The Southwest Power Pool Inc and Midcontinent ISO have proposed changes to their joint operating agreement to help build interregional transmission projects because they discovered their current framework created a “triple hurdle” that is blocking mutually beneficial projects.
The effort is significant because it shows some grid operators are taking another shot at improving interregional transmission planning after earlier efforts to implement a federal policy on the issue have fallen short.
In 2011, the Federal Energy Regulatory Commission issued Order 1000 to facilitate regional transmission planning and encourage competition to build grid projects. MISO and SPP have completed two coordinated system plans, or CSPs, since then but neither led to the development of any interregional projects.
“While several mutually beneficial projects were initially identified in both CSPs, none of those projects met the criteria for approval under the existing framework,” the regional transmission organizations told FERC on May 17.
One key problem was that projects had to go through three separate planning processes: the joint CSP, SPP's and MISO's. This “triple hurdle” was time-consuming and it created conflicting results as to the benefits of each project.
So the RTOs are proposing to do away with the joint model and rely solely on the MISO and SPP modeling processes. The RTOs are also proposing to get rid of the $5 million minimum cost required for interregional projects and to consider avoided project costs when deciding if a project is sufficiently beneficial.
“Allowing the inclusion of additional benefit metrics is also expected to increase the likelihood of interregional projects moving forward,” the RTOs said. Avoided project costs quantify the benefit created when building an interregional project would be cheaper than building regional projects to address the same issue.
The proposed changes would allow SPP and MISO to evaluate projects concurrently and potential interregional projects under multiple regional futures, which may allow for a better business case than projects only studied under a joint model with a single future, the RTOs said.
Having SPP and MISO try to remove barriers to projects across their seam is encouraging, Judy Chang, a principal at the Brattle Group, said. “I think the changes could be a big deal because they are recognizing that the triple hurdle is essentially eliminating potentially beneficial projects,” she said.
The streamlined process could lead to interregional projects that better spread power supplies across the grid operators’ footprints, she explained. “I do think both regions have great wind regimes and the eastern part of both of these footprints will have and already have exhibited demand for this wind,” she said.
Chang said other grid operators could benefit from rethinking their processes. “I am hoping this will lead other RTOs to work together to follow this lead because there are other seams that need to be looked at,” she said.
The lack of interregional transmission is a big problem and the SPP/MISO proposal moves the ball forward, said Rob Gramlich president of consulting firm Grid Strategies. “The triple-hurdle problem is real, so it’s good to see progress,” he said.
Interregional transmission has emerged as a key resilience solution, Gramlich said, noting that imports from neighboring regions can save the day during severe weather events. And from a clean energy perspective, he said transmission is needed to move renewables around and balance the system, he said. (FERC dockets ER19-1895; ER19-1896)
Kate Winston 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.