On October 13, 2016, FERC found that the M2 Milestone Payment in the Midcontinent Independent System Operator, Inc. (“MISO”) interconnection process should apply to all interconnection customers, including generators external to MISO that want to participate in MISO’s capacity and energy markets through network resource interconnection service—External Network Resource Interconnection Service (“E-NRIS”) and Network Resource Interconnection Service-only (“NRIS-only”) customers. The M2 Milestone Payment is a payment that interconnection customers entering the final phase of MISO’s interconnection process are required to make to MISO, and is used to help alleviate the costs of necessary network upgrades and restudies that are shifted to other interconnection customers in the event that an interconnection customer withdraws from the interconnection queue.
On March 29, 2016, FERC granted in part and denied in part a complaint filed by a group of merchant generators alleging, among other things, that MISO gives preferential treatment in its interconnection process to external generators by exempting external generators from the M2 Milestone Payment (see April 5, 2016 edition of the WER). In the March 29 order, FERC instituted a paper hearing to analyze the application of the M2 Milestone Payment to all classes of interconnection customers and directed MISO to make a compliance filing revising its tariff to include the terms and conditions related to providing interconnection service for external generators, including the application of the M2 Milestone Payment.
In its briefs submitted pursuant to the paper hearing, MISO argued that the M2 Milestone Payment should not be assessed to E-NRIS and NRIS-only customers because the M2 Milestone Payment was intended to assure that interconnection customers were ready to achieve commercial operation and was not intended to apply to customers seeking to interconnect existing generators. Thus, MISO reasoned that because E-NRIS and NRIS-only customers are either already in-service, under construction, or have an executed interconnection agreement, the M2 Milestone Payment should not apply to those generators. MISO further contended that, although the M2 Milestone Payment was also intended to reduce late-stage termination and restudies, there is no evidence that lower-queued interconnection customers are impacted by an E-NRIS or NRIS-only customer’s withdrawal. Moreover, MISO argued that, under its current formula for M2 Milestone Payments, the M2 Milestone Payment would be zero for E-NRIS and NRIS-only customers because their requests involve existing generation. In addition, for its compliance filing, MISO filed tariff revisions governing the interconnection of external generators.
In its order, FERC found that it was unjust, unreasonable, unduly discriminatory, or preferential for MISO to exempt E-NRIS and NRIS-only customers from the M2 Milestone Payment, stating that all interconnection customers should be treated comparably. Specifically, FERC found that other customers that are lower in the interconnection queue could be negatively impacted by restudies or shifted cost allocation when an E-NRIS or NRIS-only customer withdraws from the queue. FERC stated that the M2 Milestone Payment is designed to protect other customers from late-stage withdrawals, and that lower-queued customers should be protected from potential network upgrade costs identified by restudies caused by the withdrawal of E-NRIS and NRIS-only customers. FERC required MISO to make a further compliance filing to include tariff revisions that (1) apply the M2 Milestone Payment to all interconnection customers and (2) ensure that the M2 Milestone Payment assessed to any customer is not zero.
A copy of the order is available here.