FERC on Tuesday rejected transmission customers’ complaint over MISO’s seven-year-old cost allocation plan for baseline reliability projects (BRPs).

The commission said the Coalition of MISO Transmission Customers, Industrial Energy Consumers of America and competitive transmission developer LS Power failed to show that MISO’s current allocation for BRPs is unjust and unreasonable (EL20-19).

The groups filed the joint complaint early this year, alleging that MISO’s location-based cost allocation methodology doesn’t square with the commission’s principle that beneficiaries of transmission projects should pay for them. (See Groups Lodge Complaint over MISO BRP Allocation.) In MISO, BRP costs are allocated only to local transmission pricing zones where project facilities are physically located.

They said MISO’s BRP allocation fails to identify all beneficiaries, arguing that the RTO should return to a cost allocation based on a line outage distribution factor (LODF) methodology, the BRP method in place prior to 2013. The LODF method would expand the number of projects eligible for competition under FERC Order 1000, they said.

But FERC said the arguments weren’t enough to upend its previous finding that the transmission pricing zone where a BRP is located enjoys “most of the benefits provided by that project.”

“Therefore … assigning all of the associated costs to that pricing zone results in an allocation of costs that is roughly commensurate to the distribution of the project’s benefits,” FERC said.

The commission also said the complainants didn’t refute its finding when it approved MISO’s classification of BRPs as local transmission facilities that the “spillover of benefits to other zones is modest enough to make the local allocation of costs ‘roughly commensurate’ with the allocation of benefits.”

“While multiple court decisions acknowledge the difficulty of measuring benefits to assess adherence to the cost-causation principle, courts ‘have never required a ratemaking agency to allocate costs with exacting precision’ and have not required, as a rule, ‘that the commission has to calculate benefits to the last penny, or for that matter to the last $1 million or $10 million or perhaps $100 million,’” FERC said, citing the D.C. Circuit Court of Appeals.

The commission also said there was a difference between local transmission facilities built to meet reliability standards, such as BRPs, and transmission projects in an RTO’s regional transmission expansion plans. BRPs wouldn’t be a good fit for competitive bids, FERC said.

“Because the issues that BRPs are designed to address are specific and localized, we find that complainants have not demonstrated that it is no longer just and reasonable for MISO to maintain its current BRP cost allocation method,” the commission wrote.

The complainants said BRPs could be compared to its cost allocation plan for a local economic project category that would be tested for regional benefits, then only cost-shared on a local basis, which FERC rejected twice. (See Another Rejection for MISO Cost Allocation Plan.) (See related story, MISO Cost Allocation Plan Wins OK on 3rd Round.)

FERC said the two were not alike.

“Unlike the 2019 regional cost allocation order, the complaint does not allege that MISO’s BRP cost allocation method identifies BRP benefits and chooses to disregard them for purposes of cost allocation. Rather, complainants argue that the current BRP cost allocation method does not attempt to identify benefits outside the BRP’s local transmission pricing zone. However, we reiterate that complainants have not met their burden to show that the current cost allocation method does not result in an allocation of costs that is at least roughly commensurate with the distribution of benefits,” the commission said.

The complaint was met with mixed reactions earlier this year from MISO’s stakeholder community. Some said the complaint sought to circumvent the RTO’s stakeholder process. Others said it would be irresponsible to open reliability projects to competitive bidding. Others still said reliability is a state responsibility and argued that BRPs largely demonstrate only local benefits. Regulators from the Organization of MISO States largely opposed the complaint.

MISO itself argued that the LODF methodology is a measure of impacts rather than benefits.