Approval of a broad cost-allocation proposal for new regional multi-value projects (MVPs) is welcome news for the Midwest and for wind development, removing a significant barrier to building new transmission. The next step is getting new transmission projects moved forward into regional expansion plans for 2011.
Last week, the Federal Energy Regulatory Commission (FERC) approved a proposal that improves the Midwest Independent Transmission System Operator's (Midwest ISO) ability to ensure that the costs of transmission projects with regional benefits are properly assigned to those who benefit.
Individual MVPs will be aggregated with other similar projects in a portfolio so that benefits of the new projects are conferred across the entire Midwest ISO in a manner that is commensurate with the costs incurred.
MVPs are expected to provide multiple benefits for Midwest consumers by helping to create a more flexible and reliable grid to reduce electricity bills, deliver renewable energy and seize energy-efficiency opportunities.
FERC recognized these multiple benefits and the need for new transmission as a factor in the decision: ‘We expect the functional approach to MVP selection to allow Midwest ISO and its members to achieve a number of goals at one time. First, it allows Midwest ISO and stakeholders to identify transmission projects that will have positive benefits for the grid, and that may also satisfy legal and public policy goals in addition to providing just and reasonable pricing on a non-discriminatory basis. Second, the four-part process provides for thorough, transparent consideration of which transmission projects should receive regional cost allocation. Third, the process allows Midwest ISO flexibility to move forward MVPs in appropriate numbers, at appropriate times, in order to maximize regional benefits and to ensure that the costs of each portfolio are widely and fairly distributed. Finally, we find that the integrated process takes another step toward achieving the goal of facilitating efficient regional transmission planning.’
FERC based its decision on the following principles:
– MVPs must provide benefits across the Midwest ISO region;
– The portfolio approach ensures that costs are spread broadly across the region;
– The stakeholder review process at the Midwest ISO will ensure that costs to parties are roughly commensurate with the benefits they receive, and if there are significant disagreements, the dispute resolution process can be used; and
– Stakeholders and state commissions generally supported the MVP proposal.
The approval of MVPs was also welcome news for Midwest wind development. The lack of access to transmission has been a large constraint for wind energy in the Midwest, with thousands of megawatts worth of wind energy projects stuck in limbo and waiting for this new transmission.
FERC's cost-allocation approval removes a significant hurdle to updating the Midwest energy grid. Now, the focus shifts to the ongoing process at the Midwest ISO to evaluate 17 candidate MVP projects for potential inclusion into the 2011 Midwest ISO Transmission Expansion Plan.
Along with approving the cost allocation for MVPs, FERC also approved a proposal that allocates 90% of the costs for new generator interconnection lines (on-ramps to the regional grid) directly to a new energy generator.
Jamie Karnik is the communications manager for Wind on the Wires, a collaborative organization that promotes transmission development.