FERC Order 2023 Queue: Fox Run Goes from a $755,000 Entry Package to $7.6 Million of Upgrade Security

September 17, 2026 · Dezzmond Team

Energy Markets Interconnection: From Site to IA Interconnection

Fox Run Solar is the same 200 MW project from the first interconnection article.

It has selected a POI and wants to enter a new cluster under FERC's pro forma Order No. 2023 process.

Before the studies begin, the federal pro forma package already asks Fox Run to put real money or financial capacity behind the request.

For a 200 MW project:

Non-refundable application fee                 $5,000
Refundable study deposit                     $250,000
Initial Commercial Readiness Deposit
= 2 × study deposit                          $500,000
                                              --------
Entry package                                $755,000

Site control sits beside that package.

Fox Run generally needs at least 90% site control when it submits the request. If a qualifying regulatory limitation prevents that, the pro forma alternative deposit is $10,000/MW, subject to a $500,000 minimum and $2 million maximum.

For a 200 MW project:

200 MW × $10,000/MW
= $2.0m

So the exceptional site-control route can add another $2 million of security.

That is the first lesson of Order 2023:

the queue is not free option value anymore.

And $755,000 is only the opening number.

"First-ready, first-served" does not mean projects are ranked by who looks most financeable

FERC describes the reformed process as first-ready, first-served.

The shorthand is useful because projects need site control and escalating financial commitments to enter and remain in the process.

But the actual pro forma LGIP is more precise.

It opens a defined Cluster Request Window, validates the requests, and studies the qualifying projects together.

Requests in the same cluster are considered equally queued.

So do not model the new process as:

Project A has PPA + financing
→ Project A jumps ahead of Project B inside the same cluster

The readiness requirements act as gates.

They do not create a continuous ranking auction among projects already admitted to the cluster.

For Fox Run, the practical sequence is:

45-day Cluster Request Window
        ↓
60-day Customer Engagement Window
        ↓
150-day Cluster Study
        ↓
possible 150-day Cluster Restudy
        ↓
Facilities Study
        ↓
LGIA

That is the federal pro forma architecture.

The applicable regional tariff still controls the project.

The study deposit is only one part of the entry check

The pro forma study deposit schedule is:

Generating Facility size	Study deposit
< 80 MW	$35,000 + $1,000/MW
≥ 80 MW and < 200 MW	$150,000
≥ 200 MW	$250,000

Fox Run is exactly 200 MW, so it sits in the $250,000 tier.

The project also pays a $5,000 non-refundable application fee.

The study deposit is refundable and is applied toward the Cluster Study Process costs.

Then the initial Commercial Readiness Deposit adds another:

2 × $250,000
= $500,000

Order 2023-A broadened acceptable forms of readiness security beyond cash and an irrevocable letter of credit to include surety bonds and other security reasonably acceptable to the transmission provider.

That distinction matters to a developer with a portfolio.

Cash
→ consumes liquidity

Letter of credit
→ consumes LC / revolver capacity

Surety
→ consumes surety capacity and premium

The nominal deposit is the same.

The corporate funding consequence is not.

The deposit ladder has two stages the old model missed

Now let Fox Run finish its Cluster Study.

Use the first article's illustrative result:

Fox Run Network Upgrade assignment             $38m

The old version of this post jumped almost directly from the initial readiness deposit to the 20% LGIA deposit.

The federal pro forma process has two additional gates.

After the Cluster Study: total readiness security goes to 5%

To enter a Cluster Restudy, Fox Run has 20 calendar days after the Cluster Study Report Meeting to provide continued site control and increase its total Commercial Readiness Deposit to:

5% × $38m
= $1.90m

It already posted $500,000.

So the incremental posting is:

$1.90m - $0.50m
= $1.40m

The word total matters.

This is not $500,000 plus 5%.

The readiness deposit is brought up to 5%.

Before the Facilities Study: total readiness security goes to 10%

If Fox Run advances to the Interconnection Facilities Study, the total Commercial Readiness Deposit rises to:

10% × $38m
= $3.80m

Incremental posting from the 5% level:

$3.80m - $1.90m
= $1.90m

Fox Run has moved from a $500,000 initial readiness deposit to $3.8 million without signing the LGIA.

That is the capital-at-risk ladder the development model needs.

The LGIA deposit takes the combined upgrade security to 20%

At LGIA execution — or when the customer requests an unexecuted LGIA filing — the pro forma LGIP requires an LGIA Deposit equal to:

20% of estimated Network Upgrade costs
minus
Commercial Readiness Deposits already provided

For Fox Run:

20% × $38m                                $7.60m
Less Commercial Readiness Deposit        (3.80m)
                                         -------
New LGIA Deposit                          $3.80m

The combined readiness + LGIA upgrade security is therefore:

$3.80m + $3.80m
= $7.60m

The $250,000 study deposit is a separate study-cost item.

Do not model:

LGIA deposit
= another 20% on top of the 10% readiness deposit

That would overstate the security.

The 20% is the target level for the upgrade-security package.

Fox Run's full commitment ladder

Put the gates in one table.

Stage	Fox Run requirement	Total readiness / LGIA upgrade security
Request	$5k fee + $250k study deposit + $500k initial readiness	$0.500m readiness
Cluster Study completed; enter restudy	Bring readiness to 5% of $38m	$1.900m
Enter Facilities Study	Bring readiness to 10% of $38m	$3.800m
Execute / file LGIA	Add LGIA deposit so combined level reaches 20%	$7.600m

Site control, the study deposit and actual study costs sit beside this table.

If Fox Run qualifies for the regulatory-limitation exception to ordinary site control, up to $2 million of additional site-control security can also sit outside the readiness column.

The financing problem is now visible.

Fox Run does not make one interconnection payment.

It passes through a series of liquidity gates.

The decision after the study is an option exercise

Before the Cluster Study report, Fox Run does not know that its Network Upgrade assignment will be $38 million.

It knows the rules of the next gate.

That is economically similar to buying an option to learn the upgrade result.

Fox Run initially commits:

$5,000 fee
$250,000 study deposit
$500,000 readiness security

Then the Cluster Study tells it whether exercising the next step requires:

5% of a manageable upgrade number

or:

5% of a project-killing upgrade number

Suppose instead of $38 million, the Cluster Study had returned:

Low case       $20m Network Upgrades
Base case      $38m
High case      $80m
Kill case     $120m

The 5% gate would be:

Network Upgrade assignment	5% readiness level
$20m	$1.0m
$38m	$1.9m
$80m	$4.0m
$120m	$6.0m

And the eventual 20% LGIA-level security would be:

Network Upgrade assignment	Combined 20% readiness + LGIA security
$20m	$4.0m
$38m	$7.6m
$80m	$16.0m
$120m	$24.0m

The queue model should therefore have a decision rule:

Study result
→ project value after upgrades
→ liquidity / security required to continue
→ proceed or withdraw

not simply:

Interconnection cost = study result

The right to walk away has a price.

The withdrawal penalty is its own escalating ladder

Order 2023's withdrawal penalty does not equal the amount of the Commercial Readiness Deposit.

The pro forma LGIP has a separate calculation.

And one condition comes before the percentages:

a withdrawal penalty applies only when the withdrawal has a material impact on the cost or timing of an equal- or lower-queued request, unless another specified exemption applies.

For a project that is subject to the penalty, the amount is generally the greater of the study deposit or the stage-specific formula.

Use Fox Run and assume its allocated study cost through the initial Cluster Study is $400,000.

Before the initial Cluster Study begins

The pro forma rule does not impose a withdrawal penalty before commencement of the initial Cluster Study.

Fox Run may still have sunk application fees and study costs.

But the escalating withdrawal-penalty regime has not started.

During the Cluster Study / after the report, before restudy or Facilities Study

The formula is two times actual allocated study costs.

2 × $400,000
= $800,000

Compare with the $250,000 study deposit:

Withdrawal penalty
= GREATER OF($250k, $800k)
= $800k

During a Cluster Restudy

The stage formula becomes 5% of estimated Network Upgrade costs.

Using $38 million:

5% × $38m
= $1.90m

During the Facilities Study / after the Facilities Study report / after draft LGIA, before execution

The stage formula becomes:

10% × $38m
= $3.80m

After LGIA execution or unexecuted filing, before COD

The stage formula becomes:

20% × $38m
= $7.60m

Fox Run's exit price has moved from zero withdrawal penalty before the Cluster Study to a potential $7.6 million after the LGIA.

That is the commitment mechanism.

A cost shock can create a penalty-free exit — but only at defined stages

The pro forma LGIP also protects the customer from certain large cost shocks.

Two examples matter.

More than 25% increase after a Cluster Restudy

Assume Fox Run's prior report assigned:

Network Upgrades        $38.0m

and the most recent Cluster Restudy moves them to:

Network Upgrades        $50.0m

Increase:

($50m - $38m) / $38m
= 31.6%

That is greater than 25%.

A withdrawal after that restudy can fall within the specified withdrawal-penalty exemption.

More than 100% increase at the Facilities Study

Assume instead the Cluster Study identified $38 million and the Facilities Study report later identifies:

$80m

Increase:

($80m - $38m) / $38m
= 110.5%

That is more than 100%.

The pro forma rule provides another specified penalty exemption at that threshold.

These are not generic "cost went up, so we can leave" rights.

The timing and comparison points are defined.

Put them into the decision schedule.

A 24% restudy increase is economically ugly and still below the 25% exemption

The threshold creates a useful financing sensitivity.

Start at:

$38.0m Network Upgrade assignment

Now move to:

$47.0m

Increase:

($47m - $38m) / $38m
= 23.7%

That is a $9 million capex increase.

It is still below the more-than-25% restudy exemption threshold.

If Fox Run is otherwise subject to the withdrawal penalty and exits during the restudy stage, the 5% formula on $47 million is:

$2.35m

So the sponsor can face:

$9.0m increase in project capex
+
$2.35m withdrawal penalty to exit

subject to the exact tariff and the material-impact test.

The reform deliberately makes "the economics got worse" different from "exit is free."

Readiness deposits are security, not automatically sunk development expense

This distinction matters for portfolio budgeting.

Fox Run's Commercial Readiness Deposits can be posted through permitted forms of financial security.

They are not automatically the same thing as:

cash expense permanently lost

A project that proceeds can use the LGIA deposit as, or as part of, the security required under the LGIA.

A project that withdraws can have readiness security applied to its withdrawal penalty according to the tariff.

So the model should separate:

Sunk development cost
Cash collateral
LC usage
Surety usage
Study-cost exposure
Potential withdrawal penalty
Construction / upgrade security

A single line called "interconnection deposit" hides the sponsor's liquidity position.

The portfolio problem is bigger than Fox Run

One $7.6 million upgrade-security package is manageable for many developers.

Ten are different.

Assume a developer has five Fox Run-sized projects each reaching the LGIA stage with the same illustrative $38 million Network Upgrade assignment.

Combined readiness + LGIA security:

5 × $7.6m
= $38.0m

If posted entirely as letters of credit, $38 million of facility capacity is tied up before project construction security, PPA collateral and other corporate LCs.

If posted as cash, $38 million of liquidity is trapped.

If supported by surety, the balance sheet and indemnity capacity move somewhere else.

That is why the instrument belongs in the corporate finance plan.

The project model gives you the amount.

The portfolio treasury model tells you whether the developer can carry it.

The cluster timeline is a minimum architecture, not a promised COD

The pro forma process includes:

45 calendar days     Cluster Request Window
60 calendar days     Customer Engagement Window
150 calendar days    Cluster Study

That is already 255 calendar days from the opening of the request window to the end of the Cluster Study, before allowing for validation timing and report meetings.

If a restudy is needed:

up to another 150 calendar days

Then the Facilities Study has its own timing:

90 days     with a ±20% cost estimate
or
180 days    if the customer requests a ±10% cost estimate

Fox Run's schedule therefore should not use:

Order 2023 cluster = 150 days total

The 150 days is one study stage.

And if another project withdraws, restudy can still add another study cycle.

Cluster studies reduce serial cascading.

They do not abolish restudies.

Transmission-provider delay penalties are not a hedge for Fox Run's delay cost

Order 2023 added study-delay penalties:

Late Cluster Study              $1,000 / Business Day
Late Cluster Restudy            $2,000 / Business Day
Late Affected System Study      $2,000 / Business Day
Late Facilities Study           $2,500 / Business Day

But the detail matters.

Under the pro forma rules:

no penalty is assessed for a delay of 10 business days or less;
if the delay exceeds 10 business days, the calculation runs from the first business day after the deadline;
the penalties are capped by applicable study-deposit amounts;
customers can agree to a 30-business-day deadline extension in the circumstances described by the tariff; and
the penalty regime does not begin until the third Cluster Study cycle after the Commission-approved effective date of the transmission provider's compliance filing.

So a $1,000/day number in a presentation is not proof that Fox Run is economically protected.

Compare it with the first article's illustrative financing delay:

Average construction debt           $180m
Rate                                   7%
Extra delay                            8 months
Extra interest                        $8.4m

The study-delay penalty is an administrative incentive.

It is not a liquidated-damages package sized to reimburse project-finance losses.

Order 2023 did not make every regional queue identical

Everything above describes the FERC pro forma architecture.

Actual projects live under approved transmission-provider tariffs.

Regional filings can contain accepted variations.

Transition rules can apply.

Some RTOs already used cluster processes before Order 2023 and integrated the federal reforms into existing architectures.

So Fox Run's diligence sequence is:

FERC pro forma rule
        ↓
relevant transmission provider compliance order
        ↓
current approved regional tariff
        ↓
Fox Run's cluster / study agreements

Do not use a federal explainer as a substitute for the project tariff.

Use it as the benchmark against which the tariff is understood.

The queue page in Fox Run's model

I would separate four ledgers.

1. Process

Cluster Request Window
Customer Engagement Window
Cluster Study
Restudy(s)
Facilities Study
LGIA

2. Readiness / security

Application fee                      $5k
Study deposit                       $250k
Initial readiness                   $500k
5% readiness gate                   $1.90m total
10% readiness gate                  $3.80m total
LGIA-level combined security        $7.60m total

3. Withdrawal exposure

Before cluster study                 $0 penalty regime
Cluster stage                        $800k illustrative
Restudy                              $1.90m
Facilities                           $3.80m
Post-LGIA                            $7.60m

plus the material-impact test and applicable exemptions.

4. Project economics

Upgrade capex
Affected-system capex
Grid-ready date
Delay carry
PPA / tax / financing date effects

The first two tell you how much capital must be committed to stay.

The third tells you what walking away can cost.

The fourth tells you whether staying still makes economic sense.

That is the real first-ready, first-served model.

What Fox Run's investment committee should approve at each gate

At the interconnection request:

Are we willing to fund the $755,000 entry package and secure the required site position to learn the cluster result?

After the Cluster Study:

Is the project still viable at the assigned upgrade cost, and can we support the 5% readiness requirement?

Before the Facilities Study:

Is the project strong enough to double readiness security to 10% and continue refining the cost estimate?

At LGIA:

Are we willing to have a total security package equal to 20% of the estimated Network Upgrade assignment and live with a withdrawal penalty that can reach the same percentage before COD?

Those are investment decisions.

The queue is the process that schedules them.

The key diligence questions

For Fox Run:

Is the project size in the correct study-deposit tier?
Has the $5,000 non-refundable application fee been separated from refundable study security?
Is 90% site control actually demonstrated at request?
If a regulatory-limitation deposit is being used, does the project qualify for that exception and what is the $/MW amount?
Is the initial Commercial Readiness Deposit modeled at 2× the study deposit?
After the Cluster Study, is the model bringing total readiness security to 5%, rather than adding 5% on top?
Before Facilities Study, is total readiness security brought to 10%?
At LGIA, is the new deposit calculated as 20% less prior Commercial Readiness Deposits?
What actual Network Upgrade estimate drives each percentage?
What is the stage-specific withdrawal penalty?
Does the material-impact condition apply?
Has a >25% restudy increase or >100% Facilities Study increase created a specified penalty exemption?
Which deposit is cash, LC, surety or other accepted security?
How much aggregate interconnection security is the sponsor carrying across the portfolio?
Which timetable is federal pro forma, and which timetable is the actual regional tariff?

Fox Run entered the process with a $755,000 package.

Its $38 million Network Upgrade assignment turns the later 20% security level into $7.6 million.

And walking away can eventually cost the same $7.6 million if the withdrawal occurs after the LGIA and the penalty applies.

Order 2023 did more than turn a serial queue into clusters.

It turned queue progression into a sequence of increasingly expensive investment decisions.

Primary sources: FERC — Pro Forma LGIP · FERC — Order No. 2023 Explainer · FERC — Order No. 2023-A Explainer · FERC — Order No. 2023 Fact Sheet