D.C. Circuit Court Upholds FERC Order No. 2023 Interconnection Reforms (Advanced Energy United, et al. v. FERC, Nos. 23-1282, et al.)

On July 31, 2026, the U.S. Court of Appeals for the District of Columbia Circuit denied multiple petitions challenging FERC’s Order No. 2023, leaving intact the Commission’s nationwide reforms to generator interconnection procedures. The Court concluded that FERC acted within its authority under Section 206 of the Federal Power Act and reasonably explained its decision to replace existing interconnection practices with a new framework designed to address growing interconnection queue backlogs.

Order No. 2023 included multiple reforms to generator interconnection policy. Inter alia it replaces the traditional serial “first-come, first-served” study process with a clustered “first-ready, first-served” approach, increases study deposits, establishes withdrawal penalties for projects leaving the queue late in the process, imposes firm study deadlines backed by late fees for transmission providers, and standardizes affected-system studies.

Clean energy developers argued that the withdrawal penalty framework provides insufficient flexibility when network upgrade costs “prove wildly wrong,” particularly where affected-system studies reveal significant additional costs after a project has advanced through the interconnection process. They also challenged FERC’s decision to require a 100 percent increase in host-system upgrade costs before a project may withdraw without penalty at the facilities-study stage.

Transmission providers and regional transmission organizations challenged different aspects of the rule. They argued that the study deadline and late-fee provisions exceeded FERC’s statutory authority, operated as punitive penalties rather than remedial measures, and failed to account adequately for delays caused by factors outside a transmission provider’s control. They also objected to FERC’s decision to require affected-system studies to use Energy Resource Interconnection Service as the default modeling assumption rather than allowing studies based on higher levels of interconnection service.

The D.C. Circuit rejected each of these challenges. With respect to withdrawal penalties, the Court concluded that FERC reasonably balanced competing objectives, discouraging speculative queue entries while still providing relief in cases of substantial cost increases. The Court emphasized that FERC adequately explained why later-stage withdrawals create greater disruption for other projects and why a higher threshold for penalty-free withdrawal was appropriate. The Court likewise upheld FERC’s decision not to create a separate penalty-free withdrawal exception for certain affected-system study cost increases. The Court found that FERC reasonably concluded that providing greater certainty for the overall interconnection cluster outweighed the benefits of additional flexibility for a smaller number of projects awaiting affected-system results.

Finally, the Court rejected the transmission providers’ challenges to the study deadline and affected-system modeling requirements. The Court agreed that FERC reasonably viewed the late-fee framework as part of its Section 206 remedy for unjust and unreasonable interconnection practices rather than as an unlawful penalty, and the Court concluded that FERC had adequately explained its decision to adopt Energy Resource Interconnection Service as the default modeling standard to improve consistency, transparency, and cost certainty.