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Renewable developers say MISO transmission proposal will boost costs

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Essential Energy Insights - January 2021


Renewable developers say MISO transmission proposal will boost costs

Renewable energy developers are protesting a plan by the Midcontinent ISO to revert to its old rules allowing transmission owners to unilaterally decide to fund interconnection-related transmission upgrades, saying it is unfair and would increase costs for developers.

At issue is a January order by the U.S. Court of Appeals for the District of Columbia Circuit that addressed funding for interconnection-related transmission upgrades in MISO.

In 2015, the Federal Energy Regulatory Commission empowered generators, rather than transmission owners, to elect to self-fund the upgrades. FERC reasoned that allowing transmission owners to choose to fund transmission upgrades could let them discriminate among generators and lead to unfair charges to generators.

Seeking court relief, the transmission owners asserted that the policy compels them to construct, own and operate facilities without the ability to earn a return on the facilities, essentially forcing them to be nonprofit managers of the upgrades. Siding with the transmission owners the D.C. Circuit vacated (Ameren Services Company v. FERC, 16-075) the order, ruling that FERC had not adequately responded to the transmission owners' concerns.

In an effort to nudge FERC to act on the remand, MISO in early July proposed (FERC dockets ER18-1964, ER18-1965) to revert to its prior tariff allowing transmission owners to elect to fund interconnection-related upgrades.

But renewable developers are crying foul. Invenergy Renewables LLC said MISO's proposed revisions are not required by the court’s decision and accepting the proposal would pre-empt FERC’s consideration of key issues like cost allocation.

The company said FERC should also take this opportunity on remand to review MISO’s interconnection rules, which have increasingly departed from FERC policy. Over the years, according to Invenergy, MISO's rules have morphed so that interconnection customers can now be responsible for 90-100% of network upgrade costs. "The cumulative effect of MISO's deviations has been to increasingly hinder new generation development," Invenergy said.

Developers pushed back against MISO's plans to rework interconnection agreements back to 2015 based on its interpretation of the court order.

The grid operator’s plans "threaten severe disruption to existing generation projects that were or are in the process of being developed and financed based on the lower costs associated with generator funding," said wind developer Apex Clean Energy. The company noted that Apex has entered into interconnection deals for three projects since 2015 and was able to reduce interconnection costs by $23.7 million by funding the upgrades itself.

But a group of MISO transmission owners said the only way to comply with the court's findings is to accept MISO's proposal to revert to its old rules.

"The court vacated the underlying orders because of the commission's flawed rationale and lack of justification in ordering the elimination of a transmission owner’s right to elect to self-fund upgrades, to eliminate the uncertainty and risk for agreements entered into during the interim period, and to avoid parties taking actions based on 'a tariff of questionable legality,'" the transmission owners said.

Kate Winston is a reporter for S&P Global Platts which, like S&P Global Market Intelligence, is owned by S&P Global Inc.