FERC on Tuesday approved Great River Energy’s request for transmission rate incentives for two MISO Multi-Value Projects (MVPs) it is working on: the Iron Range-Benton County-Cassie’s Crossing project and the Big Stone South-Alexandria-Cassie’s Crossing project (ER23-513).

The incentives for the two transmission projects include construction work in progress (CWIP) for the Iron Range project and the recovery of 100% of prudently incurred costs in the event they are abandoned.

GRE is an electric generation and transmission cooperative in Minnesota that provides wholesale electric service to 28 co-ops there and in Wisconsin. The Iron Range and Big Stone projects are both part of the MVPs that MISO approved in its 2021 Transmission Expansion Plan.

Iron Range involves the construction of a new 150 mile, double-circuit, 345-kV line from Minnesota Power’s existing Iron Range Substation to GRE’s existing Benton County Substation, replacing some existing lines and upgrading substations. GRE owns 52.3% of it, with the rest belonging to Minnesota Power, and its total cost is $969.9 million.

The Big Stone project involves the installation of a new 128-mile, single-circuit, 345-kV line between the Big Stone substation in South Dakota and the Alexandria substation in Minnesota, and a second 345-kV line being added between Alexandria and Monticello substations. The total cost of the project is $573.5 million, but GRE is only responsible for $27.5 million, as multiple firms are building the line.

Both lines should relieve potential reliability issues, while the Iron Range line is expected to help connect renewable power to market as well.

FERC said that because the two projects cleared MISO’s planning process, which evaluated whether they would improve reliability, they are entitled to a rebuttable presumption that they meet commission requirements for incentives. Firms also have to prove that the incentives sought are connected to the investments being made, meaning they address demonstrated risks or challenges the transmission developer faces.

The Iron Range project is the largest transmission dollar investment ever made by GRE, and with multiple permits and owners, it created a more complex negotiating, decision-making and implementation process. Both the capital structure of 50% debt and 50% equity for both lines and the CWIP for Iron Range should ensure GRE can make the needed investments without lowering its credit rating.

FERC agreed that the incentives were tailored to meet the project’s risks, with the CWIP helping GRE avoid higher costs on the project itself and other investments.

GRE also won approval for the abandoned plant incentive to deal with regulatory and siting risks that are outside of its control. FERC found the incentive would protect GRE and its member co-ops if the projects are canceled for reasons beyond its control.

Christie’s Concurrence

Commissioner Mark Christie concurred with his colleagues, saying that while the order complies with FERC’s current transmission incentives policy, those should be revisited. The CWIP incentive effectively makes consumers the bank for transmission development, while the abandoned plant incentive makes them the insurer of last resort, he said.

“Just as consumers receive no interest for the money they effectively loan transmission developers through CWIP, they receive no premiums for the insurance they provide through the abandoned plant incentive if the project is never built,” Christie said.

FERC has a pending proposal to limit the adder for RTO membership to just three years after utilities join, and another one to eliminate the CWIP incentive altogether. Christie also wants the procedures and criteria for the abandoned plant incentive to be reconsidered.

“Revisiting all these incentives is imperative at a time of rapidly rising customer power bills,” Christie said.