The NEPOOL Transmission Committee has declined to support a compliance proposal from the New England transmission owners for a recent FERC order preventing the TOs from charging interconnection customers for operations and maintenance fees associated with network upgrades.
In December, FERC sided with clean energy advocacy group RENEW Northeast in a dispute over who must pay for the upkeep and operation of interconnection network upgrades. The commission determined these costs should not be paid by the interconnection customer, shifting them over to transmission rates. (See FERC Sides with New England Developers on Interconnection Complaint.)
In response to the order, the TOs propose to amend the RTO’s tariff to remove operations and maintenance costs from network upgrade requirements.
However, RENEW argues the TOs’ proposal does not “remove all the annual costs associated with network upgrades, stand-alone network upgrades and distribution upgrades as required by the order.”
RENEW wrote that the TOs’ proposal fails to address “some remaining annual costs … such as cost of capital, federal and state income taxes, and other related costs,” which still could be assigned to interconnection customers, it wrote in a memo published prior to the Jan. 29 TC meeting.
The group also argued that provisions of the TOs’ proposal that assign “repair and replacement” costs to interconnection customers are “directly contrary to the requirements” of the Dec. 19 order.
Finally, RENEW opposed the proposal to continue billing operations and maintenance costs until the TOs recalculate their billing formulas, and to issue refunds for these charges by mid-June. The group argued that continuing these charges is prohibited by the order.
The TOs’ proposal failed to pass with just 33.3% support from the committee, backed by members of the transmission and publicly owned entity sectors. Members of the generation, alternative resources, supplier and end user sectors opposed the proposal. It now will head to the Participants Committee (PC) in February for a vote, without the backing of the TC.
Also at the Jan. 29 meeting, the TC voted to support a Transmission Operating Agreement for the New England Clean Energy Connect transmission line and discussed compliance with FERC Order 904.
Order 904, released in November 2024, prohibits transmission providers from including charges in transmission rates to compensate generators for reactive power which falls “within the standard power factor range by generating facilities.”
The committee also discussed improvements to the ISO-NE’s economic study process. ISO-NE economic studies are intended to evaluate and address potential market inefficiencies or transmission congestion or integrate new resources or load.
The RTO is in the second phase of a project to improve these studies, which is focused on making changes to identify “system efficiency issues and needs by establishing a clear trigger for when to issue a Request for Proposal (RFP), defining benefit metrics for evaluating RFP responses and streamlining the RFP process into a single stage.”
Patrick Boughan of ISO-NE noted that the RTO plans “an interregional model that explicitly models the projected future demand and resources of surrounding regions,” instead of relying on historical data, as it has done in the past. The RTO also plans to transition from modeling imports as zero-cost resources to estimating their cost based on the interregional model.
Boughan also said ISO-NE “does not propose to pursue consideration of capacity savings” in the Phase 2 project, noting the RTO simultaneously is developing a major overhaul of its capacity market and has “no reliable method to estimate capacity savings” over the 10-year planning horizon.
He also noted the RTO plans to mirror how its longer-term transmission planning process treats aging transmission equipment.
“If a proposal includes rebuilding or eliminating a transmission element that is on the Asset Condition List, or an element that is more than 40 years old, the avoided cost of that upgrade will be counted as an avoided transmission investment,” Boughan said.
