On September 27, 2011, the Federal Energy Regulatory Commission (“FERC” or the “Commission”) denied a tariff waiver request by the Midwest Independent Transmission System Operator, Inc. (“MISO”) concerning planning and cost allocation of network upgrades and a transition period for integrating Entergy Corporation and its operating companies (together “Entergy”).  FERC found the requested tariff wavier an “inappropriate vehicle” to implement a transition period envisioned by MISO and ordered that a section 205 filing would be necessary under the Federal Power Act (“FPA”).

Entergy announced its intent to join MISO on April 25, 2011 and on June 3, 2011, MISO filed a tariff waiver request at FERC.  In its waiver request, MISO sought to establish a transition period, during which the cost of network upgrades in its current footprint (Northern Planning Region) or in Entergy (Southern Planning Region) would only be allocated within the respective planning region.  MISO argued in its filing that a transition period is necessary for MISO and Entergy to study levels of congestion and address infrastructure in each other’s area.  Without this analysis, MISO argued that subsidization could occur between the Northern and Southern Planning Regions.  Further, the Northern Planning Region’s current analysis and portfolio of Multi-Value Projects (“MVP”) did not take the Southern Planning Region into account.  MISO proposed a minimum transition period of five years, beginning in December 2013, when at least one Entergy operating company joins MISO.  MISO stated that this transition period would not extend beyond ten years.

Several parties filed notices to intervene and protests of MISO’s proposed tariff waiver.  The Commission found that the requested waiver was an inappropriate method for MISO to implement a transition period for Entergy, but the Commission did not make any findings concerning what type or length of transition arrangements might be appropriate in order to integrate Entergy.  The Commission also found that MISO’s proposed waiver was not limited in scope, and lacked the requisite specificity.  Further, the Commission found MISO’s proposed tariff waiver would alter existing cost allocation methodology for the current MISO footprint and significantly affect rates and charges for jurisdictional service, thus implicating section 205 of the FPA.  FERC ordered that such tariff changes should be submitted through a section 205 filing with applicable tariff sheets containing cost allocation provisions applicable to the Northern and Southern Planning Regions identified by MISO.  

A copy of the Commission’s Order is available here.