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FERC rejects MISO plan for ensuring it does not pay for reactive service not provided

Despite the Midcontinent Independent System Operator Inc.'scontention that its proposed tariff revisions will keep it from making reactivepower payments to entities whose generation or nongeneration resources weredeactivated or transferred to new owners, FERC that the reform "fails toaccomplish" that goal.

The commission explained that MISO's plan differs in onevital way from a similar proposal the agency approved for the PJM Interconnection LLC in June 2015, which basically requiresa resource owner to submit a filing revising its rate to reflect a deactivationor transfer no less than 90 days before that move occurs. MISO's proposal onlymandates that such a filing be made "on or before the date of the changein status," and it accordingly does not guarantee that entities receivingcompensation for reactive service are capable of providing that service, FERCsaid.

Prompted by filings made by subsidiary andBerkshire HathawayEnergy subsidiary MidAmerican Energy Co., FERC in June a show-cause order directing MISOto submit tariff revisions ensuring that it will stop making reactive powerpayments to entities that have sold or decommissioned their resources orexplaining why it should not be required to do so. FERC said at the time thatpaying a resource owner a rate that includes a reactive power revenuerequirement based on units that are no longer capable of providing reactiveservice or have been transferred out of its fleet is unjust and unreasonable.

As directed, MISO submitted a compliance in July that purportedlysatisfied the show-cause order's directives. But to accommodate a tariffprovision that mandates confidentiality regarding "retire andsuspend" plans for all units that have not been found to be needed tosupport system reliability, MISO proposed not to require that entities provideany advance notice of their intent to deactivate or transfer a resource.

In its Oct. 7 order, however, FERC said that aspect ofMISO's proposal is unacceptable since any changes made to a resource's reactiveservice revenue requirement in most cases do not become effective until thefirst day of the month that begins after the commission accepts the new revenuerequirement. It therefore "does not ensure that the effective date of thetermination of, or reduction to, the revenue requirement aligns with the dateof the reduction in reactive service," the commission said.

MISO accordingly was given 60 days to submit a new filingconsistent with FERC's findings. (EL16-61)