FERC rejects RWE complaint over PJM interconnection practices

Core Insights - The Federal Energy Regulatory Commission (FERC) has highlighted significant uncertainties in the interconnection process for developers, as exemplified by RWE's complaint regarding unexpected cost escalations for a solar and battery project [4][5]. Interconnection Process - FERC commissioners emphasized the need for PJM to explore reforms that could reduce interconnection cost uncertainties and expedite the interconnection process [2]. - The Southwest Power Pool's newly approved consolidated planning process is seen as a model for improving interconnection efficiency by determining costs upfront [1][6]. Cost Uncertainties - RWE's initial estimated network upgrade costs for a 125-MW project were $1.25 million, which later ballooned to nearly $72 million, leading to the project's withdrawal from PJM's queue [4]. - FERC's dismissal of RWE's complaint raised broader concerns about the ability to develop necessary generation capacity amid historic load growth [5]. Return on Equity (ROE) Adjustments - FERC voted to reduce the base return on equity for transmission owners in New England from 10.57% to 9.57%, with a total ROE cap of 12.09% [8]. - The decision resolves long-standing complaints regarding ROE and mandates refunds for a specific 15-month period related to the first complaint [9][10]. Utility Industry Reactions - The decision has drawn criticism from affected utilities, with claims of "regulatory malpractice" due to the lengthy resolution process [12]. - Eversource indicated that a reduction in ROE would significantly impact its after-tax earnings, estimating a loss of about $70 million annually [13]. Cybersecurity and Reliability Standards - FERC approved updates to NERC cybersecurity standards, enhancing protections against cyber threats and allowing for more efficient use of technology [20][21]. - Recommendations for large loads, such as data centers, to register with NERC and adhere to reliability standards were discussed, aiming to ensure their operations do not compromise grid reliability [17][18].