Network upgrade cost allocation: who pays for the reinforcement
The tariff rules that determine how the cost of a shared network upgrade is divided among the interconnection requests that made it necessary.
Network upgrade cost allocation is the set of tariff rules that divide the cost of a shared upgrade among the interconnection requests that require it. Where a single reinforcement relieves a constraint created by several projects in the same cluster, the tariff specifies how much of it each project funds.
Methods differ by region. Some tariffs allocate on installed capacity in megawatts; others allocate on each project''s calculated contribution to the constraint. FERC Order No. 2023 addressed allocation in the cluster context and left regions to implement the details through compliance filings, which is why the applicable method must be read from the transmission provider''s own tariff rather than assumed.
Allocation is not static. Withdrawals within a cluster trigger reallocation among the projects that remain, subject to any cap or restudy trigger in the tariff. Disputes about allocation and reallocation are litigated at FERC and appear on the docket for the relevant tariff.
Questions
- Is allocation always by megawatt?
- No. Proportional-impact and megawatt-based methods both appear in filed tariffs, and the method in force is the one in the transmission provider's tariff as accepted by FERC.
- What happens to an allocation when another project withdraws?
- The upgrade is reallocated among the remaining projects under the tariff's reallocation and restudy provisions, which can raise the cost carried by a project that did not change its own request.
Sources
- 01
Improvements to Generator Interconnection Procedures and Agreements, Order No. 2023
Federal Energy Regulatory Commission · RM22-14-000 · retrieved 2026-08-09
- 02
Pro forma Large Generator Interconnection Procedures and Large Generator Interconnection Agreement
Federal Energy Regulatory Commission · pro-forma-LGIP-LGIA · retrieved 2026-08-09