Refining California’s Grid Access Framework: CAISO’s Draft Final Proposal for Interconnection Process Enhancements 5.0

Legal Alert

10.21.2025

Introduction

On October 13, 2025, the California Independent System Operator (CAISO) released its Draft Final Proposal for Interconnection Process Enhancements (IPE) 5.0, continuing its multi-year effort to modernize and streamline the interconnection process for new energy resources.[1] On October 20, 2025, CAISO held a virtual stakeholder meeting to discuss CAISO’s proposal. The proposal builds upon reforms adopted 2024 and 2025, lessons learned from the implementation of Cluster 15, stakeholder feedback, and evolving procurement and reliability needs.[2]

Background

The reforms proposed in IPE 5.0 follow the series of reforms implemented under the IPE 2023 initiative, which included Tracks 1 through 3 and reforms such as adopting a zonal approach, scoring criteria, and heighted readiness requirements to proceed to the study phase of CAISO’s interconnection process. IPE 5.0’s scope is focused on adjustments to the recently implemented IPE reforms along with modifications to deliverability processes. IPE 5.0 reforms are intended to be implemented before Cluster 16 opens in October 2026. The reforms apply solely to the CAISO-controlled grid. The proposed changes fall outside the scope of Western Energy Markets’ joint or advisory authority under the Western Energy Imbalance Market and Extended Day Ahead Market Governance Charter.

Key Proposals

Non-LSE Commercial Interest Participation
CAISO proposes to remove the requirement that non-load-serving entities (non-LSEs) must support interconnection requests based on sustainability goals when selecting projects for the commercial interest scoring process.[3] This change is intended to acknowledge that non-LSEs may have diverse motivations, such as economic or operational needs, and aims to broaden legitimate participation in the commercial interest scoring process. CAISO states that the Cluster 15 scoring criteria data suggested that projects with non-LSE points were able to compete effectively in the scoring process, and that all projects that received non-LSE points advanced to the study process. CAISO will continue to vet non-LSE selections to ensure they are bona fide and unaffiliated with the interconnection customer.
Revised Cap on Full Deliverability Allocation Elections
CAISO proposes a new cap methodology for full deliverability allocation elections. Specifically, the lesser of 50% of an LSE’s forecasted resource adequacy (RA) load share (based on California Energy Commission’s Coincident Peak Demand forecasts) or 500 MW.[4] CAISO states that this reform is designed to prevent large LSEs from disproportionately influencing scoring outcomes while enabling smaller LSEs to support projects that meet their procurement needs. The cap only applies to an LSE’s selection of projects requesting Full Capacity Deliverability Status (FCDS) or Partial Capacity Deliverability Status (PCDS).
Integration of Distribution-Level Projects
Distributed energy resources (DERs) seeking deliverability and to participate in the CAISO market must participate in a cluster deliverability study under existing practice. However, CAISO proposes that DERs must now participate in the same scoring and study processes as transmission-connected projects.[5] As such, DERs will be included in the cluster scoring and 150% study limit processes, beginning with Cluster 16. This reform aims to utilize provisions in CAISO Tariff Appendix KK and ensure equitable treatment of Wholesale Distribution Access Tariff projects.
Deliverability for Operational Energy Only Projects
CAISO proposes to allow Energy Only projects in commercial operation in Cluster 15 and later to seek Transmission Plan Deliverability (TPD) through the commercial operation allocation group.[6] Under the current tariff, Energy Only projects that proceed to the cluster study may not obtain deliverability for the generating facility.[7] Under the proposed reform, Energy Only project eligibility for deliverability requires a five-year RA procurement agreement with an LSE.[8] CAISO states that this reform aims to respond to concerns about stranded capacity and align with procurement realities, while preserving the integrity of the deliverability allocation process.
Queue Management and COD Extensions
All projects seeking Commercial Operation Date (COD) extensions beyond seven years must demonstrate commercial viability through an executed power purchase agreement (PPA) that matches the project’s deliverability status.[9] Extensions requested by the interconnection customer, including those requested after GIA execution or the filing of an unexecuted GIA, will be capped at three cumulative years, excluding interconnection study delays or Participating Transmission Owners (PTO) construction delays.. If a project’s COD lapses, the project will be in default and will have the default cure period to obtain a PPA before the project is withdrawn. This reform aims to reduce queue stagnation and speculative filings.
Affected System Study Process Enhancements
CAISO proposes procedural refinements to its role as an affected system, including:[10]
- Require a $1,500 study deposit from the Affected System Customer.
- Clarify that the deficiency cure process repeats until all deficiencies are cured.
- Revise affected system study to only include reliability study elements deemed necessary by ISO or PTO based on the proposed interconnection.
- Allowing CAISO and the affected PTO to study the Affected System Customer(s) in coordination with the cluster study process.
CAISO states that these changes are designed to improve coordination with external balancing authorities and reduce administrative burden, while maintaining compliance with FERC Order No. 2023.
Commercial Readiness Deposit Timing
CAISO will require commercial readiness deposits only after projects have successfully completed scoring and ranking and proceed to the interconnection request validation step.[11] The deposit would need to be completed by the close of the cluster engagement window to proceed to the cluster study.
Elimination of the Pre-Application Process
CAISO proposes discontinuing the pre-application report process for small generators (≤20 MW), citing improved data transparency and limited utility.[12] This change removes Tariff Appendix KK Section 1.3 and reflects a shift toward self-service data access.
Generator Interconnection Deliverability Allocation Procedures (GIDAP) Executive Dispute Committee Flexibility
Projects that are withdrawn may submit an appeal to the GIDAP Executive Dispute Committee. To ensure timely resolution of withdrawal appeals, CAISO proposes allowing designated vice presidents to appoint delegates when unavailable to preserve the five-business-day resolution timeline and mitigate administrative bottlenecks.[13]

Topics Deferred or Not Advancing

CAISO has opted not to pursue reforms in several areas, including:

Methodology for awarding commercial interest points based on partial capacity[14]
Inclusion of the Department of Water Resources as an LSE[15]
Deferral of deliverability for long lead-time resources[16]
Adjustments to GIA execution timing[17]
Caps on Energy Only projects[18]

CAISO contends that these reforms lack stakeholder consensus, or existing processes are legally sufficient and operationally sound.

Implementation Timeline

CAISO anticipates presenting the Final Proposal to its Board of Governors in March 2026, with stakeholder engagement continuing through early 2026. The reforms are intended to be in place prior to the opening of Cluster 16 on October 1, 2026. Comments on the Draft Final Proposal are due November 3. The Final Proposal will be issued on December 22, 2025.

For more information about CAISO’s recent interconnection reforms please see:

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[1] CAISO, Interconnection Process Enhancements 5.0 Draft Final Proposal (Oct. 13, 2025) (IPE 5.0 Draft Final Proposal), https://stakeholdercenter.caiso.com/RecurringStakeholderProcesses/Interconnection-process-enhancements-5-0.

[2] See, e.g., CAISO, Order on Compliance, Docket No. ER24-2042-000, 191 FERC ¶ 61,119 (May 15, 2025) (partially accepting CAISO’s compliance filing under Order Nos. 2023 and 2023‑A); CAISO, Order on Tariff Revisions, Docket No. ER24-2671-000, 188 FERC ¶ 61,225 (Sept. 30, 2024) (accepting CAISO’s Track 2 tariff revisions, covering interconnection intake and queue management); CAISO, Order on Tariff Revisions, Docket No. ER25-131-000, 189 FERC ¶ 61,195 (Dec. 16, 2024) (approving additional tariff amendments for earlier queue clusters (Clusters 14 and prior) aimed to improve commercial readiness and Generator Interconnection Agreement (GIA) performance).

[3] IPE 5.0 Draft Final Proposal, §2.1.

[4] IPE 5.0 Draft Final Proposal, §2.2.

[5] IPE 5.0 Draft Final Proposal, §2.3.

[6] IPE 5.0 Draft Final Proposal, §3.1.

[7] Id. at n.7 (citing CAISO Tariff, Appendix KK, Section 4 (Cluster Study Criteria) (Oct. 1, 2024)).

[8] IPE 5.0 Draft Final Proposal, §3.1.

[9] IPE 5.0 Draft Final Proposal, §4.1.

[10] IPE 5.0 Draft Final Proposal, §4.2.

[11] IPE 5.0 Draft Final Proposal, §4.3.

[12] IPE 5.0 Draft Final Proposal, §4.4.

[13] IPE 5.0 Draft Final Proposal, §4.5.

[14] IPE 5.0 Draft Final Proposal, §5.3.