FERC Okays California ISO's First Step in Clearing Backlog of Power Plant Requests...

FERC Okays California ISO's First Step in Clearing Backlog of Power Plant Requests to Hook Up to Grid

Second Boost from FERC to Give ISO Ability to Advance Renewable
Power
FOLSOM, Calif.--(Business Wire)--
In an important step toward streamlining the process of
interconnecting renewable resources to the power grid, the Federal
Energy Regulatory Commission (FERC) issued an order yesterday granting
the California Independent System Operator Corporation (California
ISO) the ability to launch the first part of a two-step process to
clear a logjam that has hindered renewable projects attempting to
connect to the California grid.

"The good news is that renewable power projects are clamoring to
supply electricity to California consumers," said California ISO
President and CEO Yakout Mansour. "The better news is we can take the
first step toward freeing bottlenecks that have prevented these
exciting projects from coming online."

This is the second lift FERC has given the California ISO as it
works swiftly to help green power developers get their projects on the
grid. Late last year, FERC approved the ISO proposal for a new
hybrid-financing tool that is reducing cost barriers facing renewable
developers and paving the way for transmission "trunk lines" to reach
remote and renewable-rich areas.

In yesterday's FERC order, the ISO was given the okay to waive
certain rules and timelines for handling requests from new power
plants hoping to hook up to the transmission system. As a result, the
ISO can begin immediately to reduce a backlog of projects in its
overloaded generation interconnection queue. One of the primary
benefits is to help accelerate development of green power needed to
meet California's Renewables Portfolio Standard and greenhouse gas
(GHG) reduction goals.

"FERC is giving California the power to help 'green the grid' by
addressing the backlog of generation interconnection requests that
have stymied our ability to manage the timetables for ensuring the
reliable connection of renewable power to the transmission grid," said
Mansour. "We are impressed with FERC's response to this urgent
situation in California. All along, the Commission has demonstrated in
words and actions its commitment to adjust existing policies and
introduce new ones to facilitate the implementation of environmental
goals."

As part of this transition, the ISO will now be allowed to create
three study groups:

-- A grandfathered serial study group that would give expedited
treatment to projects already in the queue

-- A transition cluster, comprising non-grandfathered projects
submitted on or before June 2, 2008

-- An initial cluster for projects submitted on or after June 3,
2008

In response to the state's renewable and greenhouse gas goals
intended to reduce dependence on fossil fuels, a torrent of renewable
power projects has poured into the ISO interconnection queue. Today,
361 interconnection requests totaling more than 105,000 megawatts
(MWs) are pending in the interconnection study process. Of these, more
than 68,000 MWs are from renewable resources. These far exceed the
highest demand on record and also exceed the ability of the current
interconnection procedures to efficiently process the requests. FERC's
actions will be instrumental in breaking this logjam and will ensure
the interconnection process does not impede the California Public
Utilities Commission siting process.

The second step in the process to address these issues will be
gaining FERC approval for a full-scale Generator Interconnection
Process Reform (GIPR) proposal. The California ISO worked closely with
stakeholders to develop the proposal which was approved by the ISO
Board of Governors only last week. The ISO plans to file the long-term
solution with FERC by the end of the month. If approved, the GIPR will
resolve the source of the procedural flaws in the current
interconnection process by increasing the financial commitment
necessary for project developers to enter and progress through the
interconnection process, studying projects with related system impacts
in groups, and providing for pro-rata allocation of transmission
upgrades across grouped projects. With these and other changes, the
California ISO will have greater confidence that the projects being
studied are commercially viable and will be able to study projects
more efficiently. At the same time, project developers will have
greater certainty about the timing of interconnection studies and
their share of interconnection costs.

The California ISO is a not-for-profit public benefit corporation
charged with managing the flow of electricity along California's
open-market wholesale power grid. The mission of the California ISO is
to safeguard the reliable delivery of electricity, and ensure equal
access to 25,000 circuit miles of "electron highway." As the impartial
operator of the wholesale power grid in the state, the California ISO
conducts a small portion of the bulk power markets. These markets are
used to allocate space on the transmission lines, maintain operating
reserves and match supply with demand in real time.

California ISO
Stephanie McCorkle, 888-516-NEWS

Copyright Business Wire 2008