An alliance of consumer groups on Friday jointly filed a complaint with FERC against MISO’s practice of respecting state rights-of-first-refusal (ROFR) laws in its regional transmission planning.
The consumer alliance asked the commission to block MISO and other RTOs from applying “anticompetitive” ROFR laws to their regional transmission planning and cost-allocation processes.
The group made the filing as the RTO’s Board of Directors prepares to consider Monday the $10.4-billion, 18-project long-range transmission plan (LRTP) for its Midwestern states. The portfolio is the first of four that MISO is planning to modernize its system.
The group said ROFR laws conflict with FERC’s rules on transmission competition and the commission’s obligation to establish just and reasonable rates.
The alliance includes the Industrial Energy Consumers of America, the Coalition of MISO Transmission Customers, the Wisconsin Industrial Energy Group, Resale Power Group of Iowa, Association of Businesses Advocating Tariff Equity and the Michigan Chemistry Council.
The groups said MISO should not hamstring itself by maintaining tariff provisions that prohibit it from holding a competitive solicitation for regionally cost-allocated projects. It said ROFR laws in that application are unjust and unreasonable.
FERC should prohibit the grid operator from recognizing the laws in the LRTP and order the RTO to hold competitive solicitations for projects located in those states, the consumer alliance said.
MISO estimates $1 billion of the portfolio will ultimately be open to competition. The grid operator said nearly $4 billion worth of the projects are considered upgrades to existing facilities, while another $5.5 billion of projects are in states that have enacted ROFR legislation.
Michigan, Minnesota, Iowa and the Dakotas all have ROFR laws; Wisconsin lawmakers have considered one but haven’t passed it. Additionally, MISO is likely to scrap its only market efficiency project assigned to MISO South after Texas’s ROFR legislation delayed the project’s start by years. (See MISO on Verge of Cancelling Hartburg-Sabine Tx Project.)
The RTO is planning to prepare requests for proposals where ROFR laws don’t prohibit competitive bidding. In those states without the legislation, incumbent transmission developers will need to provide to their regulators a notice of intent to construct.
The consumer alliance insisted that its complaint wasn’t seeking to slow down any reliability projects, but that MISO “delay issuing any notices to construct to projects currently protected by state ROFR laws” in the LRTP’s first cycle.
“Circumstances have substantially changed since 2013-2014 when the commission accepted the MISO tariff provisions … that mandate that MISO apply any state law that includes a ROFR to circumvent transmission competition in MISO,” the alliance said.
The alliance argued it’s now clear that ROFRs are being enacted to circumvent FERC’s competition mandate and “that the burdens of state ROFR requirements do not fall solely on customers within ROFR states, forcing pro-competition states to pay for the parochial policies of incumbent preference states.” They said ROFR laws are premised on the fear that incumbents will be outbid by competitive developers, are “economically inefficient by design” and “needlessly raise costs to consumers.”
“The costs at issue are far from modest, and so the time is ripe for the commission to act,” the alliance argued.
Industrial Energy Consumers of America President Paul Cicio said should $5.5 billion of transmission projects be automatically assigned to incumbent utilities, consumers in MISO Midwest will pay more for regional transmission than if they were bid out.
“We are requesting that the commission act quickly to find MISO’s provisions to be unjust and unreasonable and to require the replacement rate to be based on project costs resulting from competitive solicitation,” Cicio said in a statement.
