We all have to wait in lines, from the bank to the grocery store to the airport.
And we’ve all experienced frustration when people ahead of us aren’t paying attention. They don’t have their payment ready to cash out, or they can't find their ID and boarding pass for the security check point. So they slow things down for everyone else. But as some of these processes become more automated and streamlined, it’s beginning to save us time and energy.
We can now deposit checks from our phone, or order food online for delivery to our doorstep. Nonetheless, lines remain a reality in modern life, and sometimes the best we can hope for is just knowing how long it’s going to take.
In many ways, the interconnection queue is like any other line. It allows utilities to process interconnection applications in a fair and orderly manner — first-come, first-served. And it is also susceptible to delays at many “check points” throughout the process, which can slow things down in unpredictable ways for every project. Sometimes the effects are minor and inconsequential. However, some delays, such as late interconnection study results or construction bottlenecks, can translate to big costs for project applicants and impact their ability to obtain financing.
In our regulatory work in states across the country, IREC often sees timelines and “queue management” issues come up in times of crisis, when a utility’s interconnection queue has become backlogged, and applicants and customers complain.
For example, after implementing ambitious shared solar programs, both Minnesota and New York see their utilities’ interconnection processes under considerable stress, resulting in major delays. In part, this is due to the sheer number of applications coming in the door. However, it also reflects the shortfalls of both states’ now outdated interconnection procedures, which lack, among other best-practice elements, clear timelines for each step in the process, for both applicants and utilities, and clear enforcement mechanisms for when those timelines are missed.
Not only can timelines help keep the line moving forward, but they can also set expectations for utilities and applicants, and minimize disputes. In addition, when applicants have a clearer sense of timelines, they can more effectively communicate these expectations to their customers, including rooftop solar customers and shared solar subscribers. Fortunately, as discussed in the first blog in our series, existing models make the adoption of straightforward, appropriate timelines relatively easy.
Even in these model procedures, however, there are still timeline gaps that require more attention, especially after an interconnection agreement has been signed. At this point, larger facilities requiring distribution system upgrades enter a construction phase, usually managed by the utility.
Construction timelines are typically developed on a project-by-project basis and included in the interconnection agreement (not the procedures); they may be vague and there aren’t necessarily penalties for missing them. Delays in the construction process can have big impacts on projects working toward a specific operational deadline, when they expect to be generating electricity and earning money.
There is not an easy solution here. In reality, projects may require different construction timelines because of their particular design, location and other factors. In our proposed revisions to Minnesota’s interconnection procedures, IREC and our partners attempted to reconcile this need for individual treatment with a desire for increased clarity and transparency regarding construction timelines within the interconnection procedures.
We included specific provisions regarding utility-applicant agreement on construction milestones and timelines based on industry best practices. We also added timelines for payment and final accounting of the cost associated with necessary upgrades. This remains a cutting-edge issue that will require attention in all states pursuing interconnection reform. (Paying for these upgrades gets into issues of cost certainty and allocation, which IREC will address in future blogs in this series.)
Ultimately, one of the most important steps in the interconnection process for all projects is the very last one: receiving permission to operate, or PTO, after a system is installed and all other steps have been completed.
Whether a project is big or small, whether or not upgrades are required, every project eagerly awaits the moment it can go online and begin generating electricity and revenue. As a recent EQ Research report shows, however, many states’ procedures do not include a PTO timeline. What’s more, the report reveals that rooftop solar customers were forced to wait an average of 45 days after construction was completed to receive utility permission to operate the system, compared to 28 days in 2014. These results follow a trend identified in the 2015 edition of the report, which found that the wait for PTO increased in 2014 as compared to 2013.
It’s clear then, that as more systems are seeking to connect to the grid, processes are either stagnating or slowing down.
While some of this might be due to overloaded utility staff forced to process higher volumes of requests, the trend suggests that more can and should be done to streamline and expedite the process. For example, at the end of the process, a lack of any enforceable deadlines for final testing and approval can leave customers frustrated, with a system installed but unable to turn it on, and with no recourse to push for a response at the utility. In this case, the first step toward a solution is simple: incorporate a PTO timeline into interconnection procedures.
While timelines are important, applicants and utilities can have legitimate reasons for missing them, sometimes due to circumstances outside of their control. Thus it is equally important that interconnection procedures include policies for extending timelines in appropriate circumstances. Some states accomplish this by clarifying extensions for each timeline, as necessary. For the sake of consistency, however, it may make sense to have a blanket policy applicable to all timelines, and to note any exceptions to this rule on a case-by-case basis within the procedures. Either way, clear rules about when extensions are allowed are also crucial to a smooth interconnection process.
Even with explicit timelines and a defined extension process, applicants and utilities will inevitably miss some deadlines. A good enforcement process can both discourage this behavior and also lay out a procedure for dealing with it when it happens. On the applicant side, enforcement ultimately means getting kicked out of the queue and, if necessary, having to reapply and start at the beginning. On the utility side, best practices are just emerging to help regulators incentivize and penalize utilities with respect to interconnection timeline compliance.
How do you get people to do what they’re supposed to do? And how do you kick them out of line if they don’t? We'll explore this in a future piece as part of this interconnection series.
Read part one here.
Erica McConnell is special counsel with Shute, Mihaly and Weinberger, attorneys for the Interstate Renewable Energy Council.