By Mark Jaffe, EUCI energy writer
Five state utility commissions opposed to paying for what they see as renewable energy projects for other states are seeking to change the financing for $22 billion in transmission projects planned by the Midcontinent Independent System Operator (MISO).
In a complaint filed with the Federal Energy Regulatory Commission (FERC), the state commissions argue that the projects in the “Tranche 2.1 portfolio” were inaccurately classified as “multi-value,” which made them eligible for regional cost sharing.
MISO operates a grid across 15 central states from Louisiana to North Dakota and the Canadian province of Manitoba. Some of the states – such as Minnesota and Illinois – have renewable energy policies or standards.
The portfolio was the product of the grid operator’s Long-Range Transmission Planning initiative (LRTP). “MISO specifically began the LRTP initiative to respond to ambitious renewable and decarbonization goals set by cities, states, corporations, and utilities within MISO Midwest,” the complaint said.
But the five complainant states – Arkansas, Louisiana, Mississippi, North Dakota, and Montana – do not have renewable energy policies.
“MISO would have the states pay for transmission facilities that are not necessary nor consistent with state resource plans,” the complaint said. “The concerned commissions represent states that are NOT relying on Tranche 2.1 projects to meet their resource adequacy requirements.”
There are several ways that transmission is financed in MISO. Utilities can directly pay for projects they have determined provide value for them. Costs may also be allocated among utilities benefiting from a project.
“But these projects are, with limited exception, not regionally cost allocated,” the complaint said.
The MISO board made a “miscalculation of benefits and a defective business case” in approving regional cost sharing for the Tranche 2.1 portfolio.
The portfolio includes a $21.8 billion investment for 24 projects and 323 facilities across the MISO Midwest subregion. The centerpiece is a 3,631-mile 765-kilovolt transmission “backbone.”
States that “prefer relying on out-of-state generation to serve load” without Tranche 2.1 would have to pay the full cost of transmission delivery, the complaint said.
Spreading the price of the portfolio across the entire MISO region “allows certain states and utilities to purchase their preferred resources and achieve decarbonization goals while paying only a fraction of those transmission costs.”
Classifying the portfolio as multi-value “allows states with ambitious clean energy goals to shift transmission costs (to deliver their remote energy) to other states that either do not share the same clean energy goals or have decided to build their renewable and other resources closer to load,” the complaint said.
One reason for the comprehensive portfolio, MISO said, is to optimize the buildout of new resources, reducing the need for local projects.
The five commissions argue that by enabling the grid operator to decide where to build transmission, it, instead of the states and their utilities, will decide where generation is located for resource adequacy.
The core of the complaint is that the benefit metrics to score the portfolio are “based on patently unreasonable assumptions that have been accepted by FERC,” the state commissions said.
The portfolio – based on avoided capacity costs, mitigation of reliability issues and decarbonization – was projected to yield $38.3 billion over 20 years.
MISO’s independent market monitor, Potomac Economics, questions both the estimate of the transmission needs and the economic benefits, and a consultant for the state utility commissions put the benefits at $4.3 billion to $7.2 billion, according to the complaint.
MISO has requested a one-month extension from FERC to prepare a comprehensive defense of its long-range transmission plan.
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