By Amanda Durish Cook

MISO’s Steering Committee last week declined to reconsider a stakeholder proposal that would allow funders of transmission upgrades for lines under 345 kV to recover some of their costs through the RTO’s allocation process.

Wind developer EDF Renewable Energy and nonprofit Wind on the Wires approached the committee during a July 26 conference call to insist again that costs for customer-funded upgrades be categorized as “non-[MISO Transmission Expansion Plan] upgrades,” a project type they said would address “chronic congestion on existing transmission elements that do not meet the criteria for market efficiency projects or multi-value projects.”

Under MISO’s current rules, only upgrades on lines 345 kV or above qualify as market efficiency projects.

The call marked the second time the issue had come before the Steering Committee, which had previously assigned the issue to MISO’s Regional Expansion Criteria and Benefits Working Group (RECBWG) in the spring. EDF representatives argued that the issue wasn’t given a fair hearing and was dismissed too quickly, and asked the committee to direct the RECBWG to re-examine the issue.

Xcel Energy’s Carolyn Wetterlin, chair of the RECBWG, said the working group generally agreed that “if a market participant chose to fund [an upgrade], they should have done it without an expectation of future reimbursement.” Stakeholders participating in the working group voted against taking up the proposal, which some attributed to buyer’s remorse after EDF voluntarily decided to upgrade the MISO grid but did not receive the expected benefits.

According to Wetterlin, RECBWG members pointed out that customer-funded upgrades are performed outside the MTEP. As such, they aren’t subject to the RTO’s transparent standards for determining whether a project is the most efficient solution for solving the transmission issue.

The RECBWG concluded that the issue is still not worth pursuing, Wetterlin said.

The ‘but for’ Principle

“We think there’s need for a deeper discussion at the RECBWG,” Wind on the Wire’s Natalie McIntire countered.

EDF argued that its simple cost reimbursement would only apply to new customers that could not have been granted new service by MISO “but for” the customer-funded upgrade.

“We’re trying to get some compensation when new users come on the grid,” said Bruce Grabow, an attorney representing EDF. “This wouldn’t be a full-blown cost recovery … it’s just a reimbursement of a portion of installed costs if the next customer coming down the pike couldn’t get network service but for the network upgrade.”

New interconnection customers can currently enter the grid and reduce some of the benefit that the original funders of the project had expected, as MISO grants non-firm usage rights to the customers that paid for the upgrades, he said.

Grabow said the poor financial benefits of market participant-funded projects are evident: No such projects were brought forward in MISO’s transmission plans from 2014 to 2016.

“This occurred notwithstanding known congestion on voltages below 345 kV. Participants see the need but are not utilizing this avenue because of the lack of reimbursement and/or retained benefit,” EDF and Wind on the Wires said in a joint presentation.

‘Devastating’ Rate Shocks

Indianapolis Power and Light’s Lin Franks said that “having after-the-fact cost allocation would seriously complicate” MISO’s planning processes.

“It could cause rate shocks that could be quite devastating,” Franks said, adding that customer-funded upgrades are “just the way the world works,” with customers accepting the risks of funding their own upgrades. She noted that transmission rates cover the cost of using existing upgrades on the system.

NRG Energy’s Tia Elliott said that the stakeholder process was not necessarily flawed even if EDF and Wind on the Wires did not receive the stakeholder response that they wanted from their proposal. ITC Holdings’ Cynthia Crane, who attended the RECBWG meetings, said she thought the issue was “properly vetted” at the RECBWG.

Elliott pointed out that the Steering Committee’s decision does not preclude the two companies from approaching the Advisory Committee with its proposal. And the two companies could always file a complaint at the FERC level, according to We Energies’ Tony Jankowski.

Participant-funded transmission projects have always been excluded from MISO’s cost allocation procedures, while projects not eligible for allocation can be recovered through a zonal transmission rate. The RTO is considering changes to its cost allocation rules — which have not been altered since the integration of MISO South in 2013 — especially given that Entergy’s integration transition period, which limits cost sharing in MISO South, expires next year. The RTO has said that it may lower the 345-kV threshold on market efficiency projects. (See MISO Stakeholders Debate Postage Stamp Cost Allocation.)