By Amanda Durish Cook

MISO last week said it will still pursue major aspects of a cost allocation proposal that FERC rejected last month after it found that the RTO’s treatment of a new category of local economic transmission projects would have violated the principle of cost causation.

The extensive cost allocation plan would have lowered the voltage threshold for market efficiency projects (MEPs) from 345 kV to 230 kV, created two new project benefit metrics and eliminated a 20% footprint-wide postage-stamp cost allocation method for projects. It would have also provided limited exceptions to the competitive bidding process if a transmission project were needed immediately for the sake of reliability. (See MISO Allocation Plan Fails on Local Project Treatment.)

MISO says it will still seek most of those changes, staff revealed during a Wednesday conference call of the Regional Expansion Criteria and Benefits Working Group. Director of Economic and Policy Planning Jesse Moser said the RTO is still hopeful it can apply the cost allocation changes before the 2019 Transmission Expansion Plan is approved in late December.

Keep Local Economic Project?

But MISO’s proposal also sought to create a new project type — the local economic project — meant for smaller, economically driven transmission projects between 100 and 230 kV, where 100% of costs would be allocated to the local transmission pricing zone containing the line. The projects would not only have to meet a local benefit-to-cost ratio of 1.25 to 1 or greater within their pricing zones, they would also be required to show the same minimum regional 1.25-to-1 ratio required of MEPs.

FERC ultimately rejected MISO’s entire cost allocation proposal on the basis of the local economic project design. The commission said the requirement to show regional benefits only to charge project costs to local pricing zones would have violated its cost-causation principle.

MISO is currently undecided on whether to alter the local economic project criteria or abandon the proposal altogether.

The revised plan could include a “Local Economic Project 2.0,” Moser said, adding that MISO could remove the 1.25-to-1 regional benefit-to-cost ratio requirement and preserve the proposed project criteria.

“I have some reservations on even using the [local economic project] terminology because it was rejected,” Moser said.

But Clean Grid Alliance’s Natalie McIntire argued that MISO should commit to assigning costs commensurate with any regional beneficiaries, even for small transmission projects.

“We’re trying to get some direction. I don’t think we even have enough detail to call them options just yet,” Moser said. “We’re not proposing anything today.”

However, MISO is clear that it will not lower its proposed regional MEP voltage threshold from 230 kV to 100 kV, although some stakeholders on the call said the RTO should consider lowering the threshold across the board.

At any rate, staff said, FERC will address the 100-kV issue shortly in response to LS Power’s June complaint seeking to compel MISO to lower the threshold for competitively bid transmission projects to 100 kV. (See Complaint Seeks Bigger Role for Smaller MISO Projects.)

Interregional Aspect

While MISO will still seek to lower its internal MEP voltage threshold to 230 kV, it still must address a six-year-old FERC compliance directive to lower its interregional MEP voltage threshold to 100 kV.

FERC in 2013 ordered MISO and PJM to lower interregional project thresholds after Northern Indiana Public Service Co. complained about shortfalls in the RTOs’ interregional planning process.

Like the local economic project proposal, MISO had proposed that its share of interregional economic projects with voltages below 230 kV but 100 kV and above be fully allocated to the transmission pricing zones where the project is located. FERC similarly ruled out the proposal based on deviation from the cost-causation principle.

“MISO is not at a place where we have a preferred option or solution to address the interregional. We’re at the place where we have to do something for PJM lower-voltage projects, but maybe we leave SPP alone?” Moser said.

Moser said MISO could either file to lower the interregional project threshold to 100 kV on both seams or make a standalone filing to extend MEP cost allocation to lower-voltage interregional projects with PJM. He added those were merely options at this point. MISO is on a 90-day timeline to address the NIPSCO complaint order.

MISO asked stakeholders to weigh in over the next three weeks on which interregional filing path it should take.