Everything old is new again. After initially appearing dead in the water, the postage-stamp cost allocation method for long-term transmission projects might be coming back in vogue in MISO.

The RTO’s Environmental Groups sector and a group of transmission owners breathed new life into the method at a teleconference Thursday when they advanced separate proposals on how to allocate the costs of MISO’s long-range transmission plan. (See MISO Analyses Show Reliability Woes Without Transmission Builds.)

The two groups suggested MISO consider a sub-regional postage stamp allocation for the Midwest and South regions if it can prove benefits are widely spread over the areas. The postage-stamp method, in which costs are recovered uniformly from all load in a defined area, has so far been generally unpopular with state regulators and stakeholders, especially those from MISO South. On the other hand, some Midwestern commissioners have said they support it.

MISO last summer overhauled its cost allocation procedures, eliminating a 20% postage stamp allocation for market efficiency projects (MEPs), lowering the voltage threshold from 345 kV to 230 kV and adding two new benefit measurements. (See MISO Cost Allocation Plan Wins OK on 3rd Round.)

The TOs also proposed that long-range projects cost at least $20 million, be 100 kV or higher and demonstrate a 1:1 or higher benefit-to-cost ratio over 20 years in order to be cost-shared. In addition to the 1:1 ratio and 100-kV minimum, the Environmental sector recommended a $5 million cost threshold and suggested benefits be measured over 40 years, rather than 20.

Stakeholders asked if it was even possible for MISO to gauge four decades of benefits. So far, the RTO is performing economic models that look 20 years ahead. Staff said they would have to find a way to extrapolate benefits over a longer horizon.

Sustainable FERC Project attorney Lauren Azar said reinstating a postage stamp rate for long-term transmission makes sense because the projects are intended to solve regional issues.

Madison Gas and Electric’s Megan Wisersky said a subregional postage stamp mechanism is a poor substitute to the more complicated task of singling out quantifiable benefits and assigning costs more accurately.

“The more we try to move away from it, it seems the more we’re coming full circle back to it,” Wisersky observed of the debate.

“This is a dance MISO has been doing as long as I’ve been engaged, and long before the [long-range transmission plan] was a glimmer in any one’s eye,” Union of Concerned Scientists’ Sam Gomberg said. He said the argument that the method is too speculative isn’t persuasive. “Utilities and regulators live in a world of speculation. We don’t wait for the system to crash before we build new facilities. I don’t know if I will live long enough to enjoy the bag of cherries I bought that is in my fridge, but I still bought them.”

Clean Grid Alliance’s Natalie McIntire said some stakeholders mistakenly believe that the long-range plan’s sole purpose is to facilitate new generator interconnections.

“We’re doing this planning study so we can reliably operate the grid with a very different mix of resources,” she said.

McIntire pointed out that even after long-term transmission projects are in operation, MISO will continue to perform interconnection studies and assign network upgrade costs to generator developers.

American Clean Power Association’s Daniel Hall agreed that a postage stamp treatment goes hand-in-hand with the long-term plan’s goal of “regional reliability in light of the resource evolution we all know is taking place.” He also said “parsing reliability and economic benefits” so meticulously becomes increasingly difficult as new players enter the MISO market.

Alliant Energy’s Mitchell Myhre said he didn’t see why MISO’s existing allocation for MEPs wouldn’t work for new long-range projects.

Jeremiah Doner, of MISO’s planning team, said the RTO isn’t convinced that simply using its current allocation for MEPs will be enough.  

“Given the types of projects we’re looking at, that method might be insufficient. But the MEP [allocation] is in the tariff, and it could be leveraged based on the circumstances of a project,” Doner said.

However, Doner said rapid decarbonization and electrification will most likely complicate the more cut-and-dried benefit identification of MEPs.

Stakeholders have also said MISO should consider one cost allocation method for transmission projects identified under a Future I analysis versus any new lines that come out of the upcoming Futures II and III analysis.

MISO is using its 20-year Future I — the most conservative of its three planning scenarios — in the first Midwestern study phase of the long-term transmission plan. Later phases of the study will examine MISO South under Future I and the entire footprint under Futures II and III, scenarios that predict more renewable penetration and electrification growth.