On December 11, 2018, FERC approved the Midcontinent Independent System Operator, Inc.’s (“MISO”) proposed tariff revisions to remove the service territory of Entergy New Orleans, LLC (“Entergy New Orleans”) from Cost Allocation Zone 9 to its own new Cost Allocation Zone 12 (“Proposal”). FERC found that the Proposal was just and reasonable because it would result in an allocation of costs that is at least roughly commensurate with MISO’s Transmission Expansion Plan (“MTEP”) economic project benefits.
On October 12, 2018, MISO filed the Proposal to create a separate stand-alone Cost Allocation Zone for Entergy New Orleans. The Proposal was based on an analysis MISO conducted in response to a request from the Council of the City of New Orleans. To substantiate its findings that a separate stand-alone Cost Allocation Zone for Entergy New Orleans is appropriate, MISO noted that adopting this Proposal would improve cost alignments and benefits for economic projects approved in the MTEP. Similarly, MISO asserted that creating a new Cost Allocation Zone for Entergy New Orleans would more appropriately balance the increased granularity in calculating Market Efficiency Project benefits, other projects approved in the MTEP, and the uncertainties derived from calculating benefits on a granular level. MISO stated that the proposed tariff changes would apply prospectively and would not change the cost allocations for Market Efficiency Projects or other economic projects approved prior to MISO’s requested effective date—60 days from the filing date—and no later than December 31, 2018.
Louisiana Energy Users Group (“LEUG”) intervened and argued that more extensive reforms are required to correct MISO’s cost allocation methods for economic transmission projects and that MISO’s cost allocation methods generally do not allocate project costs in a manner that is commensurate with their benefits. LEUG further asked the Commission to refrain from making any findings regarding whether MISO’s overall cost allocation methods are just and reasonable in approving the Proposal. Among other things, MISO argued, in response that LEUG’s issues spanned beyond the scope of the proceeding.
Upon weighing all the evidence in this matter, FERC approved MISO’s Proposal. In doing so, FERC determined that the Proposal was just and reasonable because it would result in an allocation of costs that is at least roughly commensurate with MTEP economic project benefits. FERC further found that LEUG’s perspective regarding MISO’s transmission cost allocation methods more generally were beyond the scope of the proceeding, which was limited to review of the Proposal in MISO’s filing.
FERC’s order can be found here.