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MISO proposes new wires cost-sharing methodology

The Midcontinent ISO and its transmission owners have asked federal regulators to sign off on a plan for assigning the costs for a new type of "quick hit" transmission project aimed at easing congestion on the seam MISO shares with the PJM Interconnection.

The tariff revisions establish a cost allocation methodology within MISO for "low cost, high value" interregional transmission projects intended to address persistent congestion at flowgates on the MISO-PJM seam at a cost below $20 million.

The so-called targeted market efficiency projects, or TMEPs, were blessed by staff at the Federal Energy Regulatory Commission in a June 26 letter order that accepted changes (FERC dockets ER17-718 et al.) to the MISO-PJM joint operating agreement to create this new type of crossborder transmission facility. Those provisions went into effect June 28 but remain subject to further commission order.

The Senate Aug. 3 voted to restore the commission's quorum, confirming Neil Chatterjee and Robert Powelson to two of four open seats at the agency. Once the new commissioners are seated, the agency can formally address staff's findings and concerns raised by some state regulators and renewable energy groups. But FERC has a six-month backlog of other matters that need to be addressed as well, and which it will attack first is uncertain.

MISO's proposal (ER17-2246) reflects a PJM transmission owners' cost allocation proposal (ER17-1406) for TMEPs in that both methodologies are aimed at ensuring that project costs are only assigned to zones that benefit from congestion relief spurred by those projects.

A project's eligibility for inclusion in the new interregional planning process and cost allocation methodology would hinge on the results of a study on annual congestion based on congestion experienced in prior years not caused by outages and the project's modeled effectiveness in relieving all or a portion of that historical congestion.

"If the results of the study show that the expected annual congestion relief over [a] four-year period is equal to or greater than the estimated cost of the proposed TMEP, and if the TMEP satisfies the other criteria [described in the JOA], the TMEP is eligible for interregional cost allocation," MISO said in its filing.

The grid operator further proposed to assign the MISO-allocation share of costs of TMEPs to all transmission pricing zones "that receive a positive congestion contribution benefit" from the TMEP.

A study MISO and PJM performed in late 2015 and 2016 identified 13 potential TMEP upgrades after investigating 50 flowgates. After evaluation, five of those upgrades were advanced to the grid operators' boards for approval.

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 $99.6 million in benefits over their first four years in service.

Any costs allocated to MISO would be included in the MISO Regional Transmission Expansion Plan and eligible for regional cost assignment using MISO's proposed methodology, which includes a threshold on cost allocation to avoid unnecessary administrative costs for zones with a negligible dollar impact. As such, zones with a positive congestion contribution benefit from a TMEP of less than $5,000 or 1% of the transmission provider's share of the total cost would not be assigned any of the project costs. Those costs would instead be reallocated to zones that met the threshold.

MISO asked FERC to allow its proposal to take effect Oct. 4, but only until the end of a transition period FERC established for the integration of Entergy Corp. and others into the MISO footprint, likely in December 2018.

The grid operator committed to hold a stakeholder process to devise a cost allocation methodology for TMEPs on the MISO-PJM seam that will apply after the end of the transition period. It said it would submit that method for FERC's review before the transition period expires.

MISO added that it expects in "the next several months" to file revised rate schedules to accommodate cost recovery of TMEPs, noting that cost recovery is distinct from cost allocation.

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