Dive Brief:

• State utility regulators and utility companies like NextEra Energy Resources and Alliant Energy generally support the Midcontinent Independent System Operator's (MISO) proposal that would allow sub-regional cost allocation for certain transmission lines, according to comments filed Monday at the Federal Energy Regultory Commission.

• The proposal would charge for multi-value projects across a Midwest and South subregion, instead of distributing costs across MISO's entire footprint. A coalition of groups for industrial companies oppose the plan, saying in part that the grid operator failed to show costs will be fairly allocated.

• The cost allocation proposal for multi-value projects would be used to pay for roughly $10 billion in transmission projects that are under consideration for MISO's northern region. MISO's staff is still developing a portfolio of transmission projects, which the grid operator's board could vote on in June.

Dive Insight:

MISO's proposal, filed in February at FERC, will help ensure cost recovery certainty for upcoming transmission line proposals and allow long-range transmission planning projects to move forward, the Organization of MISO States (OMS), which represents state utility commissions, said in comments at FERC. The transmission projects will improve grid reliability and allow more renewable energy projects to come online, OMS said.

MISO has committed to working with its stakeholders to fine-tune the cost allocation methodology by late 2023, according to OMS.

For more than a decade, MISO has developed multi-value projects, transmission lines that provide multiple benefits, such as lowering electricity costs and meeting state policy goals. The costs for the projects are spread across MISO's footprint.

MISO, however, expanded in 2013 to include Entergy's utilities in the south-central United States. That region is connected to MISO's northern footprint by 1,000 MW of transmission capacity, which sharply limits the flow of power between the areas and the sharing of the benefits of new transmission lines within each area. MISO's proposal will allow the costs of transmission projects that primarily benefit one region to be allocated to that region.

MISO's proposal should be a model for other regions and for FERC, which is preparing to propose changes to its transmission planning and cost allocation rules, NextEra told the commission in comments filed late last month.

"There is tremendous demand for clean, low-cost energy from renewable resources, and the transmission grid must be expanded to meet this need," NextEra said. "Initiatives such as this — with targeted cost allocation reflecting geographic subregions and power flow realities — are illustrative of what is needed to induce the development of transmission."

Alliant generally supports the plan, but urged FERC to make sure MISO doesn't change its cost allocation methodology in the future in a way that makes the grid operator's northern region pay for projects in its southern section, according to comments filed on Monday at the agency.

DTE Energy echoed Alliant's comments, adding that FERC should require MISO to consider consumer affordability in its transmission planning criteria, according to its comments at FERC. 

Groups representing large energy users from across MISO's footprint, which runs from Louisiana to Manitoba, urged FERC to reject the proposal.

"MISO has failed to demonstrate that transmission costs under its proposal will be allocated in a manner that is roughly commensurate with benefits," said the groups, which include the Illinois Industrial Energy Consumers, the the Louisiana Energy Users Group and the Wisconsin Industrial Energy Group.

After it finishes developing a first set of transmission projects for the Midwest region, called Tranche 1, MISO intends to plan a second set of projects for the area, according to OMS.

 

After that, MISO intends to develop transmission projects for its southern region, followed by an effort to increase transmission capacity between its two regions.