By Amanda Durish Cook
MISO and SPP announced Friday they plan to relax barriers that have prevented them from agreeing to develop interregional projects.
The two RTOs will remove their $5 million cost threshold and joint modeling requirement for the projects, staff revealed during a July 13 conference call of the Interregional Planning Stakeholder Advisory Committee.
Removal of the $5 million cost standard will not affect other criteria, such as the 5% or higher benefit threshold for each RTO and the requirement that projects be in service within 10 years of approval, the RTOs said.
Instead of creating a joint model, MISO and SPP will now leverage their existing regional planning models to evaluate interregional projects. Eliminating the joint model requirement will shorten a lengthy study process and allow the RTOs to examine more potential projects, they said. MISO and PJM removed a similar requirement almost two years ago in response to a FERC complaint filed by Northern Indiana Public Service Co. (See FERC Orders Changes to MISO-PJM Interregional Planning.)
MISO Planning Adviser Davey Lopez said removing the joint model will eliminate inconsistencies between the joint model and the RTOs’ respective regional models.
“We’re both doing very robust regional reviews,” SPP Interregional Coordinator Adam Bell added.
Concerns over Cost Allocation
Bell said stakeholders were split over removal of the joint model; while some wanted the triple hurdle eliminated, others were concerned about equitable cost allocation absent a joint model. Had MISO and SPP approved an interregional project, the joint model would have determined each RTO’s share of the cost.
The RTOs said they will calculate adjusted production costs and avoided costs for all interregional projects using their regional calculations of benefits. They have pledged to provide interregional cost allocation examples to address stakeholders’ concerns about inequities and explore the possibility of adding a market-to-market benefit metric.
The Wind Coalition’s Steve Gaw stressed the need for the RTOs to develop an objective cost allocation plan rather than promising negotiations.
“For me, this isn’t sweeping things under the rug. This is sweeping things into a different room,” Gaw said. “If you’ve got two RTOs determining what their benefits are. … I think you have to have something that avoids you arguing over how the benefits are calculated in each of your regions.”
Other stakeholders also asked for a more specifics on cost allocation, and Lopez promised more discussion on the issue during the August IPSAC meeting.
“This is a difficult conversation to have without examples in front of us,” Bell acknowledged. He assured stakeholders the RTOs only arrived at the decision to remove the joint model after substantial discussion about how it would affect project cost allocation.
The two RTOs agreed in February not to pursue a 2018 coordinated system plan, which could have resulted in an interregional project, instead promising to examine their joint planning process and seek ways to improve interregional coordination.
The two have completed two coordinated system plan studies to date, but neither has resulted in a viable interregional project. During their 2016/17 study, the RTOs identified three possible projects, but all were disqualified by the $5 million cost requirement, Lopez said.
“I think the studies have shown us that there are some barriers,” Lopez said.
Bell said MISO and SPP will likely return to the IPSAC next month to seek approval to revise their joint operating agreement, which will be filed by the end of the year.
Bell said the RTOs hope to produce another coordinated system plan study in 2019, although filing timelines could interfere with the goal.
No Dent in MISO 345-kV Threshold
The JOA revisions will not include a provision to lower MISO’s requirement that market efficiency interregional projects be at least 345 kV.
“SPP continues to encourage MISO to pursue lowering its current 345-kV voltage threshold for SPP-MISO interregional projects,” SPP said. However, MISO said it continues to view the voltage threshold as a strictly regional issue, not up for discussion in the IPSAC because there is no voltage threshold criteria in the JOA. Lopez said MISO’s Regional Expansion Criteria and Benefits Working Group will continue to explore the effects of lowering the threshold.
MISO last month said it will revise its regional — not interregional — cost-sharing practices for market efficiency interregional projects with SPP in order to match its process for PJM seams projects, lowering the voltage threshold to 100 kV over some stakeholders’ objections. (See MISO to Lower SPP Interregional Project Thresholds.) MISO lowered its 345-kV threshold for MISO-PJM projects to 100 kV in 2016 under FERC’s orders.
The MISO-SPP plan also excludes a requirement that prospective interregional projects that were evaluated but didn’t pass a cost-benefit ratio be reviewed and voted on by both boards of directors. MISO said requiring such a move was unnecessary: Interregional projects that pass all criteria would still need to be approved by the boards.
