Withdrawal penalty: the cost of leaving the queue
The charge imposed on an interconnection customer that withdraws its request after a specified stage, introduced to deter speculative requests and fund the restudy burden they create.
A withdrawal penalty is the amount an interconnection customer forfeits or owes when it removes its request from the queue after a specified point in the study process. FERC adopted penalties in Order No. 2023 as part of the shift to a first-ready, first-served cluster process.
The rationale stated in the order is mechanical rather than punitive. Withdrawals change the base case for every remaining project, forcing restudy and reallocating shared upgrade costs. Penalties, escalating with the stage reached, are intended to make entry a commitment rather than an option and to defray the costs withdrawals impose on others.
The pro forma provides for exceptions, and regional tariffs implement the penalty structure with variations accepted through compliance filings. The exceptions and amounts that apply to any given project are those in the transmission provider''s tariff on the date the request was made.
Questions
- Why does a withdrawal penalty exist?
- FERC found that speculative requests entered and left queues at a rate that imposed study and restudy costs on other requesters, and adopted penalties as part of the first-ready, first-served framework.
- Is the penalty avoidable?
- The pro forma provides exceptions in defined circumstances, including where withdrawal follows a material cost increase attributable to another party's conduct. The exceptions in force are those in the applicable tariff.
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