By Amanda Durish Cook and Tom Kleckner
INDIANAPOLIS — MISO and SPP have filed a settlement agreement with FERC allowing MISO to use the SPP transmission system to transfer power freely between its North and South regions.
The settlement (ER14-1174, et al.) eliminates the $9.57/MWh hurdle rate established in 2014 after SPP complained that MISO’s use of the SPP grid exceeded a 1,000-MW transfer limit in their joint operating agreement.
The agreement also supplants MISO and SPP’s Operations Reliability Coordination Agreement (ORCA), set in place in early 2014 to address capacity sharing across the region.
Six transmission owners outside of MISO and SPP — Southern Co., the Tennessee Valley Authority, Associated Electric Cooperative, Louisville Gas and Electric, Kentucky Utilities and PowerSouth Energy Cooperative — signed off with the two RTOs on the deal.
Moving forward, MISO’s compensation of SPP and the independent transmission owners will be determined through application of a capacity factor for flows exceeding the existing 1,000-MW contract path. New directional transfer limits were included in the deal: Power flowing from north to south is limited to 3,000 MW, while power flowing south to north is capped at 2,500 MW. Otherwise, the capacity usage provision between MISO and SPP under their joint operating agreement stands intact.
Under the settlement, MISO will pay SPP and the independent transmission owners $16 million — $8 million per year — to settle all claims of compensation from Jan. 29, 2014, to Jan. 31, 2016. Sixty percent of the funds will be paid to SPP, while the remaining 40% will be disbursed to the independent transmission owners. SPP said it will distribute the funds it collects to its members. The RTO will have to file the proposed distribution method with FERC because the funds are not being collected under its Tariff.
The settlement creates an operating committee to manage any disputes that may arise. The committee will be composed of two members each from MISO, SPP and the independent TOs.
The agreement will last seven years from the date of the initial complaint in January 2014. In early 2021, the parties will have the opportunity to give notice to terminate or revisit settlement provisions.
Jennifer Curran, MISO’s vice president of system planning and seams coordination, said that the RTO will “continue to evaluate if there are … appropriate alternatives to the agreement,” including expansion of its own grid to reduce the use of its neighbors’ systems.
“That work will be ongoing to see if there could or would be appropriate transmission solutions,” she said during a press conference.
In recognition of the limits of the 1,000-MW contract path, FERC on Thursday granted MISO a year-long extension on a waiver of Tariff provisions and North American Energy Standards Board rules on the processing of long-term firm transmission service requests (TSRs) between MISO South and MISO Midwest or PJM (ER14-2022-001). “A number of long-term TSRs remain in the queue that seek capacity from the MISO South region to non-contiguous geographic regions outside of MISO. MISO expects the number of these already-sold long-term TSRs to exceed the 1,000-MW threshold until 2019. MISO intends to honor fully these transmission commitments, but they make it very difficult for MISO to process adequately any additional long-term TSRs,” MISO wrote in the waiver request.
The waiver relaxes processing, assessment and timing regulations on long-term TSRs. MISO said that without the waiver, it would be forced to deny the requests.
The waiver, which expired April 1, 2015, now lasts until April 1, 2016 or until the resolution of the dispute between MISO and SPP.
Curran said MISO will file with FERC to remove the hurdle rate.
“We’re excited to have made this filing today. We think it’s a good compromise. Most importantly, it provides us clarity,” Curran said. “It took a lot of work across all parties.”
David Kelley, SPP’s director of interregional relations, said SPP’s main objective was to protect the interests of its members. He called the settlement a “mutually beneficial agreement.”
“Both sides weighed the risks of not settling and realized both parties were better off not litigating and reaching consensus instead. We had some uncertainty, too, for our members, with continued litigation,” Kelley said.
FERC set the dispute for hearings and settlement negotiations in March 2014. The parties met for seven settlement conferences at the commission’s offices in Washington.
MISO said the settlement will allow cost-effective energy delivery through continued shared use of the transmission system.
“We are pleased to have reached a resolution that provides electricity savings to consumers across the MISO region and brings clarity to our members and all stakeholders,” MISO CEO John Bear said in a statement. “With the issue of capacity sharing behind us, we can now collectively return our full attention to the significant challenges facing the industry.”
SPP CEO Nick Brown also praised the arrangement.
“As the SPP region grows and we continue to modernize the electric grid, cooperation with our neighboring regions has never been more important,” Brown said in a statement. “I am pleased we were able to reach this agreement with MISO to ensure that our member companies and their customers are compensated for the use of the SPP transmission system.”
