MISO’s end users continue to call for a more stringent variance analysis, the review process MISO uses to investigate transmission projects that incur cost overruns or encounter other difficulties. 

At MISO’s April 15 cost allocation meeting, attorney Ken Stark, representing end-use customers, called for more “insight and transparency into” the variance analysis as well as a lower, 10% threshold on cost overruns to trigger the analysis. 

Stark said the Organization of MISO States (OMS), or the Independent Market Monitor, could play a role in evaluating project costs as part of the analysis. He said OMS and the IMM could sit in on MISO’s confidential initial inquiry stage, then offer advice to the RTO.  

Stark said MISO’s Board of Directors could use an expanded authority to review and issue a final determination on triggered projects, either accepting cost increases, recommending changes or making the call to suspend or cancel projects. 

The end-use sector said MISO also should consider incorporating a “feedback loop,” where after a variance analysis, MISO publishes a proposed mitigation plan open to stakeholders’ reactions over 30 days. Stark also said the RTO could file an annual report with FERC summarizing any variance analyses it performed.  

The end-use customer sector and the Coalition of MISO Transmission Customers have said MISO’s 25% cost overrun trigger to study regional projects is too high and should be lowered to about 10%. (See Stakeholders Want More from MISO on Tx Project Cost Containment.)  

MISO staff perform variance analyses on regionally cost-shared transmission projects that encounter schedule delays, permitting challenges or significant design changes or experience at least a 25% cost increase from original estimates. The studies also are triggered when developers find themselves unable to complete the project or if they default on the terms of their developer agreement. 

After completing the analysis, MISO can either let a project stand, develop a mitigation plan for it, cancel it or assign it to different developers if possible. A committee of MISO employees selected by executives makes calls on how to deal with such projects. 

Stark said SPP’s business practice manuals require projects to get a check-in at a 10% overage and undergo a review at 20%.  

“Given the sheer investment that’s happening, even a 10% overrun is significant from a cost standpoint,” Stark said. “We feel very strongly that the trigger should be lower given the lack of projects that go through the process.”  

Werner Roth, an economist with the Public Utility Commission of Texas, said he was uncomfortable with OMS conducting an additional review on cost increases in cases where projects haven’t yet been assigned a proceeding at a state commission.  

Sustainable FERC Project’s Natalie McIntire said she’s concerned a more sensitive study process would have MISO reviewing otherwise routine cost increases.  

“There are a variety of reasons for all kinds of cost increases for all products we use day to day,” she said. “We don’t want to have this sort of thing triggered for every project MISO approves.”  

Stark agreed that he didn’t want MISO to be “bogged down.”  

Other stakeholders said the IMM shouldn’t be prescribed transmission monitoring duties at a time when MISO is seeking to clarify with FERC whether the IMM should be involved in its transmission planning activities at all. (See MISO Intent on Answers as to IMM Role in Tx Planning.)  

Stark said another independent third party could evaluate projects. He said MISO could benefit from a set of “third party, disinterested eyes” to make sure MISO gets the best transmission construction outcomes.  

Some transmission owner representatives said they weren’t sure if dropping the threshold would accomplish much. American Transmission Co.’s Greg Levesque said it seems the RTO would spend more money for an independent review just to conclude the projects are necessary and should continue. 

ITC’s Cynthia Crane said the end-use customers haven’t presented a “compelling case” that MISO’s current setup is lacking. Crane said it doesn’t seem worth upending the roles and responsibilities of state regulators, the IMM and the MISO board.  

Stark said there should be more attention on containing costs for transmission projects.  

MISO maintains it doesn’t need to increase its threshold to evaluate projects. “We think we’re at the right spot,” Jeremiah Doner said.  

MISO has said it can indicate more clearly to stakeholders when it completes a variance analysis or develops an action plan. But it warned it can’t always share confidential project information. 

Staff plan to appear before stakeholders at the May cost allocation meeting with some minor edits to its variance analysis. The amendments would focus on MISO’s notification and communication commitments to stakeholders when it’s conducting a variance analysis. 

MISO is conducting one variance analysis now, investigating a 2.5-time jump in costs on one of its long-range transmission projects from its first portfolio. Incumbent developer Northern Indiana Public Service Co.’s 345-kV Morrison Ditch-Reynolds-Burr Oak-Leesburg-Hiple line in Illinois and Indiana now is expected to cost $675 million, up from an estimated $261 million. (See Cost Overruns on Project in 1st LRTP Prompt MISO Analysis.)  

“We will get to a determination this year,” Vice President of System Planning Aubrey Johnson said during March board week, though he didn’t have a specific date to expect MISO’s conclusion.