DC Circuit upholds interconnection reforms of FERC Order No. 2023

On July 31, 2026, the US Court of Appeals for the DC Circuit issued a per curiam opinion in Advanced Energy United, et al. v. FERC,¹  denying all petitions for review and upholding Order No. 2023 in its entirety as issued by the Federal Energy Regulatory Commission in July 2023. The opinion preserves the comprehensive overhaul of generator interconnection procedures, bolstering ongoing and expanding queue transition efforts across grid operators.

Procedural History

Over the past decade, the rapid deployment of renewable energy generating facilities has overwhelmed the traditional generator interconnection process. Under the incumbent "first-come, first-served" serial study approach, regional grid operators evaluated projects sequentially. This framework led to severe backlogs and cascading restudies when speculative projects withdrew. To address this systemic bottleneck, the Federal Energy Regulatory Commission (FERC) initiated a rulemaking proceeding in June 2022 that culminated in Order No. 2023, the most significant set of generator interconnection reforms since FERC established pro forma interconnection procedures two decades ago.²

Order No. 2023 targeted queue backlogs that spanned up to five years (or longer) in certain regions under FERC jurisdiction.³ The order mandated a transition from the incumbent “first-come, first-served” queue approach to a "first-ready, first-served" cluster study process. Order No. 2023 also implemented stricter commercial readiness requirements, established firm study deadlines for transmission providers, and introduced withdrawal penalties (on a tiered basis) for interconnection customers.

Multiple transmission providers and clean energy developers filed respective petitions for review at the US Court of Appeals for the DC Circuit (DC Circuit). The petitions generally challenged FERC’s jurisdiction under Section 206 of the Federal Power Act (FPA) and the specific regulatory and legal mechanisms proposed in order to implement and enforce the new interconnection queue requirements.

The Opinion

In addressing jurisdictional challenges, the DC. Circuit found that FERC acted within its statutory authority under the FPA to remedy industry-wide inefficiencies. In reviewing the market context that prompted the issuance of Order No. 2023, the DC Circuit highlighted that interconnection queues held roughly 2,600 gigawatts of proposed capacity at the end of 2023 and remained over 2,060 GW by the end of 2025. Given that these systemic backlogs continue to exceed total installed generation capacity in the US, the Court asserted that FERC was justified in its approach.

With respect to certain issues raised by clean energy developers, the Court concluded that FERC’s tiered withdrawal fines and exemption thresholds were neither arbitrary nor capricious. Developers targeted the rule requiring a 100 percent or greater increase in estimated network upgrade costs between the cluster and facilities study stages to qualify for penalty-free withdrawal. However, as the DC Circuit contended, late-stage withdrawals shift substantial network upgrade costs onto remaining queue participants and trigger cascading restudies. As such, the Court held that FERC appropriately balanced the policy objective of discouraging speculative projects with the need to prevent unexpected cost shocks for developers.

Transmission providers further objected that the study delay penalties (comprising 150-day windows for initial cluster studies and 150 days for restudies) were tantamount to civil penalties, contending that FERC could only impose such fees under Section 316A of the FPA. The Court analyzed the specific late fee schedule set forth in Order No. 2023 ($1,000 per business day for delayed cluster studies, $2,000 per business day for cluster restudies and affected-system studies, and $2,500 per business day for facilities studies) and approved its compensatory nature, finding that the fees are refunded on a pro rata basis to interconnection customers to reflect the diminished value of a delayed study. According to the Court, the accompanying fee structure did not violate due process because the fee structure includes safeguards, such as a cap at 100 percent of initial study deposits, grace periods, and a good-cause waiver process. Ultimately, the Court found that the study delay penalties constitute a performance-based contractual adjustment, established through the authority vested to FERC under Section 206 of the FPA, rather than allegedly impermissible civil penalties under Section 316A of the FPA.

Last, in reviewing the default requirement for Energy Resource Interconnection Service (ERIS) modeling in affected system studies (i.e., irrespective of the type of service, such as firm or ERIS, the affected system studies must use an ERIS model), the D.C. Circuit sustained the provision in Order No. 2023, finding that aligning upgrade assignments with actual service levels enhances transparency and reduces late-stage queue drops.  The Court cited a case study offered by one of the regional grid operators as evidence that an energy service modeling approach was operationally viable and did not erode reliability.

Regulatory Outlook

The Court’s affirmation of Order No. 2023 provides regulatory certainty for its ongoing implementation across all FERC-jurisdictional tariffs. By denying the petitions, the DC Circuit has maintained Order No. 2023 as the effective regime for interconnection queue processes going forward. For reference, the following table details the current compliance status for each of the grid operators under FERC jurisdiction, respectively; of the six, two proceedings are ongoing, subject to further action by FERC on outstanding compliance directives in prior orders.

As intended in Order No. 2023, the barrier to entry for developers and interconnection customers is now significantly higher (and penalized for attrition). Projects entering the queue must demonstrate definitive commercial readiness, including heightened site control and increased financial deposits.

It is in the interest of developers to evaluate the viability of a project prior to the facilities study stage to avoid severe withdrawal penalties, particularly in light of the validation of the 100 percent cost increase exemption threshold offered. Transmission providers will need to shift from a "reasonable efforts" standard toward adhering to study deadlines. While the opinion affirmed that the daily late fees are compensatory rather than civil penalties, transmission providers are now compelled to more closely manage the financial exposure associated with potential study delays.

_{1 Opinion On Petitions for Review of Orders of the Federal Energy Regulatory Commission, DC Cir. No. 23-1282 (Issued on Jul 31, 2026). Available at: https://media.cadc.uscourts.gov/opinions/docs/2026/07/23-1282-2185998.pdf .
2 Improvements to Generator Interconnection Procedures and Agreements, 184 FERC ¶ 61,054 (2023).
3 Order No. 2023: Interconnection Reform Is Finally Here, The Journal of Federal Agency Action, January/February 2024.
4  California Independent System Operator Corporation Amendment to Comply with Order No. 2023 - LGIA and SGIA Improvements. FERC Docket Nos. ER24-2042-000, ER24-2042-001. Available at: https://elibrary.ferc.gov/eLibrary/docketsheet?docket_number=er24-2042&subdocket=all 
5  Southwest Power Pool, Inc. Order Nos. 2023 and 2023-A Compliance Filing. FERC Docket Nos. ER24-2026-000, ER24-2026-001, ER24-2026-002. Available at: https://elibrary.ferc.gov/eLibrary/docketsheet?docket_number=er24-2026&subdocket=all 
6 Midcontinent Independent System Operator, Inc. Compliance Filing for Order Nos. 2023 and 2023-A. FERC Docket Nos. ER24-2046-000, ER24-2046-001, ER24-2046-002, ER24-2046-003. Available at: https://elibrary.ferc.gov/eLibrary/docketsheet?docket_number=er24-2046&subdocket=all 
7 PJM Interconnection, L.L.C. Order Nos. 2023 and 2023-A Compliance Filing. FERC Docket Nos. ER24-2045-000, ER24-2045-001, ER24-2045-002, ER24-2045-003, ER24-2045-004. Available at: https://elibrary.ferc.gov/eLibrary/docketsheet?docket_number=er24-2045&subdocket=all 
8 NYISO Compliance: Order No. 2023 and 2023-A Interconnection Procedures. FERC Docket Nos. ER24-1915-000, ER24-1915-001, ER24-1915-002, ER24-1915-003, ER24-1915-004, ER24-1915-005. Available at: https://elibrary.ferc.gov/eLibrary/docketsheet?docket_number=er24-1915&subdocket=all 
9 ISO New England Inc. Revisions in Compliance with Order Nos. 2023 and 2023-A. FERC Docket Nos. ER24-2009-000, ER24-2009-001. Available at: https://elibrary.ferc.gov/eLibrary/docketsheet?docket_number=er24-2009&subdocket=all} 

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