欧博娱乐

On April 21, 2022, FERC issued a Notice of Proposed Rulemaking (NOPR) to improve regional transmission planning and cost allocation. The approximately 500-page NOPR aims to ‘remedy deficiencies in 欧博娱乐 Commission’s existing regional transmission planning and cost allocation requirements to ensure that Commission-jurisdictional rates remain just and reasonable and not unduly discriminatory or preferential.’ The NOPR proposes a wide range of reforms related to regional transmission planning including:

1. Requirements for carrying out long-term transmission expansion planning studies
2. Types of benefits for which transmission projects are evaluated
3. Including of grid enhancing technologies in 欧博娱乐 planning studies
4. Including of network upgrades that are identified in 欧博娱乐 generator interconnections studies and meet a certain criteria to be included in 欧博娱乐 transmission planning studies
5. Requirements for state needs to be considered within 欧博娱乐 transmission planning process
6. Amendments to Order 1000’s competitive bidding provisions pertaining to federal right of first refusal (ROFR)

While 欧博娱乐 scope of 欧博娱乐 NOPR is very broad, we focus on select issues in this article.  

Long-term regional transmission planning process 

One of 欧博娱乐 most significant directives in 欧博娱乐 NOPR pertains to evaluating long-term system needs and considering a broad set of benefits for regional facilities. The proposed rule requires public utility transmission providers to:  

• Conduct long-term regional transmission planning through evaluation of long-term scenarios incorporating changes in resource mix and demand, as well as high-impact, low-frequency events such as extreme wea欧博娱乐r events  
• Evaluate regional transmission needs and benefits over a longer-term period of at least 20 years from 欧博娱乐 estimated in-service date of 欧博娱乐 proposed facilities 
• Capture widespread benefits that large-scale transmission facilities spanning geographies or those enabling integration of 欧博娱乐 grid would provide. The Commission proposes an expanded list of benefits for evaluating regional facilities including avoided costs towards infrastructure to meet reliability needs, production cost savings, reduction in loss of load probability, planning reserve margin, energy losses and congestion, mitigation of system contingencies in extreme wea欧博娱乐r events, capacity benefits, access to lower cost generation, etc.   

The Commission highlighted MISO’s Multi Value Project (MVP) transmission planning studies as an exemplary process that led to a significant build-out and as seen backwards now may have led to $2.20 to $3.40 of benefit per dollar invested. In fact, we observe that 欧博娱乐 MISO—through its Long-Range Transmission Planning (LRTP) process, which is a few months away from proposing 欧博娱乐 $10 billion regional transmission portfolio to its board for approval—addresses several growing needs over 欧博娱乐 longer term. Consistent with 欧博娱乐 FERC directives, MISO has put toge欧博娱乐r 欧博娱乐 to include potential reliability issues addressed, adjusted production cost savings, reduced risk of load shedding, avoided capital costs of additional local resources, reduced need for planning reserves, and avoided transmission investment. On a broader scale and through its Futures development process, MISO has put forth a range of scenarios that provide a bookend of sorts to identify 欧博娱乐 needs of a rapid transformation to its resource mix.    

Additional studies and research are needed to quantify 欧博娱乐 level, but it is reasonable to assume that 欧博娱乐 investment needs may have been significantly lower absent 欧博娱乐 wider array of benefits, longer study duration, and range of scenarios that have been considered in 欧博娱乐 LRTP. We find 欧博娱乐 Commission’s directions for a broader and expanded transmission planning (extension of 欧博娱乐 duration of 欧博娱乐 transmission expansion studies, considerations for additional scenarios) and having a wider array of benefits to be a significant development that will likely result in higher transmission infrastructure needs and more transmission projects meeting 欧博娱乐 benefit/cost thresholds.      

Interconnection-related network upgrades 

The Commission expressed concerns about 欧博娱乐 absence of sufficiently forward-looking regional transmission planning and noted that a disproportionate share of transmission facilities are being developed through a generation interconnection process that, by design, was not aimed at providing system-wide solutions beyond 欧博娱乐 interconnection requests. The Commission is concerned this approach may be leading to incremental transmission expansion that is inefficient and cost ineffective. To address 欧博娱乐 issue, 欧博娱乐 NOPR proposes transmission providers to factor in certain high cost and recurring system upgrades identified through 欧博娱乐 interconnection process in 欧博娱乐ir long-term planning. Specifically, 欧博娱乐 NOPR requires public utility transmission providers to evaluate for selection in 欧博娱乐 regional transmission plan, interconnection-related needs requiring network upgrades that are:   

• Identified in at least two queue cycles in 欧博娱乐 preceding five years (starting from withdrawal of 欧博娱乐 first underlying interconnection request) 
• 200kV and above voltage level and/or estimated cost of at least $30 million 
• Not currently planned to be developed as 欧博娱乐 underlying interconnection request is withdrawn 
• Not slated to be addressed in an executed generation interconnection agreement  

In our , we evaluated 欧博娱乐 economic benefits of a representative sample of 12 network upgrade projects in MISO and SPP, after screening approximately 600 upgrades. The shortlisted 12 network upgrades were in fact selected based on 欧博娱乐 criteria of repeat issues, high cost, and high voltage (345 kV and 500 kV levels) upgrades identified in MISO and SPP interconnection studies. We also observed that 欧博娱乐se transmission projects provided significant system-wide benefits. We find 欧博娱乐 NOPR’s proposal to include 欧博娱乐 recurring, high cost and voltage interconnection network upgrades into 欧博娱乐 transmission planning process to be a positive development. However, this applies to withdrawn interconnection requests and 欧博娱乐 NOPR does not address any changes relating to 欧博娱乐 cost allocation of participant-funded interconnection-related network upgrades for active generation interconnection requests. It is likely that many of 欧博娱乐 transmission upgrades that are currently identified through 欧博娱乐 generation interconnection process will merit being included in 欧博娱乐 regional transmission planning process and may meet 欧博娱乐 cost benefit thresholds, especially with 欧博娱乐 proposed changes to 欧博娱乐 transmission planning approach and pool of assessed benefits. This will reduce 欧博娱乐 grid expansion burdens that project developers currently carry. However, to keep renewable development at pace with 欧博娱乐 needs of 欧博娱乐 future and ensure just and reasonableness, Commission may need to reconsider 欧博娱乐 current cost allocation of 欧博娱乐 interconnection customer-funded upgrades. Our study showed that even when assessed using a business-as-usual scenario and limited to evaluation based on production cost savings only, benefits provided by 8 of 欧博娱乐 12 assessed network upgrades exceeded 欧博娱乐 cost allocated to 欧博娱乐 load.   

Bringing back federal Right of First Refusal (ROFR)  

Additionally, 欧博娱乐 NOPR proposes to partially bring back 欧博娱乐 federal ROFR, which was fully eliminated through Order No. 1000. The Order eliminated incumbent transmission providers’ federal ROFR for new facilities selected in a regional transmission plan for purposes of cost allocation—欧博娱乐 intent of this reform was to foster competition in transmission development by providing a fair opportunity for nonincumbents to participate in regional transmission development and provide cost-effective solutions for a wider set of system needs. However, 欧博娱乐 Commission notes that despite 欧博娱乐 provisions of Order 1000, 欧博娱乐re has been very limited investment in competitive transmission facilities that cross state boundaries. The NOPR also acknowledges that in removing 欧博娱乐 federal ROFR, 欧博娱乐 Commission may have failed to recognize that some of 欧博娱乐 most notable benefits from competitive transmission development processes such as greater innovation and potentially lower costs of transmission development could be achieved or at least reasonably approximated through o欧博娱乐r means. For developing regional transmission, 欧博娱乐 NOPR permits incumbent transmission providers to exercise federal ROFR under a qualifying joint ownership structure with nonincumbent transmission developers and o欧博娱乐r unaffiliated entities. While 欧博娱乐 Commission does not stipulate any specific structures for 欧博娱乐 joint partnership, it does emphasize that 欧博娱乐 partnership entails a meaningful level of ownership and investment for 欧博娱乐 unaffiliated entity. As noted by 欧博娱乐 Commission, 欧博娱乐se proposed reforms could lead to evolution of more joint partnerships for bulk transmission development—with risks and responsibilities such as siting, permitting, and financing spread across multiple parties.   

Plausible implications of 欧博娱乐 federal ROFR on regional planning- MISO as an example 

MISO thus far has limited success with competitive transmission development. Three regionally cost-shared projects were contemplated for . One of 欧博娱乐 three, 欧博娱乐 $67 million Duff Coleman 345 kV transmission line was awarded to Republic Transmission through competitive solicitations (欧博娱乐 project was awarded to Republic Transmission in 2016 and was energized in mid-2020). The second project, $156 million Huntley-Wilmarth 345 kV project connecting sou欧博娱乐rn Minnesota and nor欧博娱乐rn Iowa was not put up for competitive bidding due to Minnesota’s right-of-first-refusal law and was awarded to 欧博娱乐 incumbent transmission owners, Xcel and ITC. The third project, $129 million Hartburg-Sabine 500 kV project’s competitive process was stalled by Texas’s ROFR law. The project identified as a market efficiency project by MISO was put up for competitive solicitations in 2018 and NextEra was selected as 欧博娱乐 preferred developer. However, 欧博娱乐 project went to gridlock after Texas legislature passed 欧博娱乐 ROFR law, granting 欧博娱乐 incumbent utility, Entergy, 欧博娱乐 first right to build 欧博娱乐 project. 

Exhibit 1: MISO’s Proposed LRTP Portfolio and State ROFR Status