By Amanda Durish Cook

CARMEL, Ind. — MISO on Wednesday dismayed some stakeholders when it doubled back on a cost allocation proposal that would have lowered voltage thresholds and raised cost minimums for economically beneficial transmission projects.

FERC rejected MISO’s first cost allocation filing in June, finding it would have violated the principle of cost causation because projects proposed under the local economic transmission category would be required to demonstrate regional benefits while only being cost-shared on a local level.

That plan also sought to lower the regional market efficiency project (MEP) voltage threshold from 345 kV to 230 kV while keeping the current $5 million cost minimum for those projects, a measure that FERC did not address in its rejection.

In September, MISO circulated a proposal that sought to address the local project issue by lowering the voltage thresholds for regional MEPs to 100 kV, while increasing cost minimums to $25 million, a move intended to cover local projects with wider benefits. The plan would have also set a 100-kV threshold for interregional MEPs with PJM or SPP, without a cost minimum. (See Key Details Change in MISO MEP Cost Allocation Plan.)

MISO’s latest proposal, revealed during a Wednesday conference call of the Regional Expansion Criteria and Benefits Working Group (RECBWG), would restore key points of the original filing, including setting the voltage threshold for regional MEPs to 230 kV and observing a $5 million cost minimum. It would also require that local economic projects between 100 and 230 kV be allocated only locally.

But unlike the rejected plan, the proposal would also stipulate that local projects be reviewed on a local basis only, and not have to show regional benefits. MISO Senior Manager of System Planning Jarred Miland said the RTO now plans to perform only local benefit-to-cost analyses for local economic projects that are based on transmission pricing zones. If the lower-voltage projects show at least a 1.25:1 benefit-to-cost ratio to the transmission pricing zone where the project is located, then the costs of that project would be allocated to that zone.

MISO would first screen projects for possible benefits, then test them in modeling, Miland explained during Wednesday’s call.

“Since there’s not regional test, there’s not regional allocation. The difference is the local economic projects are going to be locally allocated to the local” transmission pricing zone, Miland said.

Blind to Benefits?

But several stakeholders said MISO’s new proposal is still at odds with cost causation.

They said MISO is wrongly presuming that all sub-230 kV projects cannot deliver regional benefits. Some asked if the RTO planned allocation exceptions for highly beneficial lower-voltage projects.

“I would say right now, the plan is what the plan is. There’s no intention to try to make those projects regional,” Miland responded. He said the new proposal is similar to MISO’s current practice, where all projects below 345 kV cannot be considered MEPs.

“We’re still dropping down from 345 kV to 230 kV. So that still helps,” Miland said, adding that MISO would still be positioned to approve more MEPs than it does now.

LS Power Manager of Transmission Policy Pat Hayes argued that because MISO would already screen lower-voltage projects for footprint-wide benefits, it wouldn’t take much additional effort to estimate regional benefits.

“You just can’t turn the model off and shield yourself from seeing adjusted production costs,” he argued.

MISO officials confirmed that they would see possible regional benefits in modeling lower-voltage projects but wouldn’t share them externally.

‘Head in the Sand’

WEC Energy Group’s Chris Plante said the regional economic benefits of projects 230 kV and below exist even if MISO doesn’t name them.

“The first proposal failed because we failed to identify beneficiaries of projects. This proposal is akin to putting a bucket of sand in the corner and sticking your head in it. Just because we don’t look elsewhere and don’t identify beneficiaries, doesn’t meant they don’t exist. … I think that this thought process is dead-on-arrival at FERC — it’s not going to fly,” Plante said.

Clean Grid Alliance’s Natalie McIntire agreed, saying MISO is choosing to be willfully blind to some project benefits and setting itself up to block some beneficial projects from proceeding.

“There isn’t a clear path forward for lower-voltage projects that bring wider benefits to zones,” she said.

However, other stakeholders said the new allocation plan was reasonable and that the 230-kV threshold isn’t arbitrary. Some pointed out that MISO only discloses regional benefits for projects 345 kV and above.

Plante said MISO might “temper” its proposal by making cost allocation “optional” for the zone that might host a regionally beneficial local economic project. That way, single zones wouldn’t be forced to foot the bill on projects positioned to benefit other transmission pricing zones, he said.

Miland said stakeholder opinions on the September proposal can be broken down into “those that didn’t like what we did and those that did like it.” MISO said a majority of its state regulators wanted it to follow FERC’s June rejection and refile the proposal, this time scrapping the local economic project category altogether, leaving projects below 230 kV again relegated to the RTO’s “economic other” project category, which also dictates that smaller economically beneficial projects are allocated to the transmission pricing zone where they are located.

Still other stakeholders said they didn’t support MISO’s proposed $25 million threshold or the competitive bidding exception for reliability projects that it determines have an immediate need. As in the first filing, the new plan would exempt from competitive bidding any MEPs needed within three years to mitigate reliability issues. The new proposal preserves that option.

MISO maintains that its proposal will better “align who pays with who benefits over time from a regional transmission expansion perspective.”

Stakeholders on the call asked if MISO has met with FERC staff to vet its newest proposal. Staff said they had not.

“We’ve been trying to weigh the feedback we received with what we think is the best path forward,” Miland said. “This hasn’t been taken lightly by any means internally here in MISO. This has been a full-time job for several of us for a handful of months.”

The change in tack on lower-voltage projects pushes out MISO’s refiling target.

“We were hoping to get a filing out the door before Thanksgiving. That’s probably not going to happen now,” Miland said.