On April 19, 2012, the Federal Energy Regulatory Commission (the “Commission” or “FERC”) approved proposed tariff revisions of Midwest Independent Transmission System Operator, Inc. and the Transmission Owners of the Midwest Independent System Operating, Inc. (collectively “MISO”) in its effort to facilitate the integration of Entergy Corporation and its operating companies (“Entergy”) into MISO. The order clarifies how the costs of certain transmission projects will be allocated during the transition of Entergy into MISO, and sets the stage for future cost sharing between the current MISO and Entergy regions.
In April of 2011, Entergy announced its intention to join MISO as a transmission owning member by 2013, integrating its transmission system operating in Louisiana, Arkansas, Mississippi and Texas with the MISO system. In June 2011, in an effort to facilitate Entergy’s integration into MISO, MISO sought waiver of its tariff provisions regarding the cost allocation for network upgrades. The Commission denied MISO’s request at the time, finding the waiver to be the wrong mechanism for transition and directing MISO to set forth with greater specificity the cost allocation rules to be applied during the transition, the specific metrics for the achievement of comparability and the time frame for the transition period. Following stakeholder discussions, on November 28, 2011 MISO again set out a transition plan for integrating Entergy and filed a new proposal with FERC.
The Commission Order conditionally accepts MISO’s November 28 proposal. This proposal sets out a five-year transition period, under which (1) MISO would apply its existing transmission planning processes to the Entergy region to identify necessary network upgrades, and (2) the cost of network upgrades approved before or during the transition period would not be shared between customers in the existing MISO footprint and Entergy region unless the upgrades terminate in both regions. After the five-year transition period, (1) customers in both regions would begin sharing the cost of network upgrades approved after the transition period, if such sharing is required by the MISO tariff, and (2) if MISO is able to develop a portfolio of Multi-Value Projects (regional transmission facilities in MISO whose costs are socialized) before or during the transition period that satisfies a cost-benefit test, then regional cost sharing will be phased-in over eight years. The Order finds this proposal to be just and reasonable. The Commission still requires clarification and greater specificity in some aspects of the proposal, and has directed MISO to make a compliance filing to provide further explanation and tariff revisions to clarify several matters, including the treatment of Multi-Value Projects.
To view the Commission’s Order, click here.