Dive Brief:

• An Arizona Public Service Co. proposal that would let it skip the interconnection queue to replace retiring power plants is discriminatory and should be rejected by federal regulators, according to the Solar Energy Industries Association.

• The proposal the Phoenix-based utility filed last month would exclude renewable energy developers that use tax-advantaged passive equity investments from its generation replacement process, SEIA said in a March 30 protest it filed at the Federal Energy Regulatory Commission.

• The trade group called on FERC to establish a broad proceeding to examine interconnection rights, transmission network upgrade cost allocation, and generation replacement and explore whether action is needed to ensure fair competition and open access to the grid.

Dive Insight:

The dispute at FERC comes during a wave of coal-fired power plant retirements across the United States, which has sparked various proposals for how power plant owners can use interconnection facilities to bring new generating assets online.

FERC has approved generation replacement proposals from utilities including Pacificorp, Duke Energy Carolinas, Public Service Co. of Colorado and Dominion Energy, despite concerns they may give incumbent utilities an unfair advantage.

APS told FERC its proposal is nearly identical to several of the approved generation replacement plans. As in those plans, an independent “generation replacement coordinator” would process generation replacement requests outside the standard interconnection queue, which can take years to complete.

SEIA contends that one element in the proposal — a limit on the ability to transfer ownership in a planned generating facility — would freeze out renewable energy developers to the benefit of APS and its affiliates.

To facilitate passive investment, investors often receive an equity interest in an existing generating facility or a replacement facility in exchange for the funding needed to pay for the project, SEIA said, adding that investors often require a project-specific equity interest to use tax benefits.

“If the transferability provisions are not altered, APS will in effect have guaranteed for itself transmission rights for replacement generation and edged out the leading competitors in the process of having Generation Replacement requests approved outside of the standard interconnection queue,” SEIA said.

Interwest Energy Alliance, a trade group of developers and manufacturers of utility-scale renewable energy, also urged FERC to reject the proposal.

The APS proposal is backed by Elevate Renewables F7, a developer of energy storage systems at power plants owned by ArcLight Capital Partners funds. 

The proposal supports the development of replacement generation through a fast-track study process that avoids the inefficiencies and risks related to the current dual-track retirement and interconnection process, Elevate said in a filing in support of the plan.

The FERC-approved generation replacement processes gives “a tremendous advantage to the incumbents, who may or may not have the best alternative as to what to put at that site,” according to Richard Tabors, president of Tabors Caramanis Rudkevich, a consulting firm based in Newton, Massachusetts.

“This is basically just opening a door in the henhouse to the fox,” Tabors said Monday in an interview.

To be consistent with FERC’s open-access principles, interconnection capacity freed up by retiring power plants should be equally accessible to incumbent generation owners and new entrant competitors, Tabors said in an article the American Bar Association published last month.

“There's nothing that the existing owner can do at these sites that somebody else can't do at least as well,” Tabors said Monday.