Clean energy nonprofits continued trying to persuade Entergy and MISO South state regulators to embrace a broader view of cost allocation for an upcoming long-range transmission plan (LRTP) portfolio the RTO intends for the subregion.

The Sustainable FERC Project and the Southern Renewable Energy Association (SREA) took turns during an Entergy Regional State Committee (E-RSC) teleconference July 12 attempting to convince the company and its regulators to open their recommended allocation method to more transmission benefits.

Lauren Azar, a consultant for the Sustainable FERC Project, said if MISO South doesn’t create a functioning cost allocation for regional lines, the South will continue to exclusively build expensive local projects “that are bubbling up in the [integrated resource planning] process.”

“Local projects cannot cost-effectively replace regional projects, but regional projects may cost effectively replace local projects,” Azar told the E-RSC.

In early February, the E-RSC Working Group unveiled a preferred allocation for the upcoming LRTP portfolio of projects that will focus on MISO South. It involves assigning 90% of costs based on adjusted production cost savings and avoided reliability projects; the remaining 10% will be charged to new generation that interconnects in MISO South based on a flow-based methodology. (See Entergy States Debut Long-range Tx Cost Allocation Proposal, MISO Members Unconvinced.) Additionally, the E-RSC wants costs of transmission projects designed to further decarbonization goals solely assigned to jurisdictions that proposed those targets.

The Entergy states want the allocation assigned to upcoming LRTP projects in MISO South. By comparison, MISO Midwest is using a simpler, 100% postage stamp allocation to load for the same class of projects. Entergy states have been adamant that they won’t support any postage stamp allocation component for the third LRTP portfolio.

The E-RSC has said its allocation method would dole out costs as specifically as possible based on cost-causation and beneficiaries-pay principles. MISO, on the other hand, has proposed to allocate 50% of South LRTP projects to the subregion using the load-ratio postage stamp rate, and 50% to the smaller zones where projects are located. The E-RSC has publicly opposed the plan. (See Entergy Regulators Mount Challenge to MISO South Cost Allocation.)

Azar said MISO South’s local projects cannot account for the “economies of scope and scale” that regional, interstate transmission projects can capture. She cautioned that the South’s trend of relying on utilities’ IRPs for transmission planning instead of turning to MISO for comprehensive, cost-shared solutions will cost customers money in the long run.

Because regional lines benefit so many, there are many parties to “bicker” over how the costs of lines should be divided, she said. “Literally the flows on the system are changing minute-by-minute.”

Azar said the E-RSC seems to be hamstringing itself by maintaining an overly restrictive benefits philosophy that prevents it from considering other real benefits of transmission.

Arkansas Public Service Commission consultant Keith Berry disagreed that the E-RSC’s cost allocation principles are boxing its working group in from formulating adequate benefit metrics.

But Azar said the E-RSC Working Group has so far been able to come up with just two benefit metrics that almost certainly will fail to meet FERC’s standard that costs be portioned out roughly commensurate with benefits.

“You’re going to have to come up with different ways to meet that legal standard,” she said.

MISO Midwest’s 100% postage stamp allocation based on a load ratio share is often misunderstood as an “everybody pays the same rate” allocation when it’s really a rate based on grid usage, Azar said.

SREA Executive Director Simon Mahan said MISO South’s failure to settle on a cost allocation direction with the RTO may have kept it from reaping the benefits of major transmission projects.

“It’s my view that if we had a cost allocation for MISO South in place … we might have been able to move faster on the planning side,” he said.

Mahan also said FERC’s recently authorized Order 1920 is essential for MISO South states, whose IRPs are largely silent on long-term, regional transmission.

Mahan said Order 1920 is “based heavily on what MISO already does” for MISO Midwest. He said MISO South can use FERC’s planning directives “to help fill a gap” that exists in the South’s long-term transmission planning.

Though Order 1920 prescribes long-term planning on a five-year cycle, MISO South should undergo regional planning every three years, Mahan continued. That would prevent the yearslong “drought” MISO Midwest experienced between its last market efficiency project and the introduction of the long-term transmission portfolios, he said.

“You can go back at MISO’s old transmission planning futures and see how drastically things have changed,” Mahan said in support of speedier planning cycles.

Six years elapsed between MISO’s last successful market efficiency project — the $156 million, 345-kV Huntley-Wilmarth line in southern Minnesota — and its 2022 approval of its first, $10 billion LRTP for MISO Midwest.

Mahan pointed out that MISO South has never hosted a market efficiency project, and MISO’s only attempt at one in the South proved unsuccessful.

MISO canceled the $130 million, 500-kV Hartburg-Sabine Junction project in East Texas in 2022, five years after recommending it. At the time, Texas’ ultimately unconstitutional right-of-first-refusal law introduced questions over who could construct the line. Entergy in the meantime built the 993-MW Montgomery County Power Station in southeast Texas, and made plans for the 1.2-GW natural gas and hydrogen-powered Orange County Advanced Power Station by 2026, rendering the line unnecessary, according to MISO’s analyses.

Since then, Entergy has proposed billions in transmission projects to serve reliability needs. MISO South accounted for nearly half the cost of MISO’s record-breaking, $9.4 billion Transmission Expansion Plan, including a $1.1 billion, 150-mile 500-kV line and substation project Entergy proposed for southeast Texas.

Bill Booth, a consultant to the Mississippi Public Service Commission, pushed back on the notion that MISO South’s nonexistent allocation has put a drag on MISO planning. He argued that an unfinished cost allocation couldn’t have been holding up regional transmission because MISO hasn’t begun planning the third LRTP portfolio.

Booth said it seemed like Mahan was trying to argue that the South should be more like the Midwest. He also said MISO South is in the construction phase of several million dollars worth of transmission investment.

But Mahan said those investments are set to produce only local lines that don’t cross state lines.

Mahan made the case there are parallels to be drawn between MISO South and Midwest. He said that while the South doesn’t have the impending coal retirements that the Midwest is staring down, it does have aging, legacy gas units. He also said the South boasts utilities with zero-carbon goals, corporate interest in load growth, escalating extreme weather events and growing renewable fleets.

“While we’re not the same as the North, there are a lot of solutions where transmission can help,” Mahan said, adding that the South region is woefully behind on attending to its regional system.

“There are things that beg a larger planning than what we’ve been engaging in the past decade or so,” he said. “We do need to fill in this gap about what we do on long-range transmission planning.”

Azar warned Entergy and regulators against crafting an allocation with FERC’s Order 1000 in mind. By the time MISO pulls together South LRTP projects — likely in 2026 — Azar said Order 1920 will be the prevailing transmission rule.