Competitive transmission developer LS Power on Thursday made a three-pronged attack on MISO’s cost-allocation structure with a trio of FERC filings against the rules.
Two of LS Power’s requests for rehearing pushed back against MISO’s contention that sub-230-kV projects do not demonstrate enough benefits to share costs regionally, while a third decries the RTO’s local allocation for baseline reliability projects.
LS Power said MISO’s use of an “arbitrary” 230-kV threshold for its market efficiency project (MEP) category, a class of projects that enjoy regionwide allocation, is wrong. The RTO gained FERC approval to use the 230-kV cutoff in late July; the commission’s acceptance also denied LS Power’s entreaty for a 100-kV threshold for MEPs (ER20-1723). (See MISO Cost Allocation Plan Wins OK on 3rd Round.)
The company sought rehearing on both its 100-kV petition and FERC’s cost-allocation order. It said relegating economically beneficial sub-230-kV projects to allocation only at the transmission-pricing-zone level does “real harm” and argued that projects as low as 100 kV have proven regional benefits.
“The evidence presented in the proceeding leaves no doubt that a 230-kV minimum voltage threshold for market efficiency projects will preclude from regional consideration sub-230-kV projects that have consumer and regional benefits,” LS Power said. “The commission’s acceptance of the limited expansion of the MEP category seems to conclude that lowering the voltage threshold to 230 kV would be ‘good enough’ and shirked its obligation under [Federal Power Act] Section 205 to fully evaluate whether a 230-kV minimum voltage threshold actually results in a just and reasonable rate in every case.”
The company said FERC dismissed its request for a 100-kV threshold “in the face of substantial evidence” that lines under 230 kV deliver economic advantages.
“[FERC’s] decision ignored evidence that MISO currently identifies the regional benefits of economic projects operating between 100 kV and 230 kV,” LS Power said.
The company also argued for a second time that MISO should devise a better allocation for its baseline reliability projects that identifies beneficiaries beyond transmission pricing zones.
Early this year, LS Power signed on to a complaint against MISO’s current location-based, cost-allocation methodology for baseline reliability projects (BRPs), saying it doesn’t comport with the commission’s principle that transmission projects’ beneficiaries should pay for them (EL20-19). FERC said the complaint failed to show that MISO’s current approach was unfair and said any spillover benefits were modest. (See FERC Upholds Cost Allocation on MISO BRPs.)
MISO allocates BRP costs only to local transmission zones where project facilities are physically located; costs are recovered by the transmission owners developing the projects.
LS Power said FERC was “presented with unrebutted evidence” that the current allocation methodology can result in unjust and unreasonable rates, and chose to ignore it.
“The commission’s complaint denial order appears to be based on the unsupported premise that the commission’s obligation to ensure just and reasonable rates is a ‘most of the time’ standard. There is no precedent to support such a laissez-faire approach to the commission’s obligations under the Federal Power Act,” LS Power wrote.
The company said FERC, in making its decision, instead “reverted to statistics that suggest that the current location-based, nonquantitative methodology gets cost allocation mostly right, most of the time, and therefore meets the commission’s statutory standard of establishing just and reasonable rates.”
LS Power said far from modest spillover benefits, BRPs passed benefits to outside zones 28 to 100% of the time. It again pressed for an allocation based on a line-outage distribution factor methodology.
