Eric Blank brings a unique perspective to one of the most pressing challenges facing the U.S. power industry: How to efficiently connect new generation resources to the electric grid.

Blank, the current chairman of the Colorado Public Utilities Commission, founded a renewable energy development company in 2000, where he oversaw the construction of more than 2,000 MW of wind and solar projects representing $4 billion in invested capital.

As a utility commissioner, Blank views the industry he now regulates through an economic lens. In addition to a law degree from Yale Law School, Blank also holds a master's degree in economics from the London School of Economics.

Blank's career as a developer helped inform his stance on the Federal Energy Regulatory Commission's recent proposed reforms to the generator interconnection process.

Issued in June 2022, FERC's proposed rule (RM22-14) aims to clear a backlog of approximately 1,400 GW of proposed generation and energy storage facilities by imposing more stringent requirements on project developers and incumbent transmission owners.

The potential reforms have grown increasingly crucial with the passage of the Inflation Reduction Act, a law projected to produce a surge in clean energy development over the next decade.

Tri-State Generation and Transmission Association Inc., a wholesale cooperative that sells electricity to more than a dozen Colorado electric cooperatives, received 24,000 MW in proposed generation capacity in response to a recent competitive solicitation. That is more than eight times the co-op's peak demand.

Blank said he would not be surprised if Xcel Energy Inc. subsidiary Public Service Co. of Colorado, the state's largest electric utility, receives more than 100,000 MW in proposed generation when it conducts its own solicitation for approximately 8,000 MW of new capacity in 2023.

The commission chairman supports about 80% of FERC's notice of proposed rulemaking, or NOPR, on interconnection. But Blank is also concerned about how the proposed rule could impact Colorado's current generator interconnection process as the state targets a 100% renewable energy mix by 2040.

In support of that goal, Colorado Gov. Jared Polis signed a bill in 2021 requiring the state's investor-owned utilities to join a FERC-jurisdictional regional transmission organization, or RTO, by 2030. However, the requirement will not become effective if the Colorado PUC finds that RTO membership would not be in the public's interest.

Blank wants to ensure that a final FERC rule preserves the state's competitive approach to grid interconnections.

'The single biggest barrier'

As a developer, Blank immersed himself in building financial models for solar and wind projects.

"What's happened is those projects have just become so incredibly valuable," Blank said in a recent interview. "If you have a 200-MW solar project in the Southwest Power Pool or the PJM Interconnection LLC with affordable interconnection and no fatal flaws, you can sell it for $50 million with no risk."

The passage of the Inflation Reduction Act will make those projects more financially attractive, Blank noted.

"There are all these adders that create enormous value in these projects," he said. "So, when you look at a financial model for a project, every developer in the country is looking at the same thing. It's just a gold rush to get in the interconnection queue."

However, interconnection queue positions now account for a growing share of a project's value, Blank said.

"When you sell a project or a company, increasingly, the core value is in the interconnection queue positions. And increasingly, it's the single biggest barrier on the project development side," he said.

A unique interconnection approach

Colorado's interconnection process "is nationally recognized and supported by independent power producers as being competitive," Blank said. "It's a competitive process where the rules are clear in advance, disputes are decided in a transparent way with a neutral, independent decision-maker, and utility-owned generation has to compete in that process against third-party generation."

The state auctions off interconnection rights to the lowest-price bidder. "The low-cost, best projects with the most attractive prices and the highest value win," Blank said. When projects interconnect to the grid, that value is effectively transferred to customers.

"I think that's the problem with FERC's NOPR and the RTO approaches — nobody is prioritizing," Blank said. "That doesn't matter if there's no scarcity, but there is scarcity because you can't build new transmission quickly."

Blank noted that the 15-state Midcontinent ISO had approximately 170,000 MW in its last interconnection study cluster on a peak demand system of 120,000 MW, with about 100,00 MW already in the grid operator's interconnection queue. PJM has also stopped accepting new interconnection filings until 2024.

"We're just concerned about how you shift control of something that's functional under Colorado's current approach to something that's dysfunctional and increasingly getting worse," Blank said. "We need to keep the lights on and transition, we need to build and invest, and we just can't tie it all up in a dysfunctional process that's incapable of prioritizing among the best projects."

FERC's interconnection proposal

With those issues in mind, Blank wants to see FERC's proposed rule on interconnection revised to accommodate states like Colorado.

"Right now, the contract right for interconnection is with the developer. Every developer that applies gets a queue position and it's a qualified contract — it's not an absolute contract," Blank explained. "But I think that right needs to start shifting to load. I think that native load needs to be able to control interconnection access and it has to be competitive. You can't just let transmission owners and load-serving entities benefit themselves."

Blank argued that developers who win competitive solicitations should be given priority in interconnection queues.

"If projects are meeting resource adequacy standards, then those projects should move forward first. If you can't demonstrate that you're serving qualified native load, you shouldn't be part of a cluster study," Blank said.

"I would encourage FERC to allow states like Colorado to continue prioritizing bilateral markets," he said. "For states shifting to a full RTO, you've got to allow the prioritization of projects. You just can't have open access when the supply and demand balance is that crazy."

However, Blank stressed that FERC's attention to interconnection queue reform "is absolutely critical."

"I think the commission is trying to do the right thing," he said. "I think the glass is about 80% full."

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