On November 19, 2015 the Federal Energy Regulatory Commission (Commission) issued a proposal titled “Reactive Power Requirements for Non-Synchronous Generation.” In this proposal, the Commission proposes to revise standard generator interconnection agreements (GIAs) to eliminate the exemptions for non-synchronous generation, including wind generators, from the requirement to provide reactive power.

Reactive power is needed to control system voltage for efficient and reliable operation of the transmission system. Historically, the costs to design and build a wind generator that could provide reactive power were so high as to create an obstacle to the development of wind generators. Such costs have experienced a decline and the Commission has concluded that continuing to exempt such wind generators from the requirement to provide reactive power may be unduly discriminatory and preferential. Also, the Commission notes that the growing prevalence of wind generators increases the potential for reactive power deficiencies on transmission systems.

The Commission proposes to modify its two pro forma interconnection agreements, the Large GIA (for facilities larger than 20 MW) and the Small GIA to require all new wind generators seeking to interconnect and all existing wind generators making upgrades that require new interconnection requests to provide reactive power. Synchronous and non-synchronous generators would have comparable reactive power requirements, except wind and other non-synchronous generator would only be required to maintain the required power factor range when the generator’s output exceeds 10% of its nameplate capacity. To comply with the requirements of this proposal, the Commission proposes to require each public utility transmission provider to submit a compliance filing within 90 days of the effective date of the final revision in this proceeding revising its pro forma GIAs to demonstrate that it complies with the proposal. Non-public utility transmission providers will need to adopt the requirements of this proposal as a condition of maintaining the status of their safe harbor tariff or otherwise satisfying their reciprocity requirements.

The Commission’s proposal is based on its determination that the costs to design and build a wind generator that can provide reactive power are no longer so onerous to warrant an exemption for wind generator from reactive power requirements. Because such costs will ultimately be passed through to the customers of wind generators, this proposal raises an issue regarding whether wind and other non-synchronous generators are economically viable if their wholesale power rates include the costs of reactive power, such as power factor equipment.

Comments on the proposal are due January 25, 2016.