FERC granted rate incentives for the priciest project to come out of MISO’s 2024 Transmission Expansion Plan (MTEP 24), setting off friction between commissioners.
FERC approved Allete’s request for abandoned plant and construction work in progress incentives on a $1 billion modernization of subsidiary Minnesota Power’s circa-1970 HVDC line. The March 17 order had two commissioners disagreeing with how incentives were awarded on at least some of the work (ER25-948).
The commission fully allowed the pair of incentives for the portion of the line in Minnesota — where the certificate and route permitting already are approved — and conditioned incentives for the North Dakota portion of the line on state regulators’ approval of construction. In North Dakota, work awaits an order from the Public Service Commission on certificate and route permit applications. Allete said that decision is likely in the third quarter of 2025.
Allete sought transmission rate incentives under FERC’s rebuttable presumption that the line supports reliability or reduces congestion. The company said the project being subjected to MTEP studies and its ultimate inclusion in the portfolio is evidence of its usefulness.
MISO approved most of the four-part project under a seldom-used “transmission delivery service project” category as part of MTEP 24. (See MTEP 24 Reaches $6.7B; MISO Ending Rush Island Reliability Agreement in Mid-October.)
Allete said the aging, 465-mile line stretching from west-central Minnesota to central North Dakota is experiencing more frequent outages. The company breaks down the project into four components: $828 million in converter station replacements, $112 million in AC transmission facilities upgrades, a $68 million HVDC transmission line upgrade and a new, approximately $24.5 million Nelson Lake substation.
However, FERC said the project’s MTEP status didn’t prove it was the result of a fair and open regional planning process that accounts for reliability and congestion benefits. The commission cast doubt that MISO would perform the usual, comprehensive studies on that particular category of project. It also pointed out the project’s Nelson Lake substation is categorized as an “other” reliability project and also not obliged under MISO’s more rigorous studies.
The commission instead relied on the state commission processes in Minnesota and North Dakota for the project to meet the federal standard for incentives.
FERC paused before approving incentives for the $68 million line-upgrade section of the project. The commission acknowledged there’s almost no chance the Minnesota and North Dakota commissions would explicitly evaluate the upgrade of existing line because the work wouldn’t alter the original voltage, and the project would remain within its existing right of way. Nevertheless, FERC decided the line is “integrally related to the other components” and therefore also entitled to incentives.
Commissioner Lindsay See said while she was “glad” to agree with the majority on most of the incentives, she said she would have stopped short of granting Allete incentives for the line-upgrade portion of the project. She dissented in part from the order.
Commissioner Willie Phillips wrote in a separate concurrence that while he was pleased the project ultimately won incentives, he was troubled that FERC would conduct an on-the-spot reevaluation of MISO’s transmission delivery service project classification and deem it deficient against the rebuttable presumption standard.
Phillips also said the commission deviated from precedent without explanation when it made the effective date of a portion of the incentives contingent on North Dakota’s approval of construction instead of the March 18, 2025, effective date Allete requested for the entire project.
“As such, this order represents an attempt by the current commission to modify our longstanding policy on transmission incentives on a case-by-case basis,” Phillips wrote. “Our practices are not set in stone, and I believe it is both reasonable and appropriate to continually reassess and reevaluate them based on experience, changed circumstances, and achieved wisdom.
“But to do so in the context of an uncontested application, without notice or opportunity for interested parties to comment on these changes, lacks transparency and creates regulatory uncertainty that could undermine the very purpose of FPA [the Federal Power Act].”
