MISO said it will create more public notices throughout its variance analysis, the process it uses to reassess transmission projects that experience cost increases or other obstacles to construction.

However, industrial customers stillare asking the RTO to enact stronger cost-containment boundaries on transmission projects. (See End Users Push MISO for More Intensive Cost Overrun Evals on Tx Projects.)

Jeremiah Doner, MISO director of cost allocation and competitive transmission, said the variance analysis remains an efficient avenue for the RTO to track spending, permitting and progress on pricier or stalled projects.

“We haven’t identified an issue that we think needs to materially change the process today,” Doner said during a May 27 meeting of the Regional Expansion Criteria and Benefits Working Group. He added that he understands why stakeholders would call for added cost controls given the “significant investment” members have made in transmission in recent years.

However, Doner said MISO could alert stakeholders more clearly when it has found grounds for a variance analysis, update them as it studies projects and better communicate resolutions.

The RTO has not “sent out a widespread communication” when a project enters a variance analysis, Doner said, but moving forward, it will send mass emails to stakeholders and dispatch a representative to make announcements before the Planning Advisory Committee. When the study concludes, MISO will explain the outcomes to the committee.

MISO previously made postings on its website only to publicize variance analysis steps.

The new process will be reflected in MISO’s Business Practices Manuals, Doner said. While MISO wants to report as much as possible on its variance analyses, the RTO is limited by confidentiality provisions between it and transmission developers. Doner called variance analyses “very situation-specific.”

The Union of Concerned Scientists’ Sam Gomberg asked if MISO had ever deemed a transmission project’s cost increases unreasonable.

“Thankfully, our sample size for that question is extremely small,” Doner said. MISO has encountered only three instances of a 25% or more cost increase on transmission projects, he said. The RTO found the cost increase was prudent on one, worked on a mitigation plan for another to ensure costs did not further increase, and has yet to make a determination on the last project.

MISO is conducting one variance analysis at the moment, investigating a 2.5-times increase in costs on one of its long-range transmission projects from its first portfolio. Incumbent developer Northern Indiana Public Service Co.’s 345-kV Morrison Ditch-Reynolds-Burr Oak-Leesburg-Hiple line, in Illinois and Indiana, now is expected to cost $675 million, up from MISO’s estimated $261 million. (See Cost Overruns on Project in 1st LRTP Prompt MISO Analysis.)

RTO staff perform variance analyses on regionally cost-shared transmission projects when they encounter schedule delays, permitting challenges, significant design changes or experience at least a 25% cost increase from original estimates. The studies also are triggered when developers find themselves unable to complete the project or if they default on the terms of their selected developer agreement.

After completing the analysis, the RTO either can let projects stand, develop a mitigation plan for them, cancel them or assign them to different developers if possible. A committee of MISO employees selected by MISO executives makes calls on how to deal with projects.

MISO has completed nine variance analyses to date. For most studied projects, the RTO either has drawn up mitigation plans or let projects stand. While the grid operator never has reassigned a project developer through the analysis, it has canceled one 500-kV project in MISO South because of a right-of-first-refusal law in Texas. (See FERC Rejects Last-ditch Effort to Save Tx Project.)

McNees Wallace & Nurick attorney Ken Stark, representing MISO’s End-Use Customer sector, said he still is looking for a more restrictive cost increase threshold than 25%. Stark said MISO could consider a 15 or 20% threshold on cost overruns to trigger the analysis, instead of his originally suggested 10%.

Stark also continued to advocate for an independent third party to evaluate cost overruns or annual informational reporting to FERC on transmission projects that go over budget. Stark dropped a previous recommendation that the Organization of MISO States or the Independent Market Monitor take an active role in evaluating project costs. Multiple stakeholders said those two entities are ill-suited for reviewing transmission: OMS because it represents state regulators that ultimately approve routes and certifications of public convenience and necessity; and the IMM because its purview is markets, not transmission.

MISO transmission owners at the meeting said there did not appear to be a need to install more restrictive thresholds or further checks and balances. They maintained the status quo variance analysis properly evaluates changes in projects.

Duke Energy’s Jay Rasmussen said the variance analysis remains appropriate and that MISO, as an independent entity, is up to the task of reviewing projects. He said more frequent updates from the RTO on the analyses should put more stakeholder attention on transmission costs.

“We think MISO’s approach is a good one at this point and see no need to tinker with it,” Ameren’s Justin Stewart agreed.