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Industrial energy consumers criticize MISO generator replacement proposal


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Industrial energy consumers criticize MISO generator replacement proposal

The Midcontinent ISO's plan to speed replacement of aging or uneconomic power units with newer equipment and technology was mostly supported by generators but got a stiff rebuke from a group of industrial customers.

The proposal would grant existing generators undue preference, enhancing their market power and unduly discriminating against new market entrants, the group of industrial energy consumers told the Federal Energy Regulatory Commission.

Their protest was in sharp contrast to mostly glowing comments from MISO transmission owners and major power trade groups, who lauded the proposal for providing a mechanism to replace older, less-efficient generation while avoiding a "dual track" of unnecessary retirement and interconnection procedural requirements and costs.

In its Feb. 15 proposal, MISO said the tariff revisions would enable existing generators "to respond effectively to changing economics and policies." It added that many generators had the desire and technical ability "to deliver energy at the same point of interconnection within the same parameters of their existing generating facility at a lower overall cost ... and often with a cleaner fuel source."

MISO noted that multiple proposals had been presented in recent years to replace coal units with natural gas-fired generation. Such replacements would have produced "favorable cost and policy impacts" for the MISO footprint "without any material adverse impact to the transmission system," but "existing tariff processes effectively bar complete replacements or refueling regardless of their impact or benefits," the grid operator said.

Under the proposal laid out last month, a generator could submit an interconnection request for a replacement generating facility of the same or fewer megawatts at the same electrical point of interconnection as its existing facility and "qualify for expedited processing if studies show such replacement will not have a material adverse impact on the transmission system constituting a material modification," the filing said.

However, the industrial customers — the Louisiana Energy Users Group, Texas Industrial Energy Consumers, Illinois Industrial Energy Consumers and the Association of Businesses Advocating Tariff Equity — said the filing lets new generation at existing sites bypass the usual interconnection process while new generation at different locations "would be forced to the back of the interconnection queue."

While advocating for the dismissal of the Feb. 15 proposal, the industrial customers also said MISO should be allowed to rework its plan "to make it just, reasonable and not unduly discriminatory" as they supported the premise of removing barriers to building more efficient and cost-effective generation for the benefit of consumers.

Maximizing the benefits of such a proposal necessitates a level competitive playing field, they said. Therefore, interconnection process reforms "must be designed to ensure that they do not provide undue preference to self-build options by incumbent generation owners or to the replacement generation projects of dominant merchant generation owners over other potential generation sources that may be more economical to construct and operate than a utility-owned self-build unit or the replacement merchant generation project of a dominant, incumbent merchant generator," the industrial customers said.

Further, they asked FERC to provide guidance to help MISO remove the discriminatory aspects of the proposal that unfairly favor incumbent generators.

"This can be accomplished by establishing interconnection procedures that provide for equal treatment for all new generation units that will have no material adverse impacts on the MISO transmission system, irrespective of whether such generation is replacing existing, retiring generation at the same location or whether such generation is located elsewhere on the MISO system," they said. (FERC docket ER19-1065)

Jasmin Melvin is a reporter for S&P Global Platts. S&P Global Platts and S&P Global Market Intelligence are owned by S&P Global Inc.