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MISO cost-allocation plan to ease renewable transmission [free access]

Midwest Independent Transmission System Operator’s (MISO) proposal outlining the region's transmission cost-allocation methodology is expected to create a new category for costs related to transmission projects built specifically to meet state or future federal renewable energy mandates. These projects will be categorised as multi-value projects (MVP) and the costs will largely be socialised across the region, a proposal that will likely anger proponents of the beneficiary-pays methodology.

The MISO tariff filing, which must be submitted to the Federal Energy Regulatory Commission (FERC) by July 15, comes after months of contentious negotiations among Midwestern utilities that are deeply divided over the cost-allocation issue. Some groups, like Ohio-based American Electric Power (AEP) and the independent transmission company ITC Holdings Corporation, support broad socialisation of transmission costs, while others like Michigan-based CMS Energy support allocating costs to specific beneficiaries of new transmission.

At the same time, the filing comes just weeks after FERC issued a notice of proposed rulemaking (NOPR) on transmission cost-allocation and planning that largely defers to regional approaches, although it specifically requires that cost-sharing be broadly commensurate with benefits  expected to accrue to the entity.

By allocating the costs of building new MVP transmission projects across the region, the MISO will eliminate charges to the generator. But proponents of socialisation are concerned about the way charges for network upgrades for generators to interconnect to new lines are allocated. In an apparent compromise, for 300 kV lines and above, 90 per cent of costs will be charged to generators and 10 per cent will be assigned to the region. For lines below 300 kV, 100 per cent of the costs will be assigned to the generator. Still other groups are concerned about what they see as a lack of specificity in MISO's definition of an MVP project.

FERC's decision on the MISO filing will hint at how the commission will deal with future cost-allocation filings under its pending proposal on the issue, even though it has not been officially approved by the commissioners. MISO filing will face some trouble at the commission because the FERC NOPR on cost-allocation says 100 per cent participant funding is not just or reasonable. Cost-allocation for network upgrades is 90 per cent for generators, raising questions about whether the figure is too high from the commission's perspective.