notice of intervention, protest and comments of … · 6 (lodf) analysis.6 projects smaller than...
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UNITED STATES OF AMERICA
BEFORE THE
FEDERAL ENERGY REGULATORY COMMISSION
Midwest Independent Transmission )
System Operator, Inc., and the MISO ) Docket No. ER13-186-000
Transmission Owners )
Midwest Independent Transmission )
System Operator, Inc., and the MISO ) Docket No. ER13-187-000
Transmission Owners ) Docket No. ER13-187-001
NOTICE OF INTERVENTION, PROTEST AND COMMENTS OF THE PUBLIC
SERVICE COMMISSION OF WISCONSIN AND THE MICHIGAN PUBLIC SERVICE
COMMISSION, AND THE COMMENTS AND PROTEST OF THE MISSOURI PUBLIC
SERVICE COMMISSION
NOTICE OF INTERVENTION
Pursuant to Rules 211 and 214 of the Federal Energy Regulatory Commission’s
(FERC’s) Rules of Practice and Procedure, 18 C.F.R. § 385.211 and 385.214(a)(2), the Public
Service Commission of Wisconsin (PSCW) and the Michigan Public Service Commission
(MIPSC) hereby intervene in these dockets. The Missouri Public Service Commission
(MOPSC) joins these comments and protest, but does not separately intervene in these dockets.
Collectively, this group of commenters is referred to as the “Midwestern State Coalition.”1
The members of the Midwestern State Coalition are the agencies charged with the
regulation and supervision of public utilities in their relevant jurisdictions. Regulatory
jurisdiction of these agencies varies, but includes regulation over some combination of electric
1 The Midwestern State Coalition recognizes that the two captioned dockets are not, at this time, consolidated.
While the issues addressed below primarily relate to the proposed changes to the cost allocation provisions of the
tariff filed in ER13-186-000, the issues between the dockets are intertwined. Given this, these comments are being
filed concurrently in both dockets.
2
transmission-only entities, vertically integrated utilities, and load-serving electric public utilities
that buy and sell bulk electricity as dispatched by the Midwest Independent Transmission System
Operator, Inc. (MISO). The members of the Midwest State Coalition are properly qualified as
governmental entities entitled to intervene and secure party status as provided in Rule 214(a)(2)
of the FERC Rules of Practice and Procedure.2
COMMUNICATIONS
Communications regarding this docket shall be served upon or addressed to the following
persons, and the respective agencies request that they be added to the Commission’s service list.3
Michael S. Varda
Assistant General Counsel
Public Service Commission of Wisconsin
610 North Whitney Way
P.O. Box 7854
Madison, WI 53707-7854
Tel: (608) 266-3591
Fax: (608) 266-3957
E-mail: [email protected]
Robert D. Norcross
Gas and Energy Division Administrator
Public Service Commission of Wisconsin
610 North Whitney Way
P.O. Box 7854
Madison, WI 53707-7854
Tel: (608) 266-0699
Fax: (608) 266-3957
E-mail: [email protected]
Bill Schuette
Attorney General
Steven D. Hughey (P32203)
Patricia S. Barone (P29560)
Michigan Dept. of Attorney General
Public Service Division
6520 Mercantile Way, Suite 1
Lansing, MI 48911
(517) 241-6680
2 The MIPSC supports all of the concepts outlined in these comments, especially the idea of a hybrid approach to the
baseline reliability projects (BRP) cost allocation methodology that could be further vetted through the MISO
stakeholder process. The MIPSC may file additional comments in these dockets in the near future. 3 Given the nature of the Midwestern State Coalition, each state requests a representative on the service list.
Therefore, the Midwestern State Coalition is seeking a waiver of Rule 203(3)(b) of the FERC Rules of Practice and
Procedure, 18 C.F.R. § 385.203, to permit designees from each of the states in the coalition.
3
COMMENTS
I. Background
In these dockets, MISO and a number of MISO Transmission Owners (collectively, the
parties are referred to as the “Filing Parties” and, collectively, the documents filed are referred to
as the “Filing Parties’ Compliance Filing”) provide their response to the regional transmission
planning and cost allocation requirements of Order Nos. 1000, 1000-A, and 1000-B.4 As stated
in the Filing Parties’ Compliance Filing, the parties intend for the changes to take effect with the
start of the next full MISO Transmission Expansion Plan (MTEP14) cycle on June 1, 2013.
As identified above, the members of the Midwestern State Coalition are the agencies
charged with the regulation and supervision of public utilities in their respective states. The
agencies also have varying degrees of authority relating to the certification for the
construction and siting of high-capacity electric transmission facilities within their
states. The Midwestern State Coalition respectfully submits the following comments
relating to the Filing Parties’ Compliance Filing. As identified in Section III., below, the
Midwestern State Coalition also submits a protest with respect to the proposal set forth in
Docket No. ER13-186-000.
II. The Midwestern State Coalition Supports the Comments of the Organization of
MISO States
The members of the Midwestern State Coalition are each signatories to comments filed
by the Organization of MISO States (OMS) in Docket No. ER13-187-000. In those comments,
OMS identifies and addresses a number of concerns with the Filing Parties’ Compliance Filing.
The Midwestern State Coalition reiterates their support for the OMS comments. The purpose of
this filing is to address issues that are not specifically addressed in the OMS comments.
4 Transmission Planning and Cost Allocation by Transmission Owning and Operating Public Utilities, Docket Nos.
RM10-23-000, 001, and 002, 136 FERC ¶ 61,051 (July 21, 2011 (Order 1000), 139 FERC ¶ 61,132 (May 17, 2012)
(Order 1000-A), and 141 FERC ¶ 61,044 (Oct. 18, 2012) (Order 1000-B).
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III. Protest5
A. The Filing Parties’ Have Failed to Show that the Current BRP Cost Allocation
Methodology is No Longer Just and Reasonable.
The Midwestern State Coalition protests, in part, the Filing Parties’ proposal in Docket
ER13-186-000 to modify the cost allocation provisions of Attachment FF to avoid the
elimination of any federal right of first refusal (ROFR) for baseline reliability projects (BRPs).
The Filing Parties have not demonstrated that the current BRP cost allocation is no longer just
and reasonable. As is further outlined below, the current methodology was developed through an
extensive stakeholder process that included significant evidence of the regional benefits of
certain, large BRPs.
The Midwestern State Coalition believes that MISO is currently compliant with Order
1000 in that the BRP cost allocation methodology is commensurate with benefits and need not be
changed in light of Order 1000. With the elimination of federal ROFR provisions, the
Midwestern State Coalition acknowledges the concern that requiring the projects to be subjected
to the competitive process has the potential to delay needed reliability projects. This concern,
however, is not a sufficient justification to eliminate cost sharing for larger BRPs. Given their
impact on the system, these projects should be identified early in the planning process such that
the additional year required to go through the competitive process should not be a concern.
Further, larger BRPs would be more expensive, meaning there is more potential benefit by
applying the competitive process.
5 The MOPSC joins these comments, but does so in an alternative to its preferred position. The MOPSC
recommends that FERC reconsider its position relating to elimination of a ROFR for BRPs. Given the importance
of these projects to reliability, the MOPSC prefers maintaining a ROFR for this type of facility. Barring this change
in FERC policy, the MOPSC supports the hybrid approach identified here.
5
Given this, the Midwestern State Coalition protests the Filing Parties’ proposal in Docket
No. ER13-186-000 as it applies to projects that are 345kV and above. Specifically, the
Midwestern State Coalition requests the following:
Waive the cost-sharing requirements currently in place for BRPs that are below 345kV.
This would allow for the continuation of a federal ROFR on these projects, since no costs
would be shared outside of the zone where the facility is located.
Reject the Filing Parties’ proposal with respect to BRPs 345kV and above. The current
cost-sharing methodology would continue, any federal ROFR would be eliminated, and
the projects would be subject to the competitive process.
Identify that the application of this waiver would be in place until the MISO stakeholder
process could consider this proposal and other alternatives for a long-term solution. The
Commission should establish a timeline for consideration and vetting of any approach in
the MISO stakeholder process, with the goal of completing that process in advance of
MTEP 14.
In support of this protest and these requests for action, the Midwestern State Coalition
states as follows:
B. Background.
The current MISO tariff defines BRPs as network upgrades required to ensure that
MISO’s transmission system remains in compliance with applicable reliability standards adopted
by the National Electric Reliability Organization (NERC) and its relevant regional entities. BRPs
include projects operating at 100kV or above that are needed to maintain reliability while
accommodating ongoing needs of existing transmission customers.
The current MISO tariff differentiates the cost allocation that applies to BRPs based on
size. BRPs are eligible for cost sharing beyond the pricing zone where the facilities are
physically located when a BRP has project costs that are $5 million or greater, or compose 5% or
more of a Transmission Owner’s (TOs) net transmission plant. BRPs of 345kV or above are
eligible for 20% of the project costs to be shared regionally (footprint wide, or postage stamped),
with the remaining 80% allocated to the local TO based on Line Outage Distribution Factor
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(LODF) analysis.6 Projects smaller than 345kV are cost shared based only on the LODF
analysis, that is, there is no broader regional cost sharing. FERC approved this cost sharing
methodology in 2006 based on MISO evidence that some portion of BRPs provided regional
benefits or benefits to regions outside of the pricing zone where the project is located.7
In Docket No. ER13-186-000, to accommodate the federal ROFR removal required by
Order 1000, the Filing Parties now propose to eliminate the entire cost allocation methodology
for BRPs. Instead of having some cost sharing, the proposal would allocate 100% of the costs of
all BRPs to the pricing zone where the facility is physically located. In support of this significant
and dramatic policy change, MISO asserts that because of the evolution of MISO’s transmission
planning process and creation of additional project types, such as market efficiency projects
(MEPs) and multi-value projects (MVPs), cost sharing for BRPs is no longer necessary. The
Midwestern State Coalition believes that MISO has not adequately justified this significant
change in policy, specifically as it relates to the cost allocation for BRPs that are 345kV and
above.
A review of Commission Orders from 2006 shows the evidentiary basis for the
Commission’s approval of cost sharing for larger BRPs. The foundations of the 2006 Orders
remain today.
First, the Commission should consider how much stress was placed on the stakeholder
process that produced the current cost sharing methodologies.8 The 18-month collaborative
6 LODF is a method of analysis that can be used for determining the impact of projects on other lines in the
surrounding area. 7 Order Conditionally Accepting and Suspending Proposed Tariff Revisions and Establishing Technical Conference,
Midwest Independent Transmission System Operator, Inc., 114 FERC ¶ 61,106, 61,351-52 (February 3, 2006) (the
“February 2006 BRP Order”). 8 Id.
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stakeholder process used to arrive at the “grand compromise” provided the foundation for
arriving at a just and reasonable outcome.9
Additionally, at the core of the Commission’s findings in 2006 were the power flow
studies MISO performed to show the regional benefits of BRPs over 345kV, which were in a
range of 20 to 30% for the regional component of larger BRPs.10 The Commission was initially
concerned that picking the low end of this range (i.e., 20%) for larger facilities (i.e., 345kV and
above) was “insufficient given the reliability impacts” of these facilities.11 The Commission
ordered a technical conference to further investigate this issue.12
After a technical conference, the Commission further elaborated on the importance of the
engineering studies performed.13 The Commission concluded that the 20% system-wide postage
stamp for larger BRPs was adequately supported by the power flow testimony and found the
policy to be just and reasonable.14 Specifically, MISO argued that the proposal reflected a just
and reasonable balancing of the interests within the MISO region and that the compromises
reached through the stakeholder process should be granted deference by the Commission.15
Considering all of the evidence, which included a significant stakeholder process and technical
conferences, the Commission found “that the proposed 20% system-wide postage stamp rate for
9 Id. It was noted at the time that MISO believed that the compromise reached in the stakeholder process was the
“superior position” and that any deviation from the 20% regional cost sharing component would result in the
compromise falling apart. Id. at ¶¶ 61,352 and 61,355. 10
Id. at ¶ 61,355. 11
Id. 12
Id. 13
Order on Technical Conference, Rehearing, Clarification and Compliance, Midwest Independent Transmission
System Operator, Inc., 117 FERC ¶ 61,241, 62,238 (November 29, 2006). Specifically, the record reflected that the
power flow studies performed by MISO showed that some areas had external flows to other zones as high as 63%
while other areas had lower percentages of approximately 20%. Id. at ¶ 62,238. 14
Id. at ¶ 62,241; see also ¶ 62,242 (identifying that the study results showed that a higher postage stamp rate could
be justified). 15
Id. at ¶ 62.239.
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baseline reliability facilities is just and reasonable.”16
These finding were upheld in 2007 despite
challenges from several parties that the 20% rate was incorrect.17
Despite this background, the Filing Parties, in the present filing, turn their collective
backs on the very studies that supported cost sharing in 2006. Instead, the Filing Parties rely on
selective statistical analysis of the cost sharing that has occurred between 2006 and 2012. The
testimony focuses on the fact that, when viewed through one lens, a significant portion of the
costs of BRPs remain in the pricing zone where the project is located.18 However, these
selections do not appear to tell the full story of the extent of cost sharing for BRPs. Using
information provided during the stakeholder process, the Midwestern State Coalition has
calculated that from 2006 to 2012, approved BRPs have totaled approximately $3.1 billion.19 Of
this amount, approximately $858 million of costs have been shared outside of the pricing zone
where a project was physically located.20
This is a considerable sum, and represents nearly 28%
of the total tab for BRPs in this timeframe. In contrast to the Filing Parties’ analysis, the
Midwestern State Coalition believes that this is a nontrivial amount of cost sharing.
Regardless of how the data is reviewed, the fact remains that in 2006, MISO asserted
(and FERC agreed) that the cost-sharing allocations, and particularly the 20% region-wide
allocation, were reasonable. This conclusion relied heavily on engineering studies that analyzed
16
Id. at ¶ 62,241. 17
Order on Rehearing and Clarification, Midwest Independent Transmission System Operator, Inc., 118 FERC
¶ 61,208, 61,970-71 (March 15, 2007). Interestingly, the challenges to the 20% allocation argued that the evidence
showed the figure should be higher. Id. 18
As an example, in Jennifer Curran’s testimony (provided as part of the Compliance Filing), she reports that 80%
of the BRPs approved had at least 75% of their costs stay within the pricing zone where the project was located and
that there was relatively little use of the 20% postage stamp allocation. 19
The information was provided in spreadsheet form during a RECB Taskforce meeting on September 27, 2012.
The information is available at: https://www.midwestiso.org/_layouts/MISO/ECM/Redirect.aspx?ID=138302 20
The Midwestern State Coalition does not have sufficient information to break down this figure to determine which
portion of this sharing was done pursuant to the 20% regional cost sharing and which portion was shared pursuant to
the LODF analysis.
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power flows to identify or approximate the beneficiaries of new transmission facilities. While no
model provides 100% precision, these tools are reasonable ways to identify the cost causers and
beneficiaries of development. The Filing Parties’ Compliance Filing and the modifications to the
BRP cost sharing methodology fail to provide or cite to any similar power flow analysis to show
otherwise. The Filing Parties have not provided a reasonable basis to abandon the current policy,
which was found to be reasonable in 2006 and has led to the development and construction of
significant new reliability projects.
C. The Filing Parties Proposal Failed to Comply with Order 890 and Order 1000
Because The Process Used To Develop The Filing Parties’ Proposal Was
Deficient.
The Midwestern State Coalition believes that MISO did not meet the requirements of
Order 89021
for its proposed revisions to the current BRP cost allocation methodology. This
belief is supported by the fact that the initial formulation of the BRP definition and cost
allocation methodology which occurred in 2005-2006 took a number of years to finalize and
included numerous negotiations incorporating stakeholder input. To determine its MVP cost
allocation methodology, MISO held detailed discussions over 18 months, and more recently
spent several months discussing modifications to the cost benefit ratio for its MEP methodology.
For MVPs and MEPs, there was substantial back and forth and sufficient time for stakeholders to
analyze the impacts of the proposals and provide feedback to MISO.
By contrast, MISO first publicly proposed the changes to BRP cost allocation
methodology to stakeholders as a solution to the federal ROFR elimination required by the
21 Preventing Undue Discrimination and Preference in Transmission Service, Order No. 890, 72 FERC ¶ 12266
(March 15, 2007), FERC Stats. & Regs. ¶ 31,241, order on reh’g, Order No. 890-A, 73 FR 2984 (Jan. 16, 2008),
FERC Stats. & Regs. ¶ 31,261 (2007), order on reh’g and clarification, Order No. 890-B, 73 FR 39092 (July 8,
2008), 123 FERC ¶ 61,299 (2008), order on reh’g, Order No. 890-C, 74 FR 12540 (Mar. 25, 2009), 126 FERC ¶
61,228 (2009), order on clarification, Order No. 890-D, 74 FR 6151 (Nov. 25, 2009), 129 FERC ¶ 61,126 (2009).
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Commission in September, 2012. The instant filing was made to the Commission on October 25,
2012, after just one month of stakeholder discussions. One month for stakeholder discussion for
an issue as critical as cost allocation is not adequate. In responding to Order 1000’s requirement
to remove federal ROFR provisions by proposing the removal of the regional cost sharing
component of the BRP cost allocation methodology, MISO gave short shrift to the stakeholder
process. Nor did MISO afford stakeholders the amount of time needed to fully participate in the
development of the ultimate proposal filed by MISO.
The Midwestern State Coalition believes that the extremely limited timeframe and
severely compressed stakeholder process did not adhere to Order 1000 and Order 890’s open
and transparent planning process requirements. MISO simply did not spend enough time
discussing this with its stakeholders before making a massive change to its existing BRP cost
allocation methodology. Additionally, there was no consensus among stakeholders in that short
month about the direction that MISO should take on this issue.
More importantly, stakeholders were effectively given an “all or nothing” proposition:
either maintain cost sharing for all BRPs or remove cost sharing for all BRPs. No middle ground
was identified or seriously discussed. As identified in the next section, the Midwestern State
Coalition believes that such a middle ground may exist.
The Midwestern State Coalition requests that the Commission order MISO to gain
additional input with respect to any changes to the cost allocation methodology for BRPs to
allow for a proper and thorough vetting that would adhere to the open and transparent planning
process requirements of Orders 1000 and 890.
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D. The Middle Ground: Maintain Cost Sharing for BRPs 345kV and Above –
Remove Cost Sharing (and Retain A ROFR) on Smaller Projects.
To be clear, the Midwestern State Coalition supports obtaining the most cost effective
approach to building transmission and also believes that the number one responsibility of all
involved is the development of a robust and reliable transmission system. These goals may or
may not be realized by elimination of the federal ROFR. On one hand, eliminating ROFRs may
lead to cost savings, since proposals will be subject to competition from other proposals. On the
other hand, the elimination of a ROFR may potentially have a negative impact on system
reliability, remove the certainty needed for some developments, and may reduce the control that
state utility regulatory commissions have over development in their state.22
To fulfill the goal of getting transmission developed when and where it is needed, the
Midwestern State Coalition believes that the Commission should adopt the following middle
ground proposal as an interim solution, which will be subject to further deliberations in the
MISO stakeholder process:
Waive the cost sharing requirements currently in place for BRPs that are below 345kV.
This would allow for the continuation of a ROFR on these projects, since no costs would
be shared outside of the zone where the facility is located.
Reject the Filing Parties’ proposal with respect to BRPs 345kV and above. The current
cost sharing methodology would continue, any ROFR would be eliminated, and the
projects would be subject to the competitive process.
Identify that the application of this waiver would be in place until the MISO stakeholder
process could consider this proposal and other alternatives for a long-term solution. The
Commission should establish a timeline for consideration and vetting of any approach in
the MISO stakeholder process, with the goal of completing that process in advance of
MTEP 14.
22
Given these goals (which may be competing ones), the Midwestern State Coalition believes that the elimination of
the federal ROFR should be limited in application as outlined here. The size and scope of large BRP, MVP and
MEP projects mean that they are more likely to be regional in nature, more likely to have a longer lead time, and are
more likely to see savings through the competitive process. Allowing participation by qualified non-incumbent
transmission owners, who may be able to provide a solution at a lower cost than an incumbent transmission owner,
could be beneficial to customers.
12
This proposal maintains cost sharing for larger BRP projects, which have been previously
shown to provide regional benefits that should be paid by beneficiaries outside the zone where
the project is located. The proposal also recognizes that smaller projects are driven more by
local reliability needs and may require quicker action to avoid reliability concerns, which may be
frustrated by potential delays associated with the competitive process. The current cost
allocation methodology already differentiates between larger and smaller projects by having a
different cost allocation for these projects. This proposal maintains this differentiation in the
context of Order 1000.
Finally, the Midwestern State Coalition believes this proposal should be interim in nature.
This may be a longer-term solution, but it should be subject to consideration in the MISO
stakeholder process to ensure that it is considered in an open and transparent process and
subjected to sufficient scrutiny by the stakeholder community. However, to ensure that a rational
and workable cost allocation is in place, this proposal should be approved on an interim basis
and allow the MISO stakeholder process to identify and consider this and other potential long-
term solutions. The Commission may wish to set a specific timeline for consideration of this
proposal (or potentially others) by stakeholders.
13
CONCLUSION
The Midwestern State Coalition respectfully submits these comments and protest with
respect to the Filing Parties’ proposal relating to BRP cost allocation.
Dated at Madison, Wisconsin, this 10th
day of December, 2012.
Respectfully Submitted,
PUBLIC SERVICE COMMISSION OF
WISCONSIN
Sandra J. Paske
Secretary to the Commission
610 N. Whitney Way
P.O. Box 7854
Madison, WI 53707-7854
Tel: (608)266-1265
MICHIGAN PUBLIC SERVICE
COMMISSION
Patricia S. Barone
Bill Schuette
Attorney General
Steven D. Hughey
Patricia S. Barone
Assistant Attorneys General
Michigan Department of Attorney General
Public Service Division
6520 Mercantile Way, Suite 1
Lansing, MI 48911
Tel: (517) 241-6680
14
MISSOURI PUBLIC SERVICE COMMISSION
Lera L. Shemwell
Deputy General Counsel
P.O. Box 360
Jefferson City, MO 65102
Tel: (573) 751-7431
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CERTIFICATE OF SERVICE
I hereby certify that I have this day served the foregoing document upon each person designated
on the official service list compiled by the Secretary in this proceeding.
Dated at Madison, Wisconsin, this 10th
day of December, 2012.
Christina Keeley
Public Service Commission of Wisconsin
610 N. Whitney Way
P.O. Box 7854
Madison, WI 53707-7854
Tel: (608)267-7915
DL: 00611406