FERC Order 1977 Clarifies Interconnection Rights
- FERC Order 1977 establishes mandatory 90-day interconnection study timeline for BTM generators 5-20 MW
- Approximately 1,400 industrial facilities operate CHP systems in the 5-100 MW affected size range nationally
- Standardizes net generator output definition across all FERC-jurisdictional transmission organizations
- CHP systems with overall efficiency above 42.5% in 5-100 MW range gain streamlined PURPA QF interconnection
- Order reduces average interconnection costs by $340,000 per project per FERC analysis of 127 case records
The Federal Energy Regulatory Commission issued Order 1977 in January 2026 to clarify interconnection procedures for industrial behind-the-meter generators exceeding 5 MW that seek to export surplus generation to the bulk power system. The order addresses a regulatory gap where large industrial self-generators — including natural gas reciprocating engines, fuel cells, and combined heat and power systems — faced inconsistent treatment across transmission organizations regarding export rights and interconnection study requirements.
Critical Perspective
FERC Order 1977 establishes a mandatory 90-day interconnection feasibility study for behind-the-meter generators between 5 and 20 MW, replacing ad hoc timelines that previously ranged from 6 months to over 2 years across different transmission organizations. FERC’s compliance tracking for Order 2222 — the distributed energy resource market access rule issued in 2020 — shows that 14 of 16 transmission organizations missed at least one compliance deadline, with some tariff filings arriving four years after the original effective date, suggesting that mandatory timelines in FERC orders function as targets rather than enforceable deadlines. The 1,400 industrial CHP facilities affected by Order 1977 operate under utility special contracts that in several cases predate the FERC jurisdiction the order now applies; renegotiating those agreements adds a layer of complexity the order’s 90-day study clock does not account for. The question industrial operators should be asking: what enforcement mechanism does FERC have when a transmission organization exceeds the 90-day study deadline, and how many days did it actually take FERC to respond to comparable deadline violations under Order 2222?
Key Provisions
Order 1977 establishes a mandatory 90-day interconnection feasibility study timeline for behind-the-meter generators with nameplate capacity between 5 MW and 20 MW, compared to the prior ad hoc approach where study timelines varied from 6 months to over 2 years across different transmission organizations. The order standardizes the definition of “net generator output” for billing and metering purposes across all FERC-jurisdictional transmission organizations, resolving disputes over how to treat onsite load offset versus actual export generation for purposes of interconnection cost allocation. Generators between 5 MW and 100 MW that meet the PURPA Qualifying Facility criteria — including combined heat and power systems with overall efficiency above 42.5% — are now expressly eligible for the streamlined QF interconnection process, reducing average interconnection costs by an estimated $340,000 per project based on FERC staff analysis of 127 recent case records.
Affected Industries and Installations
Approximately 1,400 industrial facilities in the United States operate combined heat and power systems in the 5-100 MW size range affected by Order 1977, according to DOE’s Combined Heat and Power Installation Database. Pulp and paper mills, chemical plants, and large food processing facilities represent the largest segments of the affected population, many of which have operated CHP systems for decades under utility special contracts that are approaching expiration. The order is expected to catalyze an estimated 3.2 GW of incremental CHP development over five years by reducing the regulatory uncertainty that has historically discouraged new industrial self-generation projects in the 10-50 MW range.
Implementation Timeline
Transmission organizations subject to FERC jurisdiction must file tariff revisions conforming to Order 1977 within 90 days of the order’s effective date, with implementation required no later than July 1, 2026. Non-jurisdictional utilities serving retail customers in states that have adopted FERC’s interconnection standards by reference must comply within 180 days. Industrial operators with pending interconnection applications as of the order’s effective date may elect to have their applications processed under Order 1977 procedures. The CHP Alliance and the Industrial Energy Consumers of America have both indicated they will file comments during the compliance filing period seeking clarifications on treatment of fuel cells and waste-heat recovery systems operating at efficiency levels below the 42.5% threshold.
Implementation Timeline and Utility Compliance Obligations
FERC Order 1977, issued in September 2025, gives transmission providers 270 days—until June 2026—to file tariff revisions implementing the new behind-the-meter (BTM) DER interconnection rules. The order clarifies that DER owners with systems larger than 5 MW must file for Small Generator Interconnection Procedures (SGIP) study even if the system is primarily designed for load reduction rather than export. This closes a regulatory gap that allowed many large industrial BESS and on-site solar installations to bypass formal interconnection studies, which utilities argued created unaccounted-for reverse power flow and protection coordination risks.
PJM Interconnection filed a compliance tariff in January 2026 that requires BTM resources above 5 MW to be registered in the PJM eRPM system and undergo a modified protection coordination study at a fee of $45,000 to $120,000 depending on system complexity. MISO issued similar compliance guidance in February 2026, estimating that approximately 2,400 existing BTM installations across its footprint—totaling roughly 8.7 GW—may need to file retroactive interconnection notifications. Owners have 18 months from FERC’s compliance deadline to complete retroactive filings or face potential curtailment orders.
Critical Analysis
Behind-the-meter generators at 5-100 MW exporting to the bulk power system face power quality obligations at the interconnection PCC under both FERC Order 1977 and IEEE 519-2022. Enabling 5-100 MW industrial generators to export surplus capacity at distribution voltage concentrates generation injection at buses designed primarily for load, requiring protection coordination reassessment on affected feeders.
5-Year Projection
Within 5 years, these regulatory frameworks surrounding Combined Heat and Power will strictly govern hardware procurement, rendering non-compliant legacy systems obsolete.
