AWEA Applauds FERC’s Approval of Midwest Transmission Cost Allocation Proposal

The Federal Energy Regulatory Commission (FERC) approved a proposal by the grid operator in the Midwest, the Midwest Independent System Operator (MISO), that creates a new regime for paying for transmission that will help develop needed transmission infrastructure, improving reliability, reducing homeowners’ and businesses’ electric bills, fostering economic development, and providing consumers with access to wind energy.

The new cost allocation policy creates a new category of transmission projects called Multi-Value Projects (MVPs). The MVP concept is based on the recognition of the numerous, widely shared benefits provided by enhanced transmission infrastructure and, accordingly, spreads the costs for these lines across the MISO footprint.

This policy will help develop needed transmission infrastructure and provide access to wind energy, which would enhance states’ ability in that region to achieve their renewable energy requirements and create new jobs.

The order today also approved a cost allocation approach with respect to network upgrades (facilities that interconnect a generator to the bulk power system), under which generator interconnection customers would bear virtually all of their costs.

This part of the decision, akin to the obviously unworkable policy of charging the next driver entering a crowded highway the entire cost of adding a new lane to reduce congestion, might thwart some of the gains that will be achieved by the MVP policy, since it fails to recognize that the costs for such facilities should be shared by all their beneficiaries and potentially places disproportionate costs on generators.

The American Wind Energy Association (AWEA) today issued the following statement from AWEA’s Senior Vice-President for Public Policy Rob Gramlich on the decision:

"We applaud the Commission’s decision to approve the MISO proposal with respect to Multi-Value Projects, as it represents a significant improvement over the existing cost allocation proposal. We look forward to working with the Midwest ISO to move candidate MVP lines into the Midwest ISO Transmission Expansion Plan 2011 (MTEP ’11) to ensure that interconnection costs for wind power development are reasonable. With this policy in place, the Midwest is ready to step up to the plate and support wind farm development and unlock the associated manufacturing and supply chain jobs throughout the region. The proposed mechanism would spread the costs of new transmission infrastructure to the beneficiaries, allowing the region to build a robust transmission grid that will bring reliability and economic benefits as well as supporting state, regional and national policy goals. This policy is a tremendous victory for the region’s consumers, environment, and economy."