By David L. Cruthirds

Members of the Louisiana Public Service Commission last week expressed concern with the adequacy of the transmission construction MISO has planned for their state, which is seeing a surge in industrial development thanks to low natural gas prices.

MISO officials briefed the commissioners on the RTO’s 2014 Transmission Expansion Plan (MTEP) — the first transmission planning cycle to include the full participation of the MISO South Region — at the commission’s monthly Business & Executive (B&E) meeting in Baton Rouge last week.

The presentation by MISO’s outside counsel David Guerry and Patrick Brown, executive director of transmission asset management for MISO South, also included discussion of MTEP 2015.

MTEP 2014, approved by MISO’s board last month, included 369 projects totaling $2.5 billion.

MISO South (Arkansas, Louisiana, Mississippi and Texas) received $359 million, including 29 projects in Louisiana at an estimated $182 million. Distribution ($64 million), economic ($56 million) and baseline reliability ($41 million) projects dominate the work in Louisiana, with other reliability projects adding $17 million and “relaying” projects at $2 million.

MISO didn’t perform any calculations on projected rate impacts because the projects are deemed local and thus not eligible for regional cost allocation, Brown said.

Assurances Sought — and Obtained

Several commissioners asked for assurances that MISO will build enough transmission to serve Louisiana’s industrial growth. A state economic development report released last month found Louisiana ranked second in the South and fifth in the nation in private-sector job growth rate since 2008.

Commissioner — and gubernatorial candidate — Scott Angelle said he expected the transmission investment in Louisiana to be higher in light of the industrial expansion.

Commissioner Eric Skrmetta expressed concern about the WOTAB (West of the Atchafalaya Basin) and Amite South load pockets, saying that the Louisiana Energy Users Group (LEUG), which represents industrial customers, is “hyper-interested” in reliability issues in Amite South.

Entergy attorney Karen Freese responded by noting that MTEP 2014 includes $56 million in projects to improve reliability and increase imports into the Amite South/New Orleans area. The projects should enhance generation deliverability in Amite South, especially for one large industrial cogenerator that is a member of LEUG, she said.

The Amite South projects showed a 6-1 benefit-cost ratio, Brown said. Guerry said such economic-based projects are exactly the kind of projects LEUG is seeking.

Freese, referring to evaluations by both SPP and Entergy, said that the proposed “Houma loop” project in southern Louisiana wasn’t economically justifiable.

Skrmetta wasn’t entirely satisfied, saying the commission wants the ability to order transmission construction if MISO isn’t doing what needs to be done. He also asked Entergy and LEUG to meet with him to discuss the issues in more detail.

Guerry noted the commission has a key role in the transmission construction process because it must approve siting and cost recovery. He also noted the MTEP 2014 projects are expected to be in service in 2018, which is before the industrial expansion projects are expected to be in operation.

MTEP 15

Guerry said that while there wasn’t much involvement by MISO South stakeholders in MTEP 2014, the RTO is seeing more robust participation in MTEP 2015.

MISO plans to continue promoting increased participation and wider acceptance of the MTEP process across the MISO South footprint. MISO will hold planning forums as well as workshops to promote stakeholder education and increased involvement in MISO’s planning processes.

As part of MTEP 2015, MISO is evaluating four projects proposed by Cleco Power and 35 submitted by Entergy Louisiana.

Lake Charles Project

The briefing included a description of $187 million in transmission improvements planned by Entergy Gulf States Louisiana for the Lake Charles area.

Entergy says the project, which includes two new substations, expansion of a third and 25 miles of 500-kV and 230-kV transmission, will support industrial expansion, improve reliability and provide Southwest Louisiana access to cheaper generation elsewhere in MISO. Pending LPSC approval, construction is scheduled to begin in 2016 with a projected in-service date in 2018.

“Nearly 500 MW of new load have already signed up for facilities in the Lake Charles area and the potential exists for another 500 MW that are in various stages of exploration by new or existing customers in that part of the state,” Gulf States CEO Phillip May said in a statement announcing the project Jan. 8.

The project is an “out-of-cycle” proposal and will receive expedited review outside of the usual MTEP process. MISO is sensitive to the need to serve economic growth, so it is assigning a higher priority and streamlining the process as much as possible, Brown said.

Lake Charles is expected to be the state’s fastest-growing region, with $81.7 billion in industrial project announcements projected to add 12,000 jobs over the next two years, a 12% increase, according to an October 2014 report by Louisiana State University economists.

[Editor’s Note: Author David Cruthirds provides general regulatory and government relations consulting services to Sempra LNG, whose Cameron liquefied natural gas terminal may receive benefits from the Lake Charles project.]

Load Growth in MISO North

Skrmetta asked about generation trends in MISO North. Brown said MISO is projecting resource shortages in certain MISO North zones due to the Environmental Protection Agency’s proposed carbon regulations. Skrmetta noted MISO North is benefitting from generation located in MISO South, so that needs to be considered in the transmission cost allocation process. Guerry assured him it was.

Holloway Named LSPC Chair, Angelle Vice Chair for 2015

The commission unanimously elected Commissioner Clyde Holloway as chairman and Angelle as vice chairman for 2015 on the motion of outgoing Chairman Skrmetta.

The vote came at last week’s B&E meeting, which Skrmetta chaired at Holloway’s request. Holloway made a brief statement, thanking his colleagues for their support and saying he wants to keep Louisiana’s rates “the lowest in the nation.” According to the Energy Information Administration, the state had the second lowest residential rates in the U.S. in October 2014, the latest data available, second only to Washington state. Louisiana ranked eighth for all sectors.

Skrmetta was unanimously elected as the commission’s representative to the Entergy Regional State Committee and the Organization of MISO States.

Commissioner Foster Campbell, reported to be ailing with the flu, did not attend the meeting.