Dive Brief:

• Incumbent utilities in the Midcontinent Independent System Operator’s footprint will be able to build certain transmission projects without a competitive bidding process under a unanimous Federal Energy Regulatory Commission decision issued Tuesday.

• Under the decision, the Midcontinent grid operator will assign transmission projects to incumbent utilities when at least 80% of the project’s costs come from upgrades to the existing system, a change the grid operator contends will facilitate a $10.3 billion set of just-approved transmission projects.

• Four FERC commissioners said in a concurrence, however, that the decision has the “negative consequence of expanding the scope of projects for which the transmission owner has less incentive to reduce cost and maximize benefits to the greatest extent possible.”

Dive Insight:

FERC commissioners agreed with MISO that requiring competition where only a small part of a project is new could create administrative challenges and delays that might stall transmission projects that benefit consumers.

MISO’s proposal was a “reasonable adjustment” to the grid operator’s competitive transmission process, FERC said in its decision, noting the proposal was similar to one the commission approved for the Southwest Power Pool.

“MISO has identified circumstances in which adjustments to the competitive transmission process similarly would allow MISO to better balance the expansion of competitive transmission opportunities with administrative efficiency, as well as to reduce uncertainty about which transmission projects are eligible for consideration pursuant to that process,” FERC said.

In opposing MISO’s proposal, NextEra Energy Transmission Midwest said the new policy would remove projects totaling about $489 million from competitive bidding in the grid operator’s just-approved transmission expansion plan.

Also opposing the proposal was a consumer alliance that includes the Coalition of MISO Transmission Customers, the Resale Power Group of Iowa, the Wisconsin Industrial Energy Group, the Iowa Office of Consumer Advocate and the Citizens Utility Board of Wisconsin.

The decision comes amid concerns that a lack of competition in transmission development is driving up electricity bills.

Last week, a coalition of groups asked FERC to order MISO to ignore state laws that give incumbent utilities the right to build planned transmission projects outside of a competitive bidding process.

In the decision, four FERC commissioners — Chairman Richard Glick, Allison Clements, Mark Christie and Willie Phillips — said they were concerned the way transmission lines are developed could hurt consumers.

“A lack of competition at the regional level for an increased number of projects selected as part of its transmission planning process, coupled with a less than robust level of scrutiny of such projects at the state level, may require greater cost scrutiny of those projects by the commission,” the commissioners said.

FERC is holding a technical conference Oct. 6 to examine ways to manage transmission costs, including by creating an independent transmission monitor. 

“We urge commenters to provide a detailed picture of the extent of cost review that currently exists at the state level for different types of transmission projects, including regionally selected projects not subject to competition such as MISO’s ‘upgrade’ projects described in this order, as well as local projects constructed by transmission owners,” the commissioners said.