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FERC signs off on new type of wires project


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FERC signs off on new type of wires project

The Federal Energy Regulatory Commission has given its stamp of approval to a new interregional transmission planning process aimed at easing congestion on the seam between the Midcontinent ISO and the PJM Interconnection.

MISO, PJM and transmission owners within their footprints pitched changes to the MISO-PJM joint operating agreement, or JOA, in December 2016 to create a new category of crossborder transmission projects and a method for allocating the costs of those projects (FERC dockets ER17-718, et al.).

To qualify as a so-called targeted market efficiency project, or TMEP, under the JOA changes, a potential project must be able to be built relatively quickly to address persistent congestion at flowgates on the MISO-PJM seam at a cost below $20 million.

FERC staff in a June 26 letter order issued while the commission was without a quorum accepted the new language in the JOA creating TMEPs, with a June 28 effective date, subject to further commission order as staff preliminarily found that the JOA revisions may not be just and reasonable.

Though not directly addressed in staff's order, the proposal drew opposition from a group of state regulators and entities representing renewable energy interests. Among their concerns were the failure of the TMEP evaluation process to account for congestion hedging revenues, potential compliance issues with Order 1000 competitive bidding criteria, a lack of information on acceptable voltage levels for TMEP projects and the criteria used to weed out and select TMEP projects.

With its quorum restored in August, the commission on Oct. 3 found that the grid operators and transmission owners overall had "met their burden to demonstrate that the TMEP planning process [and proposed cost allocation methodology are] just and reasonable and not unduly discriminatory or preferential."

FERC's order, however, noted one area in which the proposal fell short: transparency regarding the reason a potential TMEP is, or is not, recommended to move forward toward board approval.

"Stakeholders must have this information in order to play a meaningful role in the TMEP planning process and to allow them to monitor and provide feedback on how MISO and PJM are planning transmission projects to alleviate the congestion that is the subject of a TMEP study," FERC said. Failing to provide this information "may lead to more frequent after-the-fact disputes regarding the TMEP planning process," the order added.

The commission therefore conditioned its acceptance of the TMEP proposal on a compliance filing being submitted within 30 days to add language to the JOA requiring MISO and PJM to provide explanations for why they "did not evaluate whether a potential TMEP could economically address congestion on a particular congested … flowgate and why a potential TMEP that [they] did evaluate was not recommended to [their] respective boards of directors."

The compliance filing must also include JOA revisions clarifying that MISO and PJM "will provide to stakeholders any additional criteria used to evaluate potential TMEP solutions, as well as the criteria used to evaluate whether congestion is likely to be persistent and when in the process this criteria will be provided to stakeholders."

MISO and PJM in 2016 identified 13 potential TMEP upgrades after investigating 50 flowgates. Five of those upgrades were eventually advanced to the grid operators' boards for approval, pending FERC action on the necessary revisions to the JOA. The five upgrades would cost an estimated $17.25 million to build and would address $59 million in historical congestion between 2014 and 2015, resulting in $100 million in benefits over their first four years in service.

Separately, FERC on Oct. 3 also gave the nod to MISO and its transmission owners' proposed method for assigning their share of the costs for TMEPs, subject to a compliance filing due in 30 days.

"We find that the method and associated benefits calculation ensure that the costs allocated to each transmission pricing zone are at least roughly commensurate with the benefits that a TMEP provides in the form of avoided congestion costs," the commission said.

FERC noted that MISO's filing contained some tariff language that was rejected in a previous FERC order and directed that a compliance filing be submitted reflecting only the currently effective tariff language.

The Aug. 4 MISO filing (ER17-2246) from MISO reflected the PJM transmission owners' April 11 cost allocation proposal (ER17-1406) for TMEPs in that both regions put forth a methodology aimed at ensuring that project costs are assigned only to zones that benefit from congestion relief spurred by these projects.

PJM's proposal also was accepted through a delegated order signed by FERC staff.

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