On June 24, 2019, FERC issued an order rejecting, without prejudice, Midcontinent Independent System Operator’s (“MISO”) and the MISO Transmission Owners’ (“MISO TOs”) proposal to allocate MISO’s share of the costs of certain interregional economic transmission projects with PJM Interconnection, L.L.C. (“PJM”) and Southwest Power Pool, Inc. within the MISO footprint (“Interregional Cost Allocation Proposal”). FERC explained that it rejected the Interregional Cost Allocation Proposal because it referenced and relied on certain provisions contained within a related, regional cost allocation proposal that FERC rejected as inconsistent with cost causation principles in a concurrently-issued order (see July 18, 2019 edition of the WER ). The June 24 order also rejected MISO’s submission of the Interregional Cost Allocation Proposal in a compliance filing in a separate complaint proceeding. FERC directed MISO to submit a new compliance filing either to confirm that an existing cost allocation method will apply to interregional projects, or to propose a new cost allocation method for these projects.

MISO’s and the MISO TOs’ Interregional Cost Allocation Proposal, submitted February 28, 2019, sought to allocate MISO’s share of the costs of the interregional transmission projects at issue depending on voltage level. For projects 230 kV or higher, 20 percent of the cost would be assigned system-wide, and 80 percent of the cost on a regional basis based on the project’s relative benefit to a particular region. For projects 100 kV to 229 kV and located wholly or partially within MISO, the filing proposed that project costs would be allocated entirely to the MISO zone in which the project is located. Projects 100 kV to 299 kV and located wholly outside MISO would be allocated entirely to the MISO transmission zone(s) that benefit most from the project, calculated through a proxy power flow analysis that would compare zones where the project would have at least a 1.25-to-1 benefit-to-cost ratio.

Also on February 28, 2019, MISO submitted a compliance filing in a separate complaint proceeding involving infirmities in the MISO and PJM interregional planning process. In April 2016, FERC issued an order that granted a complaint in part, directing MISO to lower the minimum voltage threshold and to remove the minimum cost requirement previously required for MISO-PJM interregional economic transmission projects. In a subsequent compliance order issued January 2017, FERC also directed MISO to address what cost allocation method should apply to MISO’s share of the costs of interregional economic transmission projects. Thus, MISO’s February 2019 compliance filing stated that the Interregional Cost Allocation Proposal fulfilled FERC’s 2017 directive to address cost allocation for certain interregional economic transmission projects.

FERC’s June 24 order rejected the Interregional Cost Allocation Proposal, explaining that it relied on provisions that were rejected in the regional cost allocation proceeding. FERC also concluded that as a result, its 2017 directive for MISO to address what cost allocation method should apply to MISO’s share of interregional economic transmission projects remained unfulfilled. FERC therefore required MISO to submit a further compliance filing to address this issue.

FERC’s June 24 order is available here.