA.

    Non-Synchronous Generation. Interconnection Customer shall 
design the Large Generating Facility to maintain a composite power 
delivery at continuous rated power output at the high-side of the 
generator substation at a power factor within the range of 0.95 
leading to 0.95 lagging, unless the Transmission Provider has 
established a different power factor range that applies to all non-
synchronous generators in the Control Area on a comparable basis. 
This power factor range standard shall be dynamic and can be met 
using, for example, power electronics designed to supply this level 
of reactive capability (taking into account any limitations due to 
voltage level, real power output, etc.) or fixed and switched 
capacitors, or a combination of the two. This requirement shall only 
apply to newly interconnecting non-synchronous generators that have 
not yet executed a Facilities Study Agreement as of the effective 
date of the Final Rule establishing this requirement (Order No. 
---------------------------------------------------------------------------
827).

    2. Section 35.28(f)(1) of the Commission's regulations requires 
every public utility with an open access transmission tariff (OATT) on 
file to also have on file the pro forma LGIA and pro forma SGIA 
``required by Commission rulemaking proceedings promulgating and 
amending such interconnection procedures and agreements.'' \2\ As a 
result of this Final Rule, all newly interconnecting non-synchronous 
generators will be required to provide reactive power as a condition of 
interconnection pursuant to the pro forma LGIA and pro forma SGIA. 
These reactive power requirements will apply to any new non-synchronous 
generator seeking to interconnect to the transmission system that has 
not yet executed a Facilities Study Agreement as of the effective date 
of this Final Rule.
---------------------------------------------------------------------------

    \2\ 18 CFR 35.28(f)(1) (2015).
---------------------------------------------------------------------------

    3. The existing pro forma LGIA and pro forma SGIA both require, as 
a condition of interconnection, an interconnecting generator to design 
its Generating Facility \3\ ``to maintain a composite power delivery at 
continuous rated power output at the Point of Interconnection at a 
power factor \4\ within the range of 0.95 leading to 0.95 lagging'' \5\ 
(the reactive power requirement).
---------------------------------------------------------------------------

    \3\ The pro forma LGIA defines ``Generating Facility'' as an 
``Interconnection Customer's device for the production of 
electricity identified in the Interconnection Request,'' excluding 
the Interconnection Customer's Interconnection Facilities. The pro 
forma LGIA further defines ``Large Generating Facility'' as a 
``Generating Facility having a Generating Facility Capacity of more 
than 20 MW.'' The pro forma SGIA defines ``Small Generating 
Facility'' as an ``Interconnection Customer's device for the 
production and/or storage for later injection of electricity 
identified in the Interconnection Request,'' excluding the 
Interconnection Customer's Interconnection Facilities. For purposes 
of this Final Rule, unless otherwise noted, ``Generating Facility'' 
refers to both a Large Generating Facility and a Small Generating 
Facility.
    \4\ The power factor of an alternating current transmission 
system is the ratio of real power to apparent power. Reliable 
operation of a transmission system requires system operators to 
maintain a tight control of voltages (at all points) on the 
transmission system. The ability to vary the ratio of real power to 
apparent power (i.e., adjust the power factor) allows system 
operators to maintain scheduled voltages within allowed for 
tolerances on the transmission system and maintain the reliability 
of the transmission system. The Commission established a required 
power factor range in Order No. 2003 of 0.95 leading to 0.95 
lagging, but allowed transmission providers to establish different 
requirements to be applied on a comparable basis. See 
Standardization of Generator Interconnection Agreements and 
Procedures, Order No. 2003, FERC Stats. & Regs. ] 31,146, at P 542 
(2003), order on reh'g, Order No. 2003-A, FERC Stats. & Regs. ] 
31,160, order on reh'g, Order No. 2003-B, FERC Stats. & Regs. ] 
31,171 (2004), order on reh'g, Order No. 2003-C, FERC Stats. & Regs. 
] 31,190 (2005), aff'd sub nom. Nat'l Ass'n of Regulatory Util. 
Comm'rs v. FERC, 475 F.3d 1277 (D.C. Cir. 2007), cert. denied, 552 
U.S. 1230 (2008).
    \5\ Section 9.6.1 of the pro forma LGIA and section 1.8.1 of the 
pro forma SGIA.
---------------------------------------------------------------------------

    4. As discussed below, however, wind generators have been exempt 
from the general requirement to provide reactive power absent a study 
finding that the provision of reactive power is necessary to ensure 
safety or reliability. The Commission exempted wind generators from the 
uniform reactive power requirement because, historically, the costs to 
design and build a wind generator that could provide reactive power 
were high and could have created an obstacle to the development of wind 
generation.\6\ Due to technological advancements, the cost of providing 
reactive power no longer presents an obstacle to the development of 
wind generation.\7\ The resulting decline in the cost to wind 
generators of providing

[[Page 40795]]

reactive power renders the current absolute exemptions unjust, 
unreasonable, and unduly discriminatory and preferential. Further, the 
growing penetration of wind generators on some systems increases the 
potential for a deficiency in reactive power.\8\
---------------------------------------------------------------------------

    \6\ Interconnection for Wind Energy, Order No. 661, FERC Stats. 
& Regs. ] 31,186, at P 51, order on reh'g, Order No. 661-A, FERC 
Stats. & Regs. ] 31,198 (2005).
    \7\ See, e.g., Payment for Reactive Power, Commission Staff 
Report, Docket No. AD14-7, app. 2, at 1-3 (Apr. 22, 2014).
    \8\ See, e.g., PJM Interconnection, L.L.C., 151 FERC ] 61,097, 
at P 7 (2015); CAISO Comments at 2-3 (explaining that, in 2014, 
CAISO had over 11,000 MW of interconnected variable energy 
resources, the majority of which are non-synchronous generators, but 
expects to have over 20,000 MW of such resources interconnected by 
2024).
---------------------------------------------------------------------------

    5. Given these changes, the Commission finds under section 206 of 
the Federal Power Act (FPA) \9\ that wind generators should not have an 
exemption from the reactive power requirement which is unavailable to 
other generators. While we find that requiring non-synchronous 
generators to provide dynamic reactive power is now reasonable, we 
recognize that distinctions between non-synchronous and synchronous 
generators still exist and that these differences justify requiring 
non-synchronous generators to provide dynamic reactive power at a 
different location than synchronous generators: Non-synchronous 
generators will be required to provide dynamic reactive power at the 
high-side of the generator substation, as opposed to the Point of 
Interconnection. The reactive power requirements we adopt here for 
newly interconnecting non-synchronous generators provide just and 
reasonable terms, which recognize the technical differences of non-
synchronous generators from synchronous generators. These requirements 
also benefit customers by ensuring that reliability is protected 
without adding unnecessary obstacles to further development of non-
synchronous generators.
---------------------------------------------------------------------------

    \9\ 16 U.S.C. 824d-e (2012).
---------------------------------------------------------------------------

I. Background

    6. Transmission providers require reactive power to control system 
voltage for efficient and reliable operation of an alternating current 
transmission system. At times, transmission providers need generators 
to either supply or consume reactive power. Starting with Order No. 
888,\10\ which included provisions regarding reactive power from 
generators as an ancillary service in Schedule 2 of the pro forma OATT, 
the Commission issued a series of orders intended to ensure that 
sufficient reactive power is available to maintain the reliability of 
the bulk power system.
---------------------------------------------------------------------------

    \10\ 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, FERC Stats. & Regs. ] 31,036 (1996), order on reh'g, 
Order No. 888-A, FERC Stats. & Regs. ] 31,048, 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 relevant part sub nom. 
Transmission Access Policy Study Group v. FERC, 225 F.3d 667 (D.C. 
Circuit 2000), aff'd sub nom. New York v. FERC, 535 U.S. 1 (2002).
---------------------------------------------------------------------------

    7. Starting with Order No. 2003, the Commission adopted standard 
procedures and a standard agreement for the interconnection of Large 
Generating Facilities (the pro forma LGIA), which included the reactive 
power requirement.\11\ Under this requirement, large generators must 
design their Large Generating Facilities to provide 0.95 leading to 
0.95 lagging reactive power at the Point of Interconnection. 
Synchronous generators have met this requirement by providing dynamic 
reactive power at the Point of Interconnection, utilizing the inherent 
dynamic reactive power capability of synchronous generators. The 
Commission recognized in Order No. 2003-A that the pro forma LGIA was 
``designed around the needs of large synchronous generators and that 
generators relying on newer technologies may find that either a 
specific requirement is inapplicable or that it calls for a slightly 
different approach'' because such generators ``may have unique 
electrical characteristics.'' \12\ Therefore, the Commission exempted 
wind generators from this reactive power requirement.\13\
---------------------------------------------------------------------------

    \11\ Order No. 2003, FERC Stats. & Regs. ] 31,146 at PP 1, 542.
    \12\ Order No. 2003-A, FERC Stats. & Regs. ] 31,160 at P 407 & 
n.85.
    \13\ Id. Article 9.6.1 of the pro forma LGIA provides: 
``Interconnection Customer shall design the Large Generating 
Facility 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, unless 
Transmission Provider has established different requirements that 
apply to all generators in the Control Area on a comparable basis. 
The requirements of this paragraph shall not apply to wind 
generators.''
---------------------------------------------------------------------------

    8. In June 2005, the Commission issued Order No. 661,\14\ 
establishing interconnection requirements in Appendix G to the pro 
forma LGIA for large wind generators.\15\ Recognizing that, unlike 
traditional synchronous generators, wind generators had to ``install 
costly equipment'' to maintain reactive power capability, the 
Commission in Order No. 661 preserved the exemption for large wind 
generators from the reactive power requirement unless the transmission 
provider shows, through a System Impact Study, that reactive power 
capability is required to ensure safety or reliability.\16\ The 
Commission explained that this qualified exemption from the reactive 
power requirement for large wind generators would provide certainty to 
the industry and ``remove unnecessary obstacles to the increased growth 
of wind generation.'' \17\
---------------------------------------------------------------------------

    \14\ Interconnection for Wind Energy, Order No. 661, FERC Stats. 
& Regs. ] 31,186, Appendix B (Appendix G--Interconnection 
Requirements for a Wind Generating Plant), order on reh'g, Order No. 
661-A, FERC Stats. & Regs. ] 31,198 (2005).
    \15\ Id. P 1.
    \16\ Id. PP 50-51. Appendix G states: ``A wind generating plant 
shall maintain a power factor within the range of 0.95 leading to 
0.95 lagging, measured at the Point of Interconnection as defined in 
this LGIA, if the Transmission Provider's System Impact Study shows 
that such a requirement is necessary to ensure safety or 
reliability.''
    \17\ Id. P 50.
---------------------------------------------------------------------------

    9. In May 2005, the Commission issued Order No. 2006,\18\ in which 
it adopted standard procedures and a standard agreement for the 
interconnection of Small Generating Facilities (pro forma SGIA).\19\ In 
Order No. 2006, the Commission completely exempted small wind 
generators from the reactive power requirement.\20\ The Commission 
reasoned that, similar to large wind generators, small wind generators 
would face increased costs to provide reactive power that could create 
an obstacle to the development of small wind generators. Additionally, 
the Commission reasoned that small wind generators would ``have minimal 
impact on the Transmission Provider's electric system'' and therefore 
the reliability requirements for large wind generators that were 
eventually imposed in Order No. 661 were not needed for small wind 
generators.\21\
---------------------------------------------------------------------------

    \18\ Standardization of Small Generator Interconnection 
Agreements and Procedures, Order No. 2006, FERC Stats. & Regs. ] 
31,180, Attachment F (Small Generator Interconnection Agreement), 
order on reh'g, Order No. 2006-A, FERC Stats. & Regs. ] 31,196 
(2005), order granting clarification, Order No. 2006-B, FERC Stats. 
& Regs. ] 31,221 (2006).
    \19\ Id. P 1.
    \20\ Id. P 387. Section 1.8.1 of the pro forma SGIA states: 
``The Interconnection Customer shall design its Small Generating 
Facility 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, unless the 
Transmission Provider has established different requirements that 
apply to all similarly situated generators in the control area on a 
comparable basis. The requirements of this paragraph shall not apply 
to wind generators.''
    \21\ Id. P 24.
---------------------------------------------------------------------------

    10. Since the Commission provided these exemptions from the 
reactive power requirement for wind generators, the equipment needed 
for a wind generator to provide reactive power has become more 
commercially available and less costly, such that the cost of 
installing equipment that is capable of providing reactive power is 
comparable

[[Page 40796]]

to the costs of a traditional generator.\22\ Recognizing these factors, 
the Commission recently accepted a proposal by PJM Interconnection, 
L.L.C. (PJM), effectively removing the wind generator exemptions from 
the PJM tariff.\23\ Specifically, the Commission granted PJM an 
``independent entity variation'' from Order No. 661 in accepting PJM's 
proposal to require interconnection customers seeking to interconnect 
non-synchronous generators,\24\ including wind generators, to use 
``enhanced inverters'' with the capability to provide reactive 
power.\25\ The Commission observed that, ``[a]lthough there are still 
technical differences between non-synchronous generators [such as wind 
generators] and traditional generators, with regard to the provision of 
reactive power, those differences have significantly diminished since 
the Commission issued Order No. 661.'' \26\ The Commission agreed with 
PJM ``that the technology has changed both in availability and in cost 
since the Commission rejected [the California Independent System 
Operator's] proposal in 2010,'' such that ``PJM's proposal will not 
present a barrier to non-synchronous resources.'' \27\
---------------------------------------------------------------------------

    \22\ See, e.g., Payment for Reactive Power, Commission Staff 
Report, Docket No. AD14-7, app. 1, at 6, app. 2, at 4-5 (Apr. 22, 
2014).
    \23\ PJM Interconnection, L.L.C., 151 FERC ] 61,097 at P 28.
    \24\ Non-synchronous generators are ``connected to the bulk 
power system through power electronics, but do not produce power at 
system frequency (60 Hz).'' They ``do not operate in the same way as 
traditional generators and respond differently to network 
disturbances.'' Id. P 1 n.3 (citing Order No. 661, FERC Stats. & 
Regs. ] 31,198 at P 3 n.4). Wind and solar photovoltaic generators 
are two examples of non-synchronous generators.
    \25\ Id. PP 1, 6.
    \26\ Id. P 28.
    \27\ Id.
---------------------------------------------------------------------------

II. Need for Reform

    11. Based upon this information, on November 19, 2015, the 
Commission issued a Proposal to Revise Standard Generator 
Interconnection Agreements (NOPR) that proposed to eliminate the 
exemptions for wind generators from the requirement to provide reactive 
power as contained in the pro forma LGIA, Appendix G to the pro forma 
LGIA, and the pro forma SGIA.\28\ In the NOPR, the Commission sought 
comment on: Whether to remove the exemptions for wind generators from 
the reactive power requirement; whether the current power factor range 
of 0.95 leading to 0.95 lagging, as set forth in the existing pro forma 
LGIA and pro forma SGIA, is reasonable given the technology used by 
non-synchronous generators; whether newly interconnecting non-
synchronous generators should only be required to produce reactive 
power when the generator's real power output is greater than 10 percent 
of nameplate capacity; and whether the existing methods used to 
determine reactive power compensation are appropriate for wind 
generators and, if not, what alternatives would be appropriate.\29\
---------------------------------------------------------------------------

    \28\ Reactive Power Requirements for Non-Synchronous Generation, 
Notice of Proposed Rulemaking, 80 Fed Reg. 73,683 (Nov. 25, 2015), 
FERC Stats. & Regs. ] 32,712 (2015).
    \29\ Id. P 18.
---------------------------------------------------------------------------

    12. In response to the NOPR, 24 entities submitted comments,\30\ 
most of which generally support the proposed elimination of the 
exemptions. However, some commenters seek clarification of various 
issues that fall into six broad categories: (1) Comments regarding 
where the reactive power requirement should be measured (the Point of 
Interconnection, the generator terminals, or elsewhere); (2) comments 
contesting the proposal to require fully dynamic reactive power 
capability; (3) comments contesting the proposal to require non-
synchronous generators to maintain the required power factor range only 
when the generator's real power output exceeds 10 percent of its 
nameplate capacity; (4) comments on compensation methods for reactive 
power; (5) comments seeking clarification as to which non-synchronous 
resources the Final Rule will apply; and (6) comments on the need for 
regional flexibility.
---------------------------------------------------------------------------

    \30\ See Appendix A for a list of entities that submitted 
comments and the shortened names used throughout this Final Rule to 
describe those entities.
---------------------------------------------------------------------------

III. Discussion

    13. The Commission finds that, given the changes to the cost of 
providing reactive power by non-synchronous generators, as well as the 
growing penetration of such generators, the reactive power requirements 
in the pro forma LGIA and pro forma SGIA are no longer just and 
reasonable and are unduly discriminatory and preferential and, thus, 
need to be revised. We have determined in this Final Rule to apply 
comparable reactive power requirements to non-synchronous generators 
and synchronous generators. We recognize technological differences 
between non-synchronous and synchronous generators still remain. 
Because of the configuration and means of producing power of 
synchronous generators, these generators provide dynamic reactive power 
at the Point of Interconnection. Many commenters point out, however, 
that the advancements in technology do not permit some non-synchronous 
generators to provide dynamic reactive power at reasonable cost at the 
Point of Interconnection. Recognizing the differences between the two 
categories of generation, we have determined to require non-synchronous 
generators to provide dynamic reactive power at the high-side of the 
generator substation.\31\
---------------------------------------------------------------------------

    \31\ This measurement point is different from Order No. 2003 
requirement, which measures the power factor at the Point of 
Interconnection. As an example, the generator substation would be 
the substation for a wind generator that separates the low-voltage 
collector system from the higher voltage elements of the 
Interconnection Customer Interconnection Facilities that bring the 
generator's energy to the Point of Interconnection. Both the pro 
forma Large Generator Interconnection Procedures and the pro forma 
Small Generator Interconnection Procedures require interconnecting 
generators to provide a simplified one-line diagram of the plant and 
station facilities, which will be appended to the interconnection 
agreement.
---------------------------------------------------------------------------

    14. The requirements adopted by this Final Rule are intended to 
ensure that all generators, both synchronous and non-synchronous, are 
treated in a not unduly discriminatory or preferential manner, as 
required by sections 205 and 206 of the FPA, and to ensure sufficient 
reactive power is available on the bulk power system as more non-
synchronous generators seek to interconnect and more synchronous 
generators retire.
    15. We discuss below the issues raised in the comments.

A. Reactive Power Requirement for Non-Synchronous Generators

1. NOPR Proposal
    16. In the NOPR, the Commission proposed to eliminate the 
exemptions for wind generators from the reactive power requirement, and 
thereby to require that all newly interconnecting non-synchronous 
generators provide reactive power as a condition of 
interconnection.\32\
---------------------------------------------------------------------------

    \32\ NOPR, FERC Stats. & Regs. ] 32,712 at P 12.
---------------------------------------------------------------------------

2. Comments

    17. Most commenters agree that the current exemptions for wind 
generators from the reactive power requirement are unjust, 
unreasonable, and unduly discriminatory and preferential due to 
increases in the number and size of non-synchronous generators, and 
advances in non-synchronous generator technology.\33\ Commenters 
contend that operation and planning of the bulk power system requires 
adequate levels of voltage support, and that exempting wind generators 
from the reactive power requirement may inhibit the proper

[[Page 40797]]

operation of the bulk power system.\34\ Specifically, commenters assert 
that non-synchronous generators are increasingly replacing synchronous 
generators, which is resulting in a decrease in the amount of dynamic 
reactive power available to the transmission system.\35\ Commenters 
also contend that the inverters used by most non-synchronous generators 
today are manufactured with the inherent capability to produce reactive 
power.\36\ Therefore, commenters generally support the Commission's 
proposal to create comparable reactive power requirements for non-
synchronous and synchronous generators.\37\ While the Public Interest 
Organizations support the removal of the exemptions for wind generators 
from the reactive power requirement, they ask that the Commission not 
impose unduly burdensome requirements on non-synchronous 
generators.\38\
---------------------------------------------------------------------------

    \33\ EEI Comments at 5; Indicated NYTOs Comments at 2-3; ISO/RTO 
Council Comments at 4; ISO-NE Comments at 9-10; MISO Comments at 2.
    \34\ CAISO Comments at 2-5; ISO/RTO Council Comments at 5; ISO-
NE Comments at 9; NERC Comments at 5-6; Six Cities Comments at 3-4.
    \35\ CAISO Comments at 2-3; EEI Comments at 4-5; ITC Comments at 
1-2; SCE Comments at 2; SDG&E Comments at 2.
    \36\ CAISO Comments at 3; ISO/RTO Council Comments at 5; MISO 
Comments at 2-3; NaturEner Comments at 2; NERC Comments at 9; SCE 
Comments at 2.
    \37\ CAISO Comments at 3; EEI Comments at 6-7; EPSA Comments at 
3; Idaho Power Comments at 1; Indicated NYTOs Comments at 2; ISO/RTO 
Council Comments at 4; ISO-NE Comments at 7-8; ITC Comments at 1; 
Lincoln Comments at 1-2; MISO Comments at 1-2; NEPOOL Initial 
Comments at 6; SCE Comments at 2; SDG&E Comments at 3.
    \38\ Public Interest Organizations Comments at 1.
---------------------------------------------------------------------------

    18. Commenters argue that it is more effective to have a standard 
reactive power requirement for wind generators than requiring 
transmission providers to show through a System Impact Study the need 
for reactive power from an interconnecting wind generator on a case-by-
case basis because a System Impact Study may not reflect the future 
needs of the transmission system.\39\ CAISO explains that deficiencies 
in reactive power support may only become apparent when there are high 
levels of variable energy resources and low demand, or when certain 
transmission infrastructure or synchronous generators are out of 
service.\40\ Because System Impact Studies do not study all conditions, 
CAISO contends they may not capture these deficiencies before a wind 
generator interconnects to the transmission system.\41\ Therefore, 
CAISO, as well as the ISO/RTO Council, assert that transmission 
providers may need to remedy deficiencies in reactive power support 
that were not identified through a System Impact Study through 
authorization and development of transmission infrastructure 
upgrades.\42\
---------------------------------------------------------------------------

    \39\ CAISO Comments at 4-5; EEI Comments at 5-6; ISO/RTO Council 
Comments at 5; ISO-NE Comments at 2.
    \40\ CAISO Comments at 4.
    \41\ Id.
    \42\ CAISO Comments at 4; ISO/RTO Council Comments at 5.
---------------------------------------------------------------------------

    19. Commenters argue that relying on transmission system upgrades 
after a wind generator interconnects, or relying on more recently 
interconnected generation resources, to meet reactive power 
deficiencies may shift the cost of providing reactive power from one 
interconnection customer to another. Specifically, if a System Impact 
Study does not show that an earlier interconnecting wind generator 
needs to provide reactive power, but, as a result of the combination of 
existing and new wind generators, a System Impact Study for a later 
interconnecting wind generator does make that showing, the newer 
interconnecting wind generator would have the entire burden of 
supplying reactive power instead of sharing equally with the other wind 
generators creating the need for reactive power.\43\ Further, 
commenters assert that requiring transmission providers to show through 
a System Impact Study the need for reactive power from interconnecting 
wind generators leads to delays and increased costs in processing 
interconnection requests.\44\ Commenters argue that a uniform reactive 
power requirement for non-synchronous generators may result in reduced 
costs for wind development by allowing standardization of components 
and equipment.\45\ Additionally, ISO-NE argues that the difficulty in 
demonstrating a need for reactive power through a System Impact Study 
has resulted in some wind generators not being required to install 
reactive power equipment and, consequently, not being able to deliver 
real power during certain system conditions as a result of insufficient 
reactive power capability.\46\ According to ISO-NE., this situation has 
resulted in transmission system operators needing to curtail wind 
generators as a result of unstudied real-time system 
characteristics.\47\
---------------------------------------------------------------------------

    \43\ ISO/RTO Council Comments at 5; Union of Concerned 
Scientists Comments at 4-5.
    \44\ ISO-NE Comments at 2, 4, 10; NEPOOL Initial Comments at 5.
    \45\ Indicated NYTOs Comments at 2; Joint NYTOs Comments at 2.
    \46\ ISO-NE Comments at 5.
    \47\ Id. at 6.
---------------------------------------------------------------------------

    20. Several independent system operators (ISOs) and regional 
transmission organizations (RTOs) have been developing new reactive 
power requirements and procedures to address deficiencies in the 
current method of requiring transmission providers to show through a 
System Impact Study that reactive power from an interconnecting wind 
generator is necessary to ensure safety or reliability.\48\
---------------------------------------------------------------------------

    \48\ CAISO Comments at 1-2; ISO-NE Comments at 6; NEPOOL Initial 
Comments at 4.
---------------------------------------------------------------------------

3. Commission Determination
    21. Based on the comments filed in response to the NOPR, and the 
record in the PJM and ISO-NE proceedings accepting PJM's and ISO-NE's 
reactive power requirements for non-synchronous generators,\49\ the 
Commission adopts in this Final Rule reactive power requirements for 
newly interconnecting non-synchronous generators, as discussed in 
greater detail below. We find the continued exemptions from the 
reactive power requirement in the pro forma LGIA and the pro forma SGIA 
for newly interconnecting wind generators to be unjust, unreasonable, 
and unduly discriminatory and preferential.
---------------------------------------------------------------------------

    \49\ On April 15, 2016, after issuing the NOPR and receiving 
comments, the Commission approved ISO-NE's proposal to eliminate the 
exemptions for wind generators from the reactive power requirement. 
ISO New England Inc., 155 FERC ] 61,031 (2016). The Commission 
previously accepted PJM's similar proposal. See PJM Interconnection, 
L.L.C., 151 FERC ] 61,097 (2015).
---------------------------------------------------------------------------

    22. Non-synchronous generators other than wind generators currently 
are not exempt from the reactive power requirement in the pro forma 
LGIA and pro forma SGIA,\50\ although the Commission has treated other 
types of non-synchronous generators in the same manner as wind 
generators on a case-by-case basis.\51\ We proposed in the NOPR \52\ to 
apply the Final Rule to all non-synchronous generators, and received no 
adverse comments. This Final Rule will apply to all newly

[[Page 40798]]

interconnecting non-synchronous generators that have not yet executed a 
Facilities Study Agreement as of the effective date of this Final Rule.
---------------------------------------------------------------------------

    \50\ Order Nos. 2003, 661, and 2006 explicitly exempted only 
wind generators from the reactive power requirement. See Order No. 
661, FERC Stats. & Regs. ] 31,186 at P 106 (``While we are not 
applying the Final Rule Appendix G to non-wind technologies, we may 
do this in the future, or take other generic or case-specific 
actions, if another technology emerges for which a different set of 
interconnection requirements is necessary.'').
    \51\ See Nevada Power Co., 130 FERC ] 61,147, at P 27 (2010) 
(``[C]onsistent with our requirements for all wind facilities in 
Order No. 661, the Commission will require based on the facts of 
this case, that, before Nevada Power may require El Dorado's solar 
facility to be capable of providing reactive power, Nevada Power 
must show, through a system impact study, that such a requirement is 
necessary to ensure the safety or reliability of the grid.''); id. P 
24 (``We agree . . . that this is not the appropriate proceeding in 
which to make a generic determination on whether to extend to solar 
generators wind power's exemption from the requirement to provide 
reactive power support.'').
    \52\ E.g., NOPR, FERC Stats. & Regs. ] 32,712 at P 17.
---------------------------------------------------------------------------

    23. Older wind turbine generators consumed reactive power, but, 
because they did not use inverters like other non-synchronous 
generators, they lacked the capability to produce and control reactive 
power without the use of costly equipment.\53\ Based on technological 
improvements since the Commission created the exemptions for wind 
generators, requiring newly interconnecting wind generators to provide 
reactive power is not the obstacle to the development of wind 
generation that it was when the Commission issued Order Nos. 2003, 661, 
and 2006.\54\ In particular, the wind turbines being installed today 
are generally Type III and Type IV inverter-based turbines,\55\ which 
are capable of producing and controlling dynamic reactive power, which 
was not the case in 2005 when the Commission exempted wind generators 
from the reactive power requirement in Order No. 661.\56\
---------------------------------------------------------------------------

    \53\ Order No. 661, FERC Stats. & Regs. ] 31,186 at PP 50-51.
    \54\ As discussed above, in exempting wind generators from the 
reactive power requirement, the Commission sought to avoid creating 
an obstacle to the development of wind generation. For example, in 
Order No. 661, the Commission was concerned with ``remov[ing] 
unnecessary obstacles to the increased growth of wind generation.'' 
Id. P 50.
    \55\ A Type III wind turbine is a non-synchronous wound-rotor 
generator that has a three phase AC field applied to the rotor from 
a partially-rated power-electronics converter. A Type IV wind 
turbine is an AC generator in which the stator windings are 
connected to the power system through a fully-rated power-
electronics converter. Both Type III and Type IV wind turbines have 
inherent reactive power capabilities.
    \56\ Id. PP 50-51.
---------------------------------------------------------------------------

    24. We therefore conclude that improvements in technology, and the 
corresponding declining costs for newly interconnecting wind generators 
to provide reactive power, make it unjust, unreasonable, and unduly 
discriminatory and preferential to exempt such non-synchronous 
generators from the reactive power requirement when other types of 
generators are not exempt. Further, requiring all newly interconnecting 
non-synchronous generators to design their Generating Facilities to 
maintain the required power factor range ensures they are subject to 
comparable requirements as other generators.\57\
---------------------------------------------------------------------------

    \57\ See, e.g., Sw. Power Pool, Inc., 119 FERC ] 61,199, at P 29 
(``Providing reactive power within the [standard power factor range] 
is an obligation of a generator, and is as much an obligation of a 
generator as, for example, operating in accordance with Good Utility 
Practice.''), order on reh'g, 121 FERC ] 61,196 (2007).
---------------------------------------------------------------------------

    25. The Commission also is concerned that, as the penetration of 
non-synchronous generators continues to grow, exempting a class of 
generators from providing reactive power could create reliability 
concerns, especially if those generators represent a substantial amount 
of total generation in a particular region, or if many of the resources 
that currently provide reactive power are retired from operation. In 
addition, as noted above, maintaining the exemptions for wind 
generators places an undue burden on synchronous generators to supply 
reactive power without a reasonable technological or cost-based 
distinction between synchronous and non-synchronous generators.\58\ 
Therefore, the Commission concludes that the continued exemptions from 
the reactive power requirement for newly interconnecting wind 
generators are unjust, unreasonable, and unduly discriminatory and 
preferential. For these reasons, the Commission revises the pro forma 
LGIA, Appendix G to the pro forma LGIA, and the pro forma SGIA to 
eliminate the exemptions for wind generators from the reactive power 
requirement.\59\
---------------------------------------------------------------------------

    \58\ See PJM Interconnection, L.L.C., 151 FERC ] 61,097 at P 7; 
Payment for Reactive Power, Commission Staff Report, Docket No. 
AD14-7, app. 1 (Apr. 22, 2014).
    \59\ The Final Rule does not revise any regulatory text. The 
Final Rule revises the pro forma LGIA and pro forma SGIA in 
accordance with section 35.28(f)(1) of the Commission's regulations, 
which provides: ``Every public utility that is required to have on 
file a non-discriminatory open access transmission tariff under this 
section must amend such tariff by adding the standard 
interconnection procedures and agreement and the standard small 
generator interconnection procedures and agreement required by 
Commission rulemaking proceedings promulgating and amending such 
interconnection procedures and agreements, or such other 
interconnection procedures and agreements as may be required by 
Commission rulemaking proceedings promulgating and amending the 
standard interconnection procedures and agreement and the standard 
small generator interconnection procedures and agreement.'' 18 CFR 
35.28(f)(1) (2015). See Integration of Variable Energy Resources, 
Order No. 764, FERC Stats. & Regs. ] 31,331, at PP 343-345 (adopting 
this regulatory text effective September 11, 2012), order on reh'g 
and clarification, Order No. 764-A, 141 FERC ] 61,232 (2012), order 
on clarification and reh'g, Order No. 764-B, 144 FERC ] 61,222 
(2013). While not revising regulatory text, the Commission is using 
the process provided for rulemaking proceedings, as defined in 5 
U.S.C. 551(4)-(5) (2012).
---------------------------------------------------------------------------

B. Power Factor Range, Point of Measurement, and Dynamic Reactive Power 
Capability Requirements

1. NOPR Proposal
    26. The Commission proposed in the NOPR as part of the reactive 
power requirements for non-synchronous generators to require all newly 
interconnecting non-synchronous generators to design their Generating 
Facilities 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.\60\ Further, the Commission 
proposed to require that the reactive power capability installed by 
non-synchronous generators be dynamic.\61\
---------------------------------------------------------------------------

    \60\ NOPR, FERC Stats. & Regs. ] 32,712 at P 16.
    \61\ Id. P 14.
---------------------------------------------------------------------------

2. Comments
    27. Several commenters support the Commission's proposal to measure 
the reactive power requirement at the Point of Interconnection.\62\ 
Commenters note that measuring the reactive power requirement at the 
Point of Interconnection is consistent with the current requirement in 
the pro forma LGIA for measuring the reactive power requirement where a 
transmission provider's System Impact Study shows the need for reactive 
power from an interconnecting wind generator.\63\ Midwest Energy argues 
that transmission providers are only concerned with power factor and 
voltage at the Point of Interconnection.\64\ CAISO asserts that 
measuring the reactive power requirement at the Point of 
Interconnection gives interconnection customers flexibility in how they 
design their generator projects to meet the reactive power 
requirement.\65\ CAISO states that inverter manufacturers informed 
CAISO that current inverters used by most non-synchronous generators 
are capable of producing 0.95 leading and 0.95 lagging reactive power 
at full real power output at the generator's Point of 
Interconnection.\66\ NextEra acknowledges that the common approach 
within ISOs/RTOs is to measure reactive power at the Point of 
Interconnection, but suggests that if reactive power is measured at the 
Point of Interconnection, then the Commission should maintain the 
flexibility for non-synchronous generators to meet that requirement 
using static reactive power devices if agreed to by the transmission 
provider, as provided for in Appendix G to the pro forma LGIA.\67\ 
NaturEner asserts that, depending on the length of the collector 
system, transformer substation characteristics, and the length of the

[[Page 40799]]

Interconnection Customer Interconnection Facilities from the generator 
terminals to the Point of Interconnection, it may not be possible for 
non-synchronous generators to meet the 0.95 leading to 0.95 lagging 
reactive power requirement at the Point of Interconnection without 
installing additional equipment.\68\
---------------------------------------------------------------------------

    \62\ CAISO Comments at 6; EEI Comments at 8; Indicated NYTOs 
Comments at 4; Midwest Energy Comments at 9; NERC Comments at 9.
    \63\ CAISO Comments at 6; EEI Comments at 7.
    \64\ Midwest Energy Comments at 9.
    \65\ CAISO Comments at 6.
    \66\ Id. at 3.
    \67\ NextEra Comments at 10-11.
    \68\ NaturEner Comments at 3.
---------------------------------------------------------------------------

    28. On the other hand, some commenters disagree with the NOPR 
proposal and argue that the reactive power requirement should be 
measured at the generator terminals rather than at the Point of 
Interconnection for non-synchronous generators. They assert that 
measuring at the Point of Interconnection would result in significantly 
higher costs for non-synchronous generators than measuring at the 
generator terminals. They also argue that, because of the often 
significant distance between non-synchronous generator terminals and 
the Point of Interconnection, measuring the reactive power requirement 
for non-synchronous generators at the generator terminals would result 
in a reactive power requirement that is comparable to measuring at the 
Point of Interconnection for synchronous generators.\69\ AWEA and LSA 
contend that synchronous and non-synchronous generators are not 
similarly situated due to the fact that non-synchronous generators are 
typically located geographically and electrically farther from the 
Point of Interconnection than synchronous generators.\70\ Therefore, 
AWEA and LSA request that non-synchronous generators have the option to 
meet the reactive power requirement at the generator terminals, even if 
the requirement at that point is more stringent (e.g., 0.95 leading to 
0.90 lagging) than at the Point of Interconnection.\71\ AWEA and LSA 
note that they supported the independent entity variation from Order 
No. 661 in PJM in part because the reactive power requirement is 
measured at the generator terminals.\72\
---------------------------------------------------------------------------

    \69\ AWEA and LSA Comments at 12; Joint NYTOs Comments at 3-4; 
Public Interest Organizations Comments at 2; Union of Concerned 
Scientists Comments at 3.
    \70\ AWEA and LSA Comments at 12.
    \71\ Id. at 10, 12-13.
    \72\ Id. at 10-11.
---------------------------------------------------------------------------

    29. Some commenters argue that, due to the configuration of typical 
non-synchronous generators, additional investment is required to 
supplement the inherent dynamic reactive power capability of the 
generators to meet the reactive power requirement at the Point of 
Interconnection; therefore, they assert that requiring measurement at 
the Point of Interconnection would reset the costs for non-synchronous 
generators to a level higher than that which the Commission considered 
in approving PJM's independent entity variation.\73\ In addition to 
equipment investment, AWEA and LSA contend that, in many situations, 
providing excess reactive power at the generator terminals to meet the 
reactive power requirement at the Point of Interconnection would result 
in a large decrease in real power output, and accompanying lost 
opportunity costs and lost zero-emission, zero-fuel cost energy.\74\ 
Similarly, NaturEner argues that the proposed power factor range of 
0.95 leading to 0.95 lagging is only reasonable if the reactive power 
requirement is measured at the generator terminals.\75\ NaturEner 
contends that measuring the reactive power requirement at the generator 
terminals will result in sufficient voltage control at the Point of 
Interconnection.\76\ Alternatively, NaturEner also suggests that it 
would be reasonable to require a power factor range of 0.95 leading to 
0.95 lagging at the generator substation.\77\ Finally, NaturEner argues 
that any additional reactive power needs could be determined in a 
System Impact Study.\78\
---------------------------------------------------------------------------

    \73\ AWEA and LSA Comments at 10-12; NextEra Comments at 9; 
Union of Concerned Scientists Comments at 3-4.
    \74\ AWEA and LSA Comments at 11.
    \75\ NaturEner Comments at 3.
    \76\ Id. at 3-4.
    \77\ Id. at 3.
    \78\ Id. at 4; see also Midwest Energy Comments at 10.
---------------------------------------------------------------------------

    30. While CAISO allows synchronous generators to provide reactive 
power at the generator terminals, CAISO does not support providing this 
option to non-synchronous generators. CAISO argues that measuring the 
reactive power requirement at the generator terminals is inappropriate 
for non-synchronous generators because non-synchronous generators often 
use multiple transformers, collection circuits, and substations to 
transmit real power across lengthy Interconnection Customer 
Interconnection Facilities from the generator terminal to the Point of 
Interconnection, reducing the amount of reactive power that reaches the 
transmission system. In contrast, CAISO explains that the configuration 
of synchronous generators typically involves a single transformer and 
short Interconnection Customer Interconnection Facilities from the 
generator terminal to the Point of Interconnection, making measuring 
the reactive power requirement at the generator terminals for 
synchronous generators appropriate for ensuring that sufficient 
reactive power is provided to the transmission system.\79\
---------------------------------------------------------------------------

    \79\ CAISO Comments at 6-7.
---------------------------------------------------------------------------

    31. As to the Commission's proposal to require fully dynamic 
reactive power capability, commenters in support argue that requiring 
dynamic reactive power capability allows generators to operate across a 
broader range of operating conditions than allowing static reactive 
power devices.\80\ ISO-NE asserts that requiring fully dynamic reactive 
power capability is consistent with the historic requirement that 
synchronous generators provide dynamic reactive power.\81\ ISO-NE 
contends that generators are more effective at providing dynamic 
reactive power compared to transmission infrastructure.\82\
---------------------------------------------------------------------------

    \80\ EEI Comments at 8; ISO-NE Comments at 8.
    \81\ ISO-NE Comments at 8.
    \82\ Id. at 9.
---------------------------------------------------------------------------

    32. Conversely, other commenters disagree with the proposal to 
require fully dynamic reactive power capability. SDG&E contends that 
such a requirement is not necessary and that allowing non-synchronous 
generators to use static reactive power devices to meet the reactive 
power requirement will provide flexibility to generator developers and 
keep costs at a reasonable level.\83\ SDG&E suggests that the dynamic 
reactive power capability requirement only be for 0.985 leading to 
0.985 lagging reactive power capability.\84\ Other commenters assert 
that the existing pro forma LGIA and pro forma SGIA neither define 
``dynamic'' reactive power capability, nor specify a mix of static 
versus dynamic reactive power capability that a generator must 
maintain, and that the Commission should not specify such a mix in this 
proceeding.\85\ Rather, AWEA and LSA argue that it would be 
discriminatory to require non-synchronous generators to maintain fully 
dynamic reactive power capability because their configuration results 
in significant loss of dynamic reactive power from the generator 
terminal to the Point of Interconnection. Instead, AWEA and LSA argue 
that static reactive power devices are necessary and effective to 
supplement the dynamic reactive power capability of the generator to 
provide reactive power at the Point of Interconnection.\86\
---------------------------------------------------------------------------

    \83\ SDG&E Comments at 3-4.
    \84\ Id. at 4.
    \85\ AWEA and LSA Comments at 8; EEI Comments at 8; Midwest 
Energy Comments at 5; NextEra Comments at 6.
    \86\ AWEA and LSA Comments at 9; see also Midwest Energy 
Comments at 6.
---------------------------------------------------------------------------

    33. NextEra argues that if the proposed reactive power requirement 
is

[[Page 40800]]

for fully dynamic reactive power capability, then measuring the 
requirement at the generator terminals for non-synchronous generators 
is required to ensure comparable treatment to synchronous 
generators.\87\ NextEra contends that the cost of providing reactive 
power is manageable at the Point of Interconnection if the flexibility 
provided in section 9.6.1 of the pro forma LGIA is maintained and the 
reactive power requirement can be met with static reactive power 
devices, but that the requirement could be cost-prohibitive if non-
synchronous generators are required to install dynamic reactive power 
devices.\88\ Commenters request that the Commission clarify that it did 
not intend to specify that a non-synchronous generator must meet the 
reactive power requirement with only dynamic reactive power 
capability.\89\ Specifically, NextEra argues that the Commission should 
not remove paragraph A.ii of Appendix G to the pro forma LGIA because 
it provides important provisions regarding the types of devices that 
can be used to meet the reactive power requirement.\90\
---------------------------------------------------------------------------

    \87\ NextEra Comments at 9-10.
    \88\ Id. at 9; NextEra Supplemental Comments at 4.
    \89\ AWEA and LSA Comments at 9; Midwest Energy Comments at 6; 
NextEra Comments at 7.
    \90\ NextEra Comments at 8.
---------------------------------------------------------------------------

3. Commission Determination
    34. We will require the reactive power requirements in the pro 
forma LGIA and pro forma SGIA for non-synchronous generators to be 
measured at the high-side of the generator substation. Newly 
interconnecting non-synchronous generators will be required to design 
their Generating Facilities to maintain a composite power delivery at 
continuous rated power output at the high-side of the generator 
substation. At that point, the non-synchronous generator must provide 
dynamic reactive power within the power factor range of 0.95 leading to 
0.95 lagging, unless the transmission provider has established a 
different power factor range that applies to all non-synchronous 
generators in the transmission provider's control area on a comparable 
basis.\91\ To ensure there is no undue discrimination, we clarify that 
the ability of a transmission provider to establish different 
requirements is limited to establishing a different power factor range, 
and not to the other reactive power requirements.
---------------------------------------------------------------------------

    \91\ Under these provisions, transmission providers may 
establish a different power factor range for synchronous or non-
synchronous generators as long as the requirement applies to all 
generators in each class on a comparable basis. See Order No. 2003, 
FERC Stats. & Regs. ] 31,146 at P 542 (``We adopt the power factor 
requirement of 0.95 leading to 0.95 lagging because it is a common 
practice in some NERC regions. If a Transmission Provider wants to 
adopt a different power factor requirement, Final Rule LGIA Article 
9.6.1 permits it to do so as long as the power factor requirement 
applies to all generators on a comparable basis.'').
---------------------------------------------------------------------------

    35. Non-synchronous generators may meet the dynamic reactive power 
requirement by utilizing a combination of the inherent dynamic reactive 
power capability of the inverter, dynamic reactive power devices (e.g., 
Static VAR Compensators), and static reactive power devices (e.g., 
capacitors) to make up for losses. In developing this reactive power 
requirement for non-synchronous generators, the Commission is balancing 
the costs to newly-interconnecting non-synchronous generators of 
providing reactive power with the benefits to the transmission system 
of having another source of reactive power.
    36. Although the Commission in the NOPR considered measuring the 
reactive power requirements for non-synchronous generators at the Point 
of Interconnection, we are persuaded by commenters' arguments that 
requiring fully dynamic reactive power capability at the Point of 
Interconnection may result in significantly increased costs for non-
synchronous generators in meeting the reactive power requirements.\92\ 
These added costs will ultimately be borne by customers, whether 
through reactive power payments in regions that compensate for reactive 
power capability, or through elevated prices for capacity or energy in 
regions that do not compensate for reactive power capability. In 
contrast, measuring the reactive power requirements at the high-side of 
the generator substation, rather than at the Point of Interconnection, 
will be less expensive for non-synchronous generators because a greater 
amount of the inherent dynamic reactive power capability of the 
inverters associated with non-synchronous generators will be available 
at the high-side of the generator substation than at the Point of 
Interconnection.
---------------------------------------------------------------------------

    \92\ See, e.g., NaturEner Comments at 3 (``Based on the above 
technological and cost-based reasons, NaturEner believes the +/- 
0.95 requirement is reasonable if the Proposed Rule is refined to 
measure the requirement at the wind turbine terminals (or as an 
alternative at the wind farm substation), and not at the Point of 
Interconnection.'').
---------------------------------------------------------------------------

    37. In adopting the Point of Interconnection as the point of 
measurement for large wind plants in Order No. 661, the Commission 
balanced the case-by-case reactive power requirement with the needs of 
the transmission system.\93\ Here, we remove the case-by-case approach, 
and require that all newly interconnecting non-synchronous generators 
provide reactive power as a condition of interconnection. By requiring 
all newly interconnecting non-synchronous generators to provide 
reactive power, we are increasing the amount of reactive power 
available to meet transmission system needs, and, at the same time, 
balancing the costs to non-synchronous generators of providing that 
reactive power by measuring the requirements at the high-side of the 
generator substation.
---------------------------------------------------------------------------

    \93\ Order No. 661, FERC Stats. & Regs. ] 31,186 at P 59.
---------------------------------------------------------------------------

    38. Similarly, in Order No. 661, the Commission was not convinced 
that dynamic reactive power capability was needed from every wind 
generator, and so adopted the case-by-case approach.\94\ However, with 
the increasing penetration of wind generation and retirement of 
traditional synchronous generators, which provided dynamic reactive 
power capability to the transmission system, we now find it is 
necessary to require dynamic reactive power capability from all new 
generators. The dynamic reactive power capability may be achieved at 
the high-side of the generator substation at lower cost compared to 
dynamic reactive power at the Point of Interconnection by systems using 
a combination of dynamic capability from the inverters plus static 
reactive power devices to make up for losses. Therefore, this Final 
Rule gives non-synchronous generators the flexibility to use static 
reactive power devices to make up for losses that occur between the 
inverters and the high-side of the generator substation, so long as the 
generators maintain 0.95 leading to 0.95 lagging dynamic reactive power 
capability at the high-side of the generator substation.
---------------------------------------------------------------------------

    \94\ Id. P 66.
---------------------------------------------------------------------------

    39. While measuring the reactive power requirements at the Point of 
Interconnection would provide the greatest amount of reactive power to 
the transmission system, the costs associated with providing that level 
of reactive power do not justify the added benefit to the transmission 
system.\95\ In

[[Page 40801]]

fact, one of the reasons for undertaking this rulemaking proceeding was 
the Commission recognized that the cost of providing reactive power may 
no longer present an obstacle to the development of wind generation. On 
the other hand, measuring the reactive power requirements at the 
Generating Facilities would likely result in very little reactive power 
being provided to the transmission system but would be relatively 
inexpensive to implement for the non-synchronous generator. The high-
side of the generator substation represents a middle ground. It is 
located beyond the low voltage collector systems where significant 
reactive power losses occur, resulting in more reactive power provided 
to the transmission system than a requirement at the Generating 
Facilities, while being less expensive to implement than a requirement 
at the Point of Interconnection. We find that measuring the reactive 
power requirements at the high-side of the generator substation 
reasonably balances the need for reactive power for the transmission 
system with the costs to non-synchronous generators of providing 
reactive power.
---------------------------------------------------------------------------

    \95\ See ISO New England Inc., Tariff Filing, Transmittal 
Letter, Docket No. ER16-946-000, at 17 (filed Feb. 16, 2016) 
(``[T]he proposed requirements provide for the reactive capability 
to be measured at the high-side of the station transformer rather 
than at the Point of Interconnection to account for the long 
generator leads through which many wind generators are 
interconnecting to the New England system--as long as approximately 
50-80 miles between the generator collector transformer and the 
Point of Interconnection. There is no benefit to the generator, and 
little benefit to the system, to force the generator to provide 
voltage support all the way to a Point of Interconnection that is 
very remote, and it is not necessarily even achievable to 
effectively transfer such quantities of reactive power over such 
distances.''); see also NextEra Supplemental Comments at 3-4.
---------------------------------------------------------------------------

    40. We find establishing dynamic reactive power requirements at the 
high-side of the generator substation preferable to the suggestion in 
the comments that, at relative equal cost, reactive power could be 
provided at the Point of Interconnection as long as the inherent 
dynamic reactive power produced by the generator can be enhanced with 
static reactive power capability. By establishing dynamic reactive 
power requirements at the high-side of the generator substation, non-
synchronous generators will be able to provide faster responding and 
more continuously variable reactive power capability than if they 
provide static reactive power capability at the Point of 
Interconnection. In addition, requiring dynamic reactive power 
capability allows generators to operate across a broader range of 
operating conditions than allowing static reactive power 
enhancements.\96\
---------------------------------------------------------------------------

    \96\ EEI Comments at 8; ISO-NE Comments at 8; see also ISO New 
England Inc., Tariff Filing, Transmittal Letter, Docket No. ER16-
946-000, at 19 (filed Feb. 16, 2016) (``[I]n New England's 
experience, the implementation of the reactive power exemption has 
disadvantaged wind generators seeking to interconnect, putting 
burdens on the study process not experienced for conventional 
generators and compromising their ability to operate through various 
system conditions once interconnected, a situation that leads system 
operators to curtail wind farm output for system reliability 
reasons.'').
---------------------------------------------------------------------------

C. Real Power Output Level

1. NOPR Proposal
    41. The NOPR proposed to require newly interconnecting non-
synchronous generators to design their Generating Facilities to 
maintain the required power factor range only when the generator's real 
power output exceeds 10 percent of its nameplate capacity.\97\ The 
proposed pro forma LGIA would state: ``Non-synchronous generators shall 
only be required to maintain the above power factor when their output 
is above 10 percent of the Generating Facility Capacity.'' \98\ The 
Commission stated its understanding that the inverters used by non-
synchronous generators were not capable of producing reactive power 
when operating below 10 percent of nameplate capacity.\99\
---------------------------------------------------------------------------

    \97\ NOPR, FERC Stats. & Regs. ] 32,712 at P 15 (citing Order 
No. 661, FERC Stats. & Regs. ] 31,186 at P 46).
    \98\ Id. P 16. The Commission proposed similar revisions to the 
pro forma SGIA: ``Non-synchronous generators shall only be required 
to maintain the above power factor when their output is above 10 
percent of the generator nameplate capacity.'' Id.
    \99\ Id. P 15 (citing Order No. 661, FERC Stats. & Regs. ] 
31,186 at P 46).
---------------------------------------------------------------------------

2. Comments
    42. Several commenters support the 10 percent exemption given 
current inverter technology.\100\ EEI notes that the Commission uses 
both ``generator nameplate capacity'' and ``Generator Facility 
Capacity'' in reference to the 10 percent exemption, and requests that 
the Commission clarify that the correct term is ``Generator Facility 
Capacity.'' \101\ The ISO/RTO Council states that its ISO/RTO members 
do not uniformly agree that the 10 percent exemption is appropriate and 
want to be able to establish rules based on their individual 
situations.\102\ Similarly, the Indicated NYTOs support the Commission 
allowing regional variation on the 10 percent exemption within a 
reasonable range based on existing regional requirements (up to an 
exemption for below 25 percent real power output).\103\
---------------------------------------------------------------------------

    \100\ EEI Comments at 9; NaturEner Comments at 4; NERC Comments 
at 10; SCE Comments at 3; NextEra Comments at 11.
    \101\ EEI Comments at 9-10.
    \102\ ISO/RTO Council Comments at 3.
    \103\ Indicated NYTOs Comments at 4.
---------------------------------------------------------------------------

    43. AWEA and LSA and the Joint NYTOs argue that the 10 percent 
exemption should be increased to 25 percent, consistent with what the 
Commission approved in PJM.\104\ AWEA and LSA assert that the ability 
of non-synchronous generators to provide reactive power can be reduced 
when individual generators within the plant are not producing real 
power, such that the 10 percent operating threshold is 
insufficient.\105\
---------------------------------------------------------------------------

    \104\ AWEA and LSA Comments at 13; Joint NYTOs Comments at 3.
    \105\ AWEA and LSA Comments at 13.
---------------------------------------------------------------------------

    44. Other commenters oppose the 10 percent exemption, arguing that 
it is not necessary given the technology available to non-synchronous 
generators.\106\ These commenters contend that some inverters can 
produce reactive power at zero real power output.\107\ Additionally, 
ISO-NE argues that requiring non-synchronous generators to be capable 
of providing reactive power at all output levels will further 
technological development and advancement.\108\ ISO-NE asserts that if 
the Commission adopts the 10 percent exemption, it should limit the 
exemption to only wind generators because non-synchronous generators 
other than wind generators have not had an exemption from the reactive 
power requirement and it is inappropriate to create a new exemption for 
these generators.\109\
---------------------------------------------------------------------------

    \106\ ISO-NE Comments at 13; Midwest Energy Comments at 9; MISO 
Comments at 3.
    \107\ ISO-NE Comments at 14; NaturEner Comments at 4.
    \108\ ISO-NE Comments at 14.
    \109\ Id. at 14-15.
---------------------------------------------------------------------------

    45. MISO requests that non-synchronous generators be required to 
produce reactive power at low and zero-voltage conditions to ensure the 
robustness of the transmission system.\110\ Similarly, Midwest Energy 
argues that the Commission has not fully considered the high levels of 
reactive power generated by lightly loaded interconnection facilities 
associated with non-synchronous generators.\111\ Midwest Energy 
explains that its largest events of excess reactive power production 
have occurred when non-synchronous generators are producing less than 
10 percent of their nameplate capacity. Midwest Energy asserts that it 
may be necessary for non-synchronous generators to install static 
inductors to absorb reactive power in these situations. Therefore, 
according to Midwest Energy, requiring non-synchronous generators to 
provide reactive power at all levels of real power output would prevent 
potential high voltage reliability concerns.\112\
---------------------------------------------------------------------------

    \110\ MISO Comments at 3.
    \111\ Midwest Energy Comments at 2-3.
    \112\ Id. at 8.
---------------------------------------------------------------------------

    46. AWEA and LSA request clarification regarding the proposal in 
the NOPR that non-synchronous generators be required to maintain a 
``composite power delivery at continuous rated power output at the 
Point of Interconnection at a power

[[Page 40802]]

factor within the range of 0.95 leading to 0.95 lagging.'' \113\ AWEA 
and LSA argue that this language can be interpreted as either requiring 
non-synchronous generators to provide reactive power proportionate to 
the actual output of the generator, or to provide reactive power within 
the full power factor range based on the maximum output of the 
generator no matter the actual output of the generator.\114\ AWEA and 
LSA contend that the first interpretation--a reactive power requirement 
proportionate to actual output--is the most reasonable 
interpretation.\115\ NERC asserts that the second interpretation is 
correct.\116\
---------------------------------------------------------------------------

    \113\ AWEA and LSA Comments at 5; NOPR, FERC Stats. & Regs. ] 
32,712 at P 16.
    \114\ AWEA and LSA Comments at 5-7 (explaining that the first 
interpretation will result in a triangular PQ curve, while the 
latter will result in a rectangular PQ curve); see also NERC 
Comments at 9.
    \115\ AWEA and LSA Comments at 6.
    \116\ NERC Comments at 9.
---------------------------------------------------------------------------

3. Commission Determination
    47. We will not adopt the 10 percent exemption proposed in the NOPR 
in this Final Rule and will instead require all newly interconnecting 
non-synchronous generators to design their Generating Facilities to 
meet the reactive power requirements at all levels of real power 
output, as is already required of synchronous generators.\117\ Although 
several commenters support the 10 percent exemption,\118\ and some 
commenters support increasing that threshold to 25 percent,\119\ we 
find, on balance, that requiring non-synchronous generators to provide 
reactive power at all levels of real power output appropriately 
recognizes the capabilities of existing non-synchronous generation 
technologies and creates requirements that are comparable to the 
existing requirement for synchronous generators. Additionally, by 
maintaining the reactive power requirement at all output levels, non-
synchronous generators will mitigate potential over-voltage concerns on 
lightly loaded Interconnection Customer Interconnection Facilities of a 
non-synchronous generator when operating at low real power output.
---------------------------------------------------------------------------

    \117\ Section 9.6.1 of the pro forma LGIA and section 1.8.1 of 
the pro forma SGIA.
    \118\ EEI Comments at 9; NaturEner Comments at 4; NERC Comments 
at 10; SCE Comments at 3; NextEra Comments at 11.
    \119\ AWEA and LSA Comments at 13; Joint NYTOs Comments at 3.
---------------------------------------------------------------------------

    48. While some commenters argue that technical limitations exist 
that prevent non-synchronous generators from providing adequate 
reactive power at lower levels of real power output, and note that the 
Commission approved a 25 percent exemption in PJM, several commenters 
indicate that non-synchronous generators are capable of providing 
reactive power at all levels of real power output.\120\ Although the 
Commission approved a 25 percent exemption in PJM, that was pursuant to 
a section 205 filing with broad stakeholder support. We now act on a 
more comprehensive record and take action generically to apply to all 
transmission providers.\121\ Moreover, while not all non-synchronous 
generators are currently designed to maintain reactive power capability 
at all levels of real power output, modern inverters can be designed to 
provide this capability. We agree with ISO-NE's comments that imposing 
this requirement will help encourage further technological development, 
such that the bulk power system will ultimately receive higher quality 
and more reliable reactive power service from all generators.
---------------------------------------------------------------------------

    \120\ ISO-NE Comments at 13; Midwest Energy Comments at 9; MISO 
Comments at 3.
    \121\ As discussed below, to the extent an ISO or RTO seeks to 
maintain an existing exemption, it can include such a request in its 
compliance filing as an independent entity variation and the 
Commission will consider the request at that time based on the 
arguments provided.
---------------------------------------------------------------------------

    49. As for AWEA and LSA's and NERC's requested clarifications, we 
clarify that the amount of reactive power required from non-synchronous 
generators should be proportionate to the actual output of the 
generator, such that a 100 MW generator would be required to provide 
approximately 33 MVAR of reactive power when operating at maximum 
output (100 MW), and approximately 3.3 MVAR when operating at 10 MW, 
and so on. This addresses some commenters' concerns that sometimes not 
all non-synchronous generators at a particular location are operating 
at a given time (e.g., only 50 of 100 wind turbines are actually 
spinning or \1/3\ of solar panels are covered by clouds), without 
creating an unnecessary exemption for non-synchronous generators.

D. Compensation

1. NOPR Proposal
    50. The Commission stated in the NOPR that non-synchronous 
generators are eligible for the same payments for reactive power as all 
other generators, consistent with the compensation provisions of the 
pro forma LGIA and pro forma SGIA.\122\ The Commission proposed that 
any compensation for such non-synchronous generators would be based on 
the cost of providing reactive power, but noted that the cost to a wind 
generator of providing reactive power may not be easily estimated using 
existing methods that are applied to synchronous generators.\123\ 
Therefore, the Commission sought comment on whether these existing 
methods are appropriate for wind generators and, if not, what 
alternatives would be appropriate.\124\
---------------------------------------------------------------------------

    \122\ NOPR, FERC Stats. & Regs. ] 32,712 at P 12 (citing Order 
No. 2003-A, FERC Stats. & Regs. ] 31,160 at P 416); see also 
sections 9.6.3 and 11.6 of the pro forma LGIA and sections 1.8.2 and 
1.8.3 of the pro forma SGIA.
    \123\ NOPR, FERC Stats. & Regs. ] 32,712 at P 12 (citing Payment 
for Reactive Power, Commission Staff Report, Docket No. AD14-7, app. 
2 (Apr. 22, 2014)).
    \124\ Id. P 18 (citation omitted).
---------------------------------------------------------------------------

2. Comments
    51. Several commenters support the Commission's proposal to require 
transmission providers to compensate non-synchronous generators for 
reactive power on a comparable basis as synchronous generators, 
provided that non-synchronous generators provide comparable reactive 
power service.\125\ Other commenters seek clarification, or ask that 
the Commission outline principles for compensation.\126\ Other 
commenters argue that the Commission should not mandate a uniform 
approach to reactive power compensation.\127\ Finally, while some 
commenters ask that the Commission address the issue of reactive power 
compensation, they assert that addressing reactive power compensation 
in this rulemaking is outside the scope of the proceeding.\128\
---------------------------------------------------------------------------

    \125\ CAISO Comments at 9; EEI Comments at 10; ISO/RTO Council 
Comments at 7; MISO Comments at 3-4.
    \126\ ISO/RTO Council Comments at 7; SDG&E Comments at 4-5; AWEA 
and LSA Comments at 2-5; Public Interest Organizations Comments at 
2-3; NextEra Comments at 14.
    \127\ Indicated NYTOs Comments at 4; ISO/RTO Council Comments at 
7; SDG&E Comments at 4; CAISO Comments at 8-9; Joint NYTOs Comments 
at 4; SCE Comments at 3; Six Cities Comments at 2, 5-6.
    \128\ EPSA Comments at 6; NextEra Comments at 14.
---------------------------------------------------------------------------

3. Commission Determination
    52. We will not change the Commission's existing policies on 
compensation for reactive power. Sections 9.6.3 and 11.6 of the 
currently-effective pro forma LGIA and sections 1.8.2 and 1.8.3 of the 
currently-effective pro forma SGIA provide that the transmission 
provider must compensate the interconnecting generator for reactive 
power service when the transmission provider requests that the 
interconnecting generator operate outside of the specified reactive 
power range. These sections also provide that if the transmission 
provider

[[Page 40803]]

compensates its own or affiliated generators for reactive power service 
within the specified reactive power range, it must compensate all 
generators for this service, and at what rate such compensation should 
be provided. While the Commission asked for comments on principles for 
compensating non-synchronous generators for reactive power, the 
comments, aside from noting that the current AEP methodology \129\ does 
not translate to non-synchronous generation, did not provide a 
sufficient record for determining a new method. Therefore, any non-
synchronous generator seeking reactive power compensation would need to 
propose a method for calculating that compensation as part of its 
filing. We note, however, that Commission staff is convening a workshop 
to explore reactive power compensation issues in the markets operated 
by ISOs/RTOs on June 30, 2016.\130\
---------------------------------------------------------------------------

    \129\ See Am. Elec. Power Serv. Corp., Opinion No. 440, 88 FERC 
] 61,141, at 61,456-57 (1999).
    \130\ See Reactive Supply Compensation in Markets Operated by 
Regional Transmission Organizations and Independent System 
Operators, Notice of Workshop, Docket No. AD16-17-000 (issued Mar. 
17, 2016).
---------------------------------------------------------------------------

E. Application of the Final Rule

1. NOPR Proposal
    53. As a transition mechanism, the Commission proposed in the NOPR 
to apply the reactive power requirements in this Final Rule to all 
newly interconnecting non-synchronous generators that, as of the 
effective date of this Final Rule, either: (1) Have not executed an 
interconnection agreement; or (2) requested that an interconnection 
agreement be filed unexecuted that is still pending before the 
Commission. The Commission also proposed to apply the reactive power 
requirements to all existing non-synchronous generators making upgrades 
that require new interconnection requests after the effective date of 
the Final Rule. The Commission stated that it did not believe it would 
be reasonable or necessary to require all existing wind generators to 
provide reactive power because not all such generators are capable of 
providing reactive power without incurring substantial costs to install 
new equipment. However, the Commission proposed to require existing 
wind generators that make upgrades that require new interconnection 
requests to conform to the new reactive power requirements.\131\
---------------------------------------------------------------------------

    \131\ NOPR, FERC Stats. & Regs. ] 32,712 at P 17.
---------------------------------------------------------------------------

2. Comments
    54. CAISO and MISO support the Commission's proposed application of 
the new reactive power requirements to new and existing non-synchronous 
generators.\132\ CAISO contends that interconnection customers should 
be required to adhere to the conditions of interconnection at the time 
they execute an interconnection agreement. CAISO states that, in its 
own reactive power stakeholder initiative, it proposed to apply a new 
reactive power requirement to its April 2016 interconnection queue 
cluster and to all future clusters. CAISO explains that, depending on 
the timing of the Final Rule, the new reactive power requirements would 
apply to this same group of interconnecting generators because they 
will not execute their interconnection agreements for at least one year 
after the study process begins. CAISO states that applying reactive 
power requirements to these interconnecting generators would ensure 
these generators do not lean on existing generators to provide reactive 
power.\133\
---------------------------------------------------------------------------

    \132\ CAISO Comments at 5-6; MISO Comments at 5-6.
    \133\ CAISO Comments at 5-6.
---------------------------------------------------------------------------

    55. In contrast, some commenters argue that the Commission should 
not apply the new reactive power requirements to generators that have 
begun or have already received their System Impact Study, depending on 
the requirements of the Final Rule.\134\ AWEA and LSA contend that 
applying the proposed reactive power requirements to non-synchronous 
generators that have begun their System Impact Study, or that have been 
in the interconnection queue for some period of time without starting 
their System Impact Study, may result in sizable costs and fundamental 
unfairness. AWEA and LSA argue that such non-synchronous generators may 
not have been designed to meet the new reactive power requirements and, 
therefore, may incur substantial equipment costs to meet those 
requirements.\135\
---------------------------------------------------------------------------

    \134\ AWEA and LSA Comments at 14; NextEra Comments at 13.
    \135\ AWEA and LSA Comments at 14-15.
---------------------------------------------------------------------------

    56. NextEra argues that the proposed application of the Final Rule 
to non-synchronous generators that have not yet executed an 
interconnection agreement is unreasonable if the Commission requires 
fully dynamic reactive power capability measured at the Point of 
Interconnection.\136\ NextEra asserts that requiring fully dynamic 
reactive power capability at the Point of Interconnection would be a 
significant change to the status quo and would render some investments 
made by non-synchronous generators that have already received the 
results of their System Impact Study, but have not yet executed an 
interconnection agreement, useless. According to NextEra, such a major 
shift could also impose delays and additional costs related to the 
redesign, purchase, and installation of additional equipment.\137\ 
NextEra contends that if the Commission allows for the use of static 
reactive power devices to supplement the dynamic reactive power 
capability of non-synchronous generators at the Point of 
Interconnection, the Commission would merely be formalizing what is 
already common practice, and, therefore, that the proposed application 
of the Final Rule would be reasonable. However, if the Commission 
requires fully dynamic reactive power capability at the Point of 
Interconnection, NextEra asks that the Final Rule not apply to non-
synchronous generators that have received their System Impact 
Study.\138\
---------------------------------------------------------------------------

    \136\ NextEra Comments at 11.
    \137\ Id. at 12-13.
    \138\ Id. at 12.
---------------------------------------------------------------------------

    57. Some commenters also oppose the Commission's proposal to apply 
the reactive power requirements to existing non-synchronous generators 
making upgrades that require new interconnection requests.\139\ AWEA 
and LSA assert that most upgrades do not involve fundamental changes to 
the original technology, or to the hardware, but instead simply involve 
software upgrades.\140\ Lincoln argues that applying the new reactive 
power requirements to wind generators making upgrades could result in 
financial detriment to entities that have previously entered into 
binding contracts to purchase wind generation by exposing those 
entities to unforeseen expenses not contemplated when they entered into 
the contracts.\141\ AWEA and LSA request that the new reactive power 
requirements only apply to upgrades on a case-by-case basis, depending 
on the outcome of the relevant interconnection study, and only to the 
incremental capacity requested through the upgrade.\142\ AWEA and LSA 
also request that the Commission clarify what constitutes a ``Material 
change'' to a generator that would trigger a new interconnection 
study.\143\
---------------------------------------------------------------------------

    \139\ AWEA and LSA Comments at 14; Lincoln Comments at 2.
    \140\ AWEA and LSA Comments at 14.
    \141\ Lincoln Comments at 2.
    \142\ AWEA and LSA Comments at 14-15.
    \143\ Id. at 15.
---------------------------------------------------------------------------

    58. SDG&E requests that the Commission clarify that the proposed

[[Page 40804]]

reactive power requirements would apply to all non-synchronous 
generators and not to just wind generators.\144\
---------------------------------------------------------------------------

    \144\ SDG&E Comments at 1, 3.
---------------------------------------------------------------------------

3. Commission Determination
    59. We will apply the requirements of this Final Rule to all newly 
interconnecting non-synchronous generators that have not yet executed a 
Facilities Study Agreement \145\ as of the effective date of this Final 
Rule. We will not apply the requirements of this Final Rule to existing 
non-synchronous generators making upgrades to their Generating 
Facilities that require new interconnection requests. However, such a 
generator may be required to provide reactive power if a transmission 
provider determines through that generator's System Impact Study that a 
reactive power requirement is necessary to ensure safety or 
reliability. The transition mechanism we establish in this Final Rule 
allows non-synchronous generators currently in the process of 
interconnecting to complete the interconnection process without 
unreasonable delay or expense.
---------------------------------------------------------------------------

    \145\ The pro forma Large Generator Interconnection Procedures 
contain a standard ``Interconnection Facilities Study Agreement'' as 
Appendix 4. Similarly, the pro forma Small Generator Interconnection 
Procedures contain a standard ``Facilities Study Agreement'' as 
Attachment 8.
---------------------------------------------------------------------------

a. Newly Interconnecting Non-Synchronous Generators
    60. While the Commission proposed in the NOPR to apply the 
requirements of the Final Rule to all newly interconnecting non-
synchronous generators that have not yet executed an interconnection 
agreement as of the effective date of the Final Rule, or requested that 
one be filed unexecuted that is still pending, we agree with AWEA and 
LSA, and NextEra,\146\ that applying the Final Rule as proposed may 
unduly burden non-synchronous generators that have completed their 
System Impact Study. Such non-synchronous generators may have already 
purchased equipment needed to interconnect prior to executing an 
interconnection agreement (or requesting that one be filed unexecuted 
that is still pending).\147\ We are especially concerned with applying 
new reactive power requirements to non-synchronous generators that have 
advanced in the interconnection process in light of our decision to 
measure the reactive power requirements at the high-side of the 
generator substation, rather than at the Point of Interconnection. 
Because the Point of Interconnection has been the industry standard 
under Appendix G to the pro forma LGIA, non-synchronous generators that 
have completed their System Impact Study may have relied on that 
standard in designing their Generating Facilities, thereby creating an 
undue burden on such generators.\148\
---------------------------------------------------------------------------

    \146\ AWEA and LSA Comments at 14; NextEra Comments at 13.
    \147\ AWEA and LSA explain that many non-synchronous generators 
will have already chosen their collector array cable and transformer 
or inverter before receiving an interconnection agreement. Rather 
than being able to choose equipment that could reduce reactive 
losses, the only compliance option for non-synchronous generators 
that are ``significantly advanced'' in the interconnection process 
to meet the requirements of the Final Rule would be to install 
potentially expensive reactive power devices. AWEA and LSA Comments 
at 15.
    \148\ NextEra Comments at 12-13.
---------------------------------------------------------------------------

    61. To avoid these undue burdens, we will apply the requirements of 
this Final Rule to all newly interconnecting non-synchronous generators 
that have not yet executed a Facilities Study Agreement as of the 
effective date of this Final Rule. Pursuant to the pro forma Large 
Generator Interconnection Procedures and to the pro forma Small 
Generator Interconnection Procedures, and simultaneous with the 
delivery of the System Impact Study, the transmission provider provides 
a draft Facilities Study Agreement to an interconnecting 
generator.\149\ The executing of the Facilities Study Agreement 
immediately follows the completion of the System Impact Study. The 
execution of the Facilities Study Agreement, and the subsequent 
completion of the Facilities Study, represents the time in the 
interconnection process when the transmission provider and generator 
developer agree to the general technical requirements that will be 
needed for the generator to reliably interconnect to the transmission 
system.\150\ This point in the interconnection process is early enough 
in the development of a generation project such that the project 
developer likely has not purchased equipment to interconnect their 
project because they have not yet reached an agreement with the 
transmission provider on the interconnection requirements of the 
project, which occurs after the completion of the System Impact Study. 
In choosing to apply the reactive power requirements of this Final Rule 
to projects that have not executed a Facilities Study Agreement, the 
Commission is ensuring that a majority of newly interconnecting non-
synchronous generators are subject to the requirements of this Final 
Rule without subjecting projects to additional costs after the 
interconnection requirements of the project have been established.\151\ 
Further, as discussed in the Commission's determination in Section 
III.B, Power Factor Range, Point of Measurement, and Dynamic Reactive 
Power Capability Requirements, the new reactive power requirement for 
non-synchronous generators will be measured at the high-side of the 
generator substation and should not result in the increased costs of 
providing dynamic reactive power at the Point of Interconnection that 
would substantially affect the financial viability of a non-synchronous 
generator in the interconnection queue that AWEA and LSA raise in their 
comments.
---------------------------------------------------------------------------

    \149\ Section 8.1 of the pro forma Large Generator 
Interconnection Procedures state that, simultaneous with the 
delivery of the System Impact Study, the transmission provider must 
provide the interconnection customer with an Interconnection 
Facilities Study Agreement. Likewise, section 3.5 of the pro forma 
Small Generator Interconnection Procedures state that a transmission 
provider must provide an interconnection customer a Facilities Study 
Agreement along with the completed System Impact Study report.
    \150\ Section 7.3 of the pro forma Large Generator 
Interconnection Procedures explains that the System Impact Study 
will ``provide the requirements or potential impediments to 
providing the requested interconnection service, including a 
preliminary indication of the cost and length of time that would be 
necessary to correct any problems identified in those analyses and 
implement the interconnection,'' along with ``a list of facilities 
that are required as a result of the Interconnection Request and a 
non-binding good faith estimate of cost responsibility and a non-
binding good faith estimated time to construct.'' Section 5.0 of the 
System Impact Study Agreement attached to the pro forma Small 
Generator Interconnection Procedures as Attachment 7 provides the 
same.
    \151\ See, e.g., Neptune Regional Transmission Sys., LLC v. PJM 
Interconnection, L.L.C., 110 FERC ] 61,098, at P 23 (``Each customer 
knows that subsequent cost allocations will be determined by 
circumstances that are known as of the time its System Impact Study 
is conducted. Projects may drop out of the queue and customers may 
move up the queue, but the cost allocation system insulates an 
interconnection customer from costs arising from events occurring 
after its System Impact Study is completed, other than costs arising 
from changes from higher-queued generators. . . . If an 
interconnection customer were to be held financially responsible for 
the costs of events occurring after its System Impact Study is 
completed it would be impossible for the customer to make reasoned 
business decisions.''), order on reh'g, 111 FERC ] 61,455 (2005), 
aff'd sub nom. Pub. Serv. Elec. and Gas Co. v. FERC, 485 F.3d 1164 
(D.C. Cir. 2007).
---------------------------------------------------------------------------

    62. In addition, using the execution of a Facilities Study 
Agreement as the point in the interconnection process for transitioning 
to the requirements of this Final Rule represents a clearly defined 
point to avoid confusion in applicability. To further ensure clarity 
for newly interconnecting non-synchronous generators, we include in the 
revisions to section 9.6.1 to the pro forma LGIA and section 1.8.1 to 
pro

[[Page 40805]]

forma SGIA this transition mechanism,\152\ which we require 
transmission providers to adopt, as part of their compliance with this 
Final Rule.\153\
---------------------------------------------------------------------------

    \152\ See infra P 74 (providing the amended text of section 
9.6.1 to the pro forma LGIA and section 1.8.1 to the pro forma 
SGIA).
    \153\ In West Deptford Energy, LLC v. FERC, 766 F.3d 10, 20 
(D.C. Cir. 2014), the court explained that the tariff provisions in 
effect at the time an interconnection agreement is executed apply to 
that interconnection customer, ``unless the amended tariff has a 
grandfathering provision.''
---------------------------------------------------------------------------

    63. We also amend Appendix G to the pro forma LGIA, which public 
utility transmission providers are required to adopt, as part of their 
compliance with this Final Rule. Appendix G to the pro forma LGIA 
applies only to wind generators.\154\ Those newly interconnecting wind 
generators that have executed a Facilities Study Agreement as of the 
effective date of this Final Rule will be subject to the amended 
Appendix G.\155\ If Appendix G is not applicable to any newly 
interconnecting wind generators, the public utility transmission 
provider or RTO/ISO should remove Appendix G from its LGIA as part of 
its compliance filing. When all newly interconnecting wind generators 
that have executed Facilities Study Agreements as of the effective date 
of this Final Rule finalize their LGIAs and Appendix G is no longer 
necessary, we encourage the public utility transmission providers and 
RTOs/ISOs to file, or to include as part of, an FPA section 205 filing 
a proposal to remove Appendix G from their LGIA.
---------------------------------------------------------------------------

    \154\ See Order No. 661, FERC Stats. & Regs. ] 31,186, Appendix 
B (Appendix G--Interconnection Requirements for a Wind Generating 
Plant).
    \155\ See infra P 74 (providing the amended text of paragraph 
A.ii of Appendix G to the pro forma LGIA).
---------------------------------------------------------------------------

b. Upgrades to Existing Non-Synchronous Generators
    64. Some commenters raise concerns with applying the requirements 
of this Final Rule to existing non-synchronous generators making 
upgrades that require new interconnection requests.\156\ Generally, 
such generators would otherwise be exempt from the reactive power 
requirement. Lincoln argues that the proposed application of the new 
reactive power requirements to existing non-synchronous generators 
making upgrades could expose entities with existing power purchase 
agreements to unforeseen expenses.\157\ As noted by AWEA and LSA, most 
upgrades that require new interconnection requests do not involve 
fundamental changes to the original technology, or to the hardware, but 
instead simply involve software upgrades.\158\
---------------------------------------------------------------------------

    \156\ AWEA and LSA Comments at 14; Lincoln Comments at 2.
    \157\ Lincoln Comments at 2.
    \158\ AWEA and LSA Comments at 14.
---------------------------------------------------------------------------

    65. We recognize that there are a variety of triggering points for 
a new interconnection request in the various transmission provider 
regions, and the fact that an existing non-synchronous generator making 
an upgrade may not be installing new equipment. We also acknowledge, as 
the Commission did in the NOPR, that not all existing wind generators 
are capable of providing reactive power without incurring substantial 
costs to install new equipment.\159\ Therefore, we will not apply the 
requirements of this Final Rule to existing non-synchronous generators 
making upgrades that require new interconnection requests.\160\ Rather, 
we will maintain the existing approach in Appendix G to the pro forma 
LGIA for existing non-synchronous generators making upgrades to their 
Generating Facilities that require new interconnection requests after 
the effective date of this Final Rule, meaning that those upgrades will 
be exempt from the requirement to provide reactive power unless the 
transmission provider's System Impact Study shows that provision of 
reactive power by that generator is necessary to ensure safety or 
reliability.
---------------------------------------------------------------------------

    \159\ NOPR, FERC Stats. & Regs. ] 32,712 at P 17.
    \160\ Given our determination not to adopt the NOPR proposal, we 
find moot AWEA and LSA's request that the Commission clarify what 
constitutes a ``Material change'' to a generator that would trigger 
a new interconnection study. We note that, on May 13, 2016, 
Commission staff held a technical conference on generator 
interconnection issues, exploring triggers for restudies, among 
other things. See Review of Generator Interconnection Agreements and 
Procedures, Supplemental Notice of Technical Conference, Docket Nos. 
RM16-12-000, RM15-21-000 (issued May 4, 2016); Review of Generator 
Interconnection Agreements and Procedures, Notice Inviting Post-
Technical Conference Comments, Docket Nos. RM16-12-000, RM15-21-000 
(issued June 3, 2016) (Question 1.10: ``Should interconnection 
procedures be more specific about what constitutes a material 
modification to a generator interconnection request? Is it clear to 
interconnection customers what types of modifications to their 
interconnection requests would and would not affect their place in 
the queue? Do transmission owners and RTO/ISOs exercise any level of 
discretion in determining whether a customer has made a material 
modification? What is the range and nature of that discretion? 
Please reference provisions in interconnection procedures, as 
applicable, in your answer.'').
---------------------------------------------------------------------------

    66. We decline AWEA and LSA's request that the reactive power 
requirement apply only to the incremental capacity that results from an 
upgrade in the event the System Impact Study shows the need for 
reactive power.\161\ If a transmission provider's System Impact Study 
shows the need for reactive power as a result of an upgrade, the 
transmission provider should have the flexibility to require reactive 
power capability consistent with the needs identified in the study, 
including the ability to apply the reactive power requirements of this 
Final Rule to all of the generator's capacity. Otherwise, allowing a 
transmission provider to apply the reactive power requirements only to 
the incremental capacity that results from an upgrade would undermine 
the Commission's goal of ensuring adequate reactive power support for 
the transmission system.\162\ Therefore, we will give transmission 
providers the flexibility to apply the reactive power requirements to 
all of an existing non-synchronous generator's capacity when that 
generator makes an upgrade that requires a new interconnection request, 
and the System Impact Study shows the need for reactive power.\163\
---------------------------------------------------------------------------

    \161\ AWEA and LSA Comments at 14-15.
    \162\ NOPR, FERC Stats. & Regs. ] 32,712 at P 11 (explaining the 
Commission's concern that the growing penetration of wind generators 
increases the potential for a deficiency in reactive power, and 
resulting local reliability issues).
    \163\ As with the existing approach, should an existing non-
synchronous generator disagree with the transmission provider that 
the System Impact Study shows a need for reactive power as a result 
of the upgrade, it may challenge the transmission provider's 
conclusion through dispute resolution or appeal to the Commission. 
See Order No. 661, FERC Stats. & Regs. ] 31,186 at P 51.
---------------------------------------------------------------------------

    67. We require transmission providers to propose, as part of their 
compliance with this Final Rule, tariff revisions implementing the 
transition mechanism laid out above for existing non-synchronous 
generators making upgrades to their Generating Facilities that require 
new interconnection requests.

F. Regional Flexibility

    68. Multiple commenters request that the Commission recognize 
independent entity variations for ISOs/RTOs and regional differences 
for transmission providers outside of ISOs/RTOs in evaluating 
compliance with the Final Rule.\164\
---------------------------------------------------------------------------

    \164\ EEI Comments at 11; Indicated NYTOs Comments at 3; ISO-NE 
Comments at 11-12; ISO/RTO Council Comments at 3; Joint NYTOs 
Comments at 3; NEPOOL Initial Comments at 6; NEPOOL Supplemental 
Comments at 3-4.
---------------------------------------------------------------------------

    69. We apply here all three of the methods for proposing variations 
adopted in Order No. 2003: (1) Variations based on Regional Entity 
reliability requirements; (2) variations that are ``consistent with or 
superior to'' the Final Rule; and (3) ``independent

[[Page 40806]]

entity variations'' from ISOs/RTOs.\165\ If a transmission provider 
seeks to justify variations from the requirements of this Final Rule, 
it may do so in its compliance filing. A transmission provider may 
propose to include standards developed by NERC or a Regional Entity in 
its own standard interconnection agreement. The Commission is mindful 
of the work being done by these organizations in developing standards 
for the interconnection of non-synchronous generators, and we strongly 
encourage all interested parties to continue to participate in 
developing these standards.
---------------------------------------------------------------------------

    \165\ Order No. 2003, FERC Stats. & Regs. ] 31,146 at PP 824-
827; see also Order No. 661, FERC Stats. & Regs. ] 31,186 at P 109.
---------------------------------------------------------------------------

G. Miscellaneous Comments

    70. CAISO argues that the Commission should allow transmission 
providers to propose additional technical requirements for 
interconnecting non-synchronous generators related to voltage support, 
such as requiring automatic voltage control.\166\ Transmission 
providers may propose additional technical requirements, to the extent 
they believe those are necessary, in a separate filing pursuant to 
section 205 of the FPA.
---------------------------------------------------------------------------

    \166\ CAISO Comments at 8.
---------------------------------------------------------------------------

    71. MATL requests clarification that the Commission will continue 
to accept tariff arrangements that require customers on merchant 
transmission lines to self-supply ancillary services. MATL specifically 
requests that this clarification be included in the final rule 
compliance obligation, and in similar future proceedings.\167\ We 
clarify that merchant transmission lines that have received exemptions 
from providing ancillary services will not be affected by this Final 
Rule. Therefore, those entities that do not have reactive power 
requirements in their Commission-approved OATTs will not need to submit 
a compliance filing in response to this Final Rule.
---------------------------------------------------------------------------

    \167\ MATL Comments at 5.
---------------------------------------------------------------------------

    72. SCE requests that the Commission expand the scope of the 
rulemaking proceeding to include low voltage ride-through requirements 
for synchronous and non-synchronous Generating Facilities smaller than 
20 MW.\168\ We decline to expand the scope of the rulemaking proceeding 
to include low voltage ride-through requirements for synchronous and 
non-synchronous Generating Facilities smaller than 20 MW. We note that 
the Commission has issued a Notice of Proposed Rulemaking, Requirements 
for Frequency and Voltage Ride Through Capability of Small Generating 
Facilities, to consider these issues.\169\
---------------------------------------------------------------------------

    \168\ SCE Comments at 4.
    \169\ See Requirements for Frequency and Voltage Ride Through 
Capability of Small Generating Facilities, Notice of Proposed 
Rulemaking, 81 FR 15481 (Mar. 23, 2016), 154 FERC ] 61,222 (2016).
---------------------------------------------------------------------------

    73. AWEA and LSA request that the Commission limit the reactive 
power requirements to a specific range of voltage at the Point of 
Interconnection.\170\ NERC also recommends that the Commission clarify 
the reactive power requirements by providing a reactive capability 
versus voltage characteristic diagram.\171\ We find the request to 
specify a voltage range for the reactive power requirements to be 
outside the scope of this proceeding. The existing pro forma LGIA and 
pro forma SGIA do not specify a voltage range for the reactive power 
requirement for synchronous generators, and the Commission does not 
have a sufficient record on which to create such a requirement.
---------------------------------------------------------------------------

    \170\ AWEA and LSA Comments at 7 (explaining the range of 
voltage and providing a proposed Q-V curve).
    \171\ NERC Comments at 9-10.
---------------------------------------------------------------------------

IV. Compliance and Implementation

    74. Section 35.28(f)(1) of the Commission's regulations requires 
every public utility with a non-discriminatory OATT on file to also 
have on file the pro forma LGIA and pro forma SGIA ``required by 
Commission rulemaking proceedings promulgating and amending such 
interconnection procedures and agreements.'' \172\ The Commission 
hereby revises section 9.6.1 of the pro forma LGIA to read:
---------------------------------------------------------------------------

    \172\ 18 CFR 35.28(f)(1) (2015).

    9.6.1 Power Factor Design Criteria
    9.6.1.1 Synchronous Generation. Interconnection Customer shall 
design the Large Generating Facility 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, unless the Transmission Provider has established 
different requirements that apply to all synchronous generators in 
the Control Area on a comparable basis. [The requirements of this 
paragraph shall not apply to wind generators.] (Bracketed text is 
deleted.)
    9.6.1.2 Non-Synchronous Generation. Interconnection Customer 
shall design the Large Generating Facility to maintain a composite 
power delivery at continuous rated power output at the high-side of 
the generator substation at a power factor within the range of 0.95 
leading to 0.95 lagging, unless the Transmission Provider has 
established a different power factor range that applies to all non-
synchronous generators in the Control Area on a comparable basis. 
This power factor range standard shall be dynamic and can be met 
using, for example, power electronics designed to supply this level 
of reactive capability (taking into account any limitations due to 
voltage level, real power output, etc.) or fixed and switched 
capacitors, or a combination of the two. This requirement shall only 
apply to newly interconnecting non-synchronous generators that have 
not yet executed a Facilities Study Agreement as of the effective 
date of the Final Rule establishing this requirement (Order No. 
827).

    The Commission similarly revises section 1.8.1 of the pro forma 
SGIA to read:

    1.8.1 Power Factor Design Criteria
    1.8.1.1 Synchronous Generation. The Interconnection Customer 
shall design its Small Generating Facility 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, unless the Transmission Provider has established 
different requirements that apply to all similarly situated 
synchronous generators in the control area on a comparable basis. 
[The requirements of this paragraph shall not apply to wind 
generators.] (Bracketed text is deleted.)
    1.8.1.2 Non-Synchronous Generation. The Interconnection Customer 
shall design its Small Generating Facility to maintain a composite 
power delivery at continuous rated power output at the high-side of 
the generator substation at a power factor within the range of 0.95 
leading to 0.95 lagging, unless the Transmission Provider has 
established a different power factor range that applies to all 
similarly situated non-synchronous generators in the control area on 
a comparable basis. This power factor range standard shall be 
dynamic and can be met using, for example, power electronics 
designed to supply this level of reactive capability (taking into 
account any limitations due to voltage level, real power output, 
etc.) or fixed and switched capacitors, or a combination of the two. 
This requirement shall only apply to newly interconnecting non-
synchronous generators that have not yet executed a Facilities Study 
Agreement as of the effective date of the Final Rule establishing 
this requirement (Order No. 827).

    In addition, the Commission revises paragraph A.ii of Appendix G to 
the pro forma LGIA, ``Technical Standards Applicable to a Wind 
Generation Plant,'' as follows: \173\
---------------------------------------------------------------------------

    \173\ The full text of the pro forma LGIA will be posted on the 
Commission's internet page at: http://www.ferc.gov/industries/electric/indus-act/gi/stnd-gen.asp. The full text of the pro forma 
SGIA will be posted on the Commission's internet page at: http://www.ferc.gov/industries/electric/indus-act/gi/small-gen.asp.

    The following reactive power requirements apply only to a newly 
interconnecting wind generating plant that has executed a Facilities 
Study Agreement as of the effective date of the Final Rule 
establishing the reactive power requirements for non-

[[Page 40807]]

synchronous generators in section 9.6.1 of this LGIA (Order No. 
827). A wind generating plant to which this provision applies shall 
maintain a power factor within the range of 0.95 leading to 0.95 
lagging, measured at the Point of Interconnection as defined in this 
LGIA, if the Transmission Provider's System Impact Study shows that 
such a requirement is necessary to ensure safety or reliability. The 
power factor range standard can be met by using, for example, power 
electronics designed to supply this level of reactive capability 
(taking into account any limitations due to voltage level, real 
power output, etc.) or fixed and switched capacitors if agreed to by 
the Transmission Provider, or a combination of the two. The 
Interconnection Customer shall not disable power factor equipment 
while the wind plant is in operation. Wind plants shall also be able 
to provide sufficient dynamic voltage support in lieu of the power 
system stabilizer and automatic voltage regulation at the generator 
excitation system if the System Impact Study shows this to be 
required for system safety or reliability.\174\
---------------------------------------------------------------------------

    \174\ Section A.ii of Appendix G to the pro forma LGIA.

    75. As in Order Nos. 2003 \175\ and 661,\176\ the Commission is 
requiring all public utility \177\ transmission providers to adopt the 
requirements of this Final Rule as revisions (as discussed above) to 
the LGIA and SGIA in their OATTs within 90 days after the publication 
of this Final Rule in the Federal Register.\178\ Transmission providers 
that are not public utilities also must adopt the requirements of this 
Final Rule as a condition of maintaining the status of their safe 
harbor tariff or otherwise satisfying the reciprocity requirement of 
Order No. 888.\179\ As discussed above, we are not requiring changes to 
interconnection agreements already in effect, but are applying the 
requirements of this Final Rule to newly interconnecting non-
synchronous generators that have not yet executed a Facilities Study 
Agreement. The requirements of this Final Rule also do not apply to 
existing non-synchronous generators making upgrades to their Generating 
Facilities that require new interconnection requests.
---------------------------------------------------------------------------

    \175\ Order No. 2003, FERC Stats. & Regs. ] 31,146 at P 910.
    \176\ Order No. 661, FERC Stats. & Regs. ] 31,186 at P 121.
    \177\ For purposes of this Final Rule, 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. See 16 U.S.C. 824(e) (2012). A non-public utility that 
seeks voluntary compliance with the reciprocity condition of an OATT 
may satisfy that condition by filing an OATT, which includes the pro 
forma LGIA and pro forma SGIA.
    \178\ MISO requests that the Commission extend the requirements 
of this Final Rule to the MISO pro forma Generator Interconnection 
Agreement and not just to the Commission's pro forma LGIA and pro 
forma SGIA. MISO Comments at 4-6. As stated, each public utility 
transmission provider subject to this Final Rule is directed to 
adopt the requirements of this Final Rule as revisions to the 
standard interconnection agreements in its OATT.
    \179\ Order No. 888, FERC Stats. & Regs. ] 31,036 at 31,760-63.
---------------------------------------------------------------------------

    76. In some cases, public utility transmission providers may have 
provisions in the currently effective LGIAs and SGIAs in their OATTs 
related to the provision of reactive power by non-synchronous 
generators that the Commission has deemed to be consistent with or 
superior to the pro forma LGIA and pro forma SGIA. Where the relevant 
provisions of the pro forma LGIA and pro forma SGIA are modified by 
this Final Rule, public utility transmission providers must either 
comply with this Final Rule or demonstrate that their previously-
approved LGIA and SGIA variations continue to be consistent with or 
superior to the pro forma LGIA and pro forma SGIA as modified by this 
Final Rule.
    77. In addition, some ISOs/RTOs may have provisions in the 
currently effective LGIAs and SGIAs in their OATTs related to the 
provision of reactive power by non-synchronous generators that the 
Commission has accepted as an independent entity variation to the pro 
forma LGIA and pro forma SGIA. Where the relevant provisions of the pro 
forma LGIA and pro forma SGIA are modified by this Final Rule, ISOs/
RTOs must either comply with this Final Rule or demonstrate that their 
previously-approved LGIA and SGIA variations continue to justify an 
independent entity variation from the pro forma LGIA and pro forma SGIA 
as modified by this Final Rule.

V. Information Collection Statement

    78. The following collection of information contained in this Final 
Rule is subject to review by the Office of Management and Budget (OMB) 
regulations under section 3507(d) of the Paperwork Reduction Act of 
1995.\180\ OMB's regulations require approval of certain information 
collection requirements imposed by agency rules.\181\ Upon approval of 
a collection of information, OMB will assign an OMB control number and 
expiration date. Respondents subject to the filing requirements of this 
Final Rule will not be penalized for failing to respond to this 
collection of information unless the collection of information displays 
a valid OMB control number.
---------------------------------------------------------------------------

    \180\ 44 U.S.C. 3507(d) (2012).
    \181\ 5 CFR 1320.11 (2015).
---------------------------------------------------------------------------

    79. The reforms adopted in this Final Rule revise the Commission's 
pro forma LGIA and pro forma SGIA in accordance with section 
35.28(f)(1) of the Commission's regulations.\182\ This Final Rule 
requires each public utility transmission provider to revise its pro 
forma LGIA and pro forma SGIA to: (1) Eliminate the exemptions for wind 
generators from the requirement to provide reactive power; and (2) 
require that all newly interconnecting non-synchronous generators that 
have not yet executed a Facilities Study Agreement provide reactive 
power as a condition of interconnection as set forth in their LGIA or 
SGIA as of the effective date of this Final Rule. The reforms adopted 
in this Final Rule require filings of pro forma LGIAs and pro forma 
SGIAs with the Commission. The Commission anticipates the revisions 
required by this Final Rule, once implemented, will not significantly 
change currently existing burdens on an ongoing basis. With regard to 
those public utility transmission providers that believe that they 
already comply with the revisions adopted in this Final Rule, they can 
demonstrate their compliance in the filing required 90 days after the 
effective date of this Final Rule. The Commission will submit the 
proposed reporting requirements to OMB for its review and approval 
under section 3507(d) of the Paperwork Reduction Act.\183\
---------------------------------------------------------------------------

    \182\ 18 CFR 35.28(f)(1) (2015).
    \183\ 44 U.S.C. 3507(d) (2012).
---------------------------------------------------------------------------

    80. While the Commission expects the revisions adopted in this 
Final Rule will provide significant benefits, the Commission 
understands that implementation can be a complex and costly endeavor. 
The Commission solicited comments on the accuracy of provided burden 
and cost estimates and any suggested methods for minimizing the 
respondents' burdens. The Commission did not receive any comments 
concerning its burden or cost estimates. Therefore, the Commission 
retains the estimates proposed in the NOPR, with minor changes to 
reflect updated estimates.
    Burden Estimate: The Commission believes that the burden estimates 
below are representative of the average burden on respondents. The 
estimated burden and cost for the requirements adopted in this Final 
Rule follow.\184\
---------------------------------------------------------------------------

    \184\ Commission staff estimates that industry is similarly 
situated in terms of hourly cost (wages plus benefits). Based on the 
Commission's average cost (wages plus benefits) for 2015, $72/hour 
is used.

[[Page 40808]]



                                                       FERC 516B Revisions in Final Rule in RM16-1
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                        Number of     Annual number of                                                            Total annual  burden
                                       respondents      responses per   Total number of  responses  Average burden (hrs.) and   hours  and total  annual
                                          \185\          respondent                                   cost ($) per response            cost  ($)
                                                 (1)               (2)  (1) * (2) = (3)...........  (4)......................  (3) * (4) = (5)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Conforming LGIA changes to                       132                 1  132.......................  7.5......................  990 hours.
 incorporate revisions.                                                                             $540.....................  $71,280.
Conforming SGIA changes to                       118                 1  118.......................  7.5......................  885 hours.
 incorporate revisions.                                                                             $540.....................  $63,720.
                                   ---------------------------------------------------------------------------------------------------------------------
    Total.........................  ................  ................  250.......................  15 hours.................  1,875 hours.
                                                                                                    $1,080...................  $135,000.
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Cost to Comply: The Commission has projected the total cost of 
compliance as follows: \186\
---------------------------------------------------------------------------

    \185\ Number of Applicable Registered Entities.
    \186\ The costs for Year 1 consist of filing revisions to the 
pro forma LGIA and pro forma SGIA with the Commission within 90 days 
of the effective date of this Final Rule plus initial 
implementation. The Commission does not expect any ongoing costs 
beyond the initial compliance in Year 1.
---------------------------------------------------------------------------

     Year 1: $135,000 ($1,080/utility).
     Year 2: $0.
    After implementation in Year 1, the revisions adopted in this Final 
Rule would be complete.
    Title: FERC-516B, Electric Rate Schedules and Tariff Filings.
    Action: Revisions to an information collection.
    OMB Control No.: TBD
    Respondents for this Rulemaking: Businesses or other for profit 
and/or not-for-profit institutions.
    Frequency of Information: One-time during Year 1.
    Necessity of Information: The Commission adopts revisions in this 
Final Rule to the pro forma LGIA and pro forma SGIA to improve the 
reliability of the bulk power system by requiring all newly 
interconnecting non-synchronous generators to provide reactive power as 
a condition of interconnection, and to ensure that all generators are 
being treated in a not unduly discriminatory or preferential manner.
    Internal Review: The Commission has reviewed the requirements in 
this Final Rule and has determined that such revisions are necessary. 
These requirements conform to the Commission's need for efficient 
information collection, communication, and management within the energy 
industry. The Commission has assured itself, by means of internal 
review, that there is specific, objective support for the burden 
estimates associated with the information collection requirements.
    81. Interested persons may obtain information on the reporting 
requirements by contacting the following: Federal Energy Regulatory 
Commission, 888 First Street NE., Washington, DC 20426 [Attention: 
Ellen Brown, Office of the Executive Director], email: 
DataClearance@ferc.gov, phone: (202) 502-8663, fax: (202) 273-0873.
    82. Comments on the collection of information and the associated 
burden estimates in this Final Rule should be sent to the Commission in 
this docket and may also be sent to the Office of Information and 
Regulatory Affairs, Office of Management and Budget, 725 17th Street 
NW., Washington, DC 20503 [Attention: Desk Officer for the Federal 
Energy Regulatory Commission], at the following email address: 
oira_submission@omb.eop.gov. Please reference the docket number of this 
rulemaking in your submission.

VI. Regulatory Flexibility Act Certification

    83. The Regulatory Flexibility Act of 1980 (RFA) \187\ generally 
requires a description and analysis of rules that will have significant 
economic impact on a substantial number of small entities. The RFA does 
not mandate any particular outcome in a rulemaking. It only requires 
consideration of alternatives that are less burdensome to small 
entities and an agency explanation of why alternatives were rejected.
---------------------------------------------------------------------------

    \187\ 5 U.S.C. 601-12 (2012).
---------------------------------------------------------------------------

    84. The Small Business Administration (SBA) revised its size 
standards (effective January 22, 2014) for electric utilities from a 
standard based on megawatt hours to a standard based on the number of 
employees, including affiliates. Under SBA's standards, some 
transmission owners will fall under the following category and 
associated size threshold: Electric bulk power transmission and 
control, at 500 employees.\188\
---------------------------------------------------------------------------

    \188\ 13 CFR 121.201, Sector 22 (Utilities), NAICS code 221121 
(Electric Bulk Power Transmission and Control) (2015).
---------------------------------------------------------------------------

    85. The Commission estimates that the total number of public 
utility transmission providers that would have to modify the LGIAs and 
SGIAs within their currently effective OATTs is 132. Of these, the 
Commission estimates that approximately 43 percent are small entities 
(approximately 57 entities). The Commission estimates the average total 
cost to each of these entities will be minimal, requiring on average 15 
hours or $1,080. According to SBA guidance, the determination of 
significance of impact ``should be seen as relative to the size of the 
business, the size of the competitor's business, and the impact the 
regulation has on larger competitors.'' \189\ The Commission does not 
consider the estimated burden to be a significant economic impact. As a 
result, the Commission certifies that the revisions adopted in this 
Final Rule will not have a significant economic impact on a substantial 
number of small entities.
---------------------------------------------------------------------------

    \189\ U.S. Small Business Administration, A Guide for Government 
Agencies How to Comply with the Regulatory Flexibility Act, at 18 
(May 2012), https://www.sba.gov/sites/default/files/advocacy/rfaguide_0512_0.pdf.
---------------------------------------------------------------------------

VII. Environmental Analysis

    86. The Commission is required to prepare an Environmental 
Assessment or an Environmental Impact Statement for any action that may 
have a significant adverse effect on the human environment.\190\ As we 
stated in the NOPR, the Commission concludes that neither an 
Environmental Assessment nor an Environmental Impact Statement is 
required for the revisions adopted in this Final Rule under section 
380.4(a)(15) of the Commission's

[[Page 40809]]

regulations, which provides a categorical exemption for approval of 
actions under sections 205 and 206 of the FPA relating to the filing of 
schedules containing all rates and charges for the transmission or sale 
of electric energy subject to the Commission's jurisdiction, plus the 
classification, practices, contracts and regulations that affect rates, 
charges, classifications, and services.\191\ The revisions adopted in 
this Final Rule update and clarify the application of the Commission's 
standard interconnection requirements to non-synchronous generators. 
Therefore, this Final Rule falls within the categorical exemptions 
provided in the Commission's regulations, and as a result neither an 
Environmental Impact Statement nor an Environmental Assessment is 
required.
---------------------------------------------------------------------------

    \190\ Regulations Implementing National Environmental Policy Act 
of 1969, Order No. 486, FERC Stats. & Regs. ] 30,783 (1987).
    \191\ 18 CFR 380.4(a)(15) (2015).
---------------------------------------------------------------------------

VIII. Document Availability

    87. In addition to publishing the full text of this document in the 
Federal Register, the Commission provides all interested persons an 
opportunity to view and/or print the contents of this document via the 
Internet through the Commission's Home Page (http://www.ferc.gov) and 
in the Commission's Public Reference Room during normal business hours 
(8:30 a.m. to 5:00 p.m. Eastern time) at 888 First Street NE., Room 2A, 
Washington, DC 20426.
    88. From the Commission's Home Page on the Internet, this 
information is available on eLibrary. The full text of this document is 
available on eLibrary in PDF and Microsoft Word format for viewing, 
printing, and/or downloading. To access this document in eLibrary, type 
the docket number of this document, excluding the last three digits, in 
the docket number field.
    89. User assistance is available for eLibrary and the Commission's 
Web site during normal business hours from the Commission's Online 
Support at (202) 502-6652 (toll free at 1-866-208-3676) or email at 
ferconlinesupport@ferc.gov, or the Public Reference Room at (202) 502-
8371, TTY (202) 502-8659. Email the Public Reference Room at 
public.referenceroom@ferc.gov.

IX. Effective Date and Congressional Notification

    90. The Final Rule is effective September 21, 2016. However, as 
noted above, the requirements of this Final Rule will apply only to 
newly interconnecting non-synchronous generators that have not yet 
executed a Facilities Study Agreement. The Commission has determined, 
with the concurrence of the Administrator of the Office of Information 
and Regulatory Affairs of OMB, that this Final Rule is not a ``major 
rule'' as defined in section 351 of the Small Business Regulatory 
Enforcement Fairness Act of 1996. This Final Rule is being submitted to 
the Senate, House, Government Accountability Office, and Small Business 
Administration.

List of Subjects in 18 CFR Part 35

    Electric power rates, Electric utilities, Non-discriminatory open 
access transmission tariffs.

    By the Commission.

    Issued: June 16, 2016.
Kimberly D. Bose,
Secretary.

    The following appendix will not appear in the Code of Federal 
Regulations.

                     Appendix A--List of Commenters
                              [RM16-1-000]
------------------------------------------------------------------------
 
------------------------------------------------------------------------
AWEA and LSA......................  American Wind Energy Association and
                                     Large-scale Solar Association.
CAISO.............................  California Independent System
                                     Operator Corporation.
EEI...............................  Edison Electric Institute.
EPSA..............................  Electric Power Supply Association.
Idaho Power.......................  Idaho Power Company.
Indicated NYTOs...................  Consolidated Edison Company of New
                                     York, Inc.; Niagara Mohawk Power
                                     Corporation d/b/a National Grid;
                                     and Orange and Rockland Utilities,
                                     Inc.
ISO/RTO Council...................  ISO/RTO Council.
ISO[dash]NE.......................  ISO New England Inc.
ITC...............................  International Transmission Company d/
                                     b/a ITC Transmission; Michigan
                                     Electric Transmission Company, LLC;
                                     ITC Midwest LLC; and ITC Great
                                     Plains, LLC.
Joint NYTOs.......................  New York Power Authority; New York
                                     State Electric and Gas; Rochester
                                     Gas and Electric; and Central
                                     Hudson Gas and Electric.
Lincoln...........................  City of Lincoln, Nebraska d/b/a
                                     Lincoln Electric System.
MATL..............................  MATL LLP.
Midwest Energy....................  Midwest Energy, Inc.
MISO..............................  Midcontinent Independent System
                                     Operator, Inc.
NaturEner.........................  NaturEner USA, LLC and its
                                     subsidiaries.
NEPOOL............................  New England Power Pool Participants
                                     Committee.
NERC..............................  North American Electric Reliability
                                     Corporation.
NextEra...........................  NextEra Energy, Inc.
PG&E..............................  Pacific Gas and Electric Company.
Public Interest Organizations.....  Center for Rural Affairs; Clean
                                     Wisconsin; Great Plains Institute;
                                     Natural Resources Defense Council;
                                     Sierra Club; Sustainable FERC
                                     Project; Western Grid Group; Wind
                                     on the Wires.
SCE...............................  Southern California Edison Company.
SDG&E.............................  San Diego Gas and Electric Company.
Six Cities........................  Cities of Anaheim, Azusa, Banning,
                                     Colton, Pasadena, and Riverside,
                                     California.
Union of Concerned Scientists.....  Union of Concerned Scientists.
------------------------------------------------------------------------

[FR Doc. 2016-14764 Filed 6-22-16; 8:45 am]
 BILLING CODE 6717-01-P


