Monday, December 10, 2018

FERC Approves Revised TMEP Cost Allocation

By Amanda Durish Cook

FERC last week accepted MISO’s revised cost allocation proposal for the RTO’s relatively new category of smaller interregional transmission projects with PJM.

The new cost allocation affects targeted market efficiency projects (TMEPs) between MISO and PJM and became effective Nov. 28 (ER18-2514). MISO made the allocation revisions as part of a larger update to its cost allocation as the five-year Entergy transition period — which limits cost sharing of transmission projects in MISO South — expires at the end of this month.

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2018 TMEPs | MISO

The RTO’s share of TMEP costs is currently allocated to transmission pricing zones based on each zone’s share of the relative positive congestion contribution, measured by the TMEP candidate study. (See FERC OKs MISO TMEP Cost Recovery Schedule.)

MISO made three complex changes to its cost-sharing formula while still preserving the premise that TMEP costs flow to benefiting transmission pricing zones.

The RTO had been calculating TMEP benefits by using a calculation of the nodal congestion contribution for each load node. Now it will include generator nodes in determining congestion benefits, rather than considering only load nodes. The two nodes will be aggregated to calculate the net benefits of the upgrade to each transmission pricing zone.

MISO will also discontinue its practice of applying the formula to all five-minute dispatches in the real-time market. The formula will now apply only to hours in the day-ahead market in which a reciprocal coordinated flowgate will experience congestion.

FERC said MISO’s proposal will simplify the TMEP cost allocation process.

“We find that the proposed revisions will better define the beneficiaries of avoided congestion as well as allocate the costs of TMEP upgrades more accurately, while removing undue complexities from the calculation of benefits,” FERC said.

The calculation will not account for the contract path on SPP’s transmission that connects MISO Midwest with South. Regulators in South had called for a stakeholder process to determine the impacts of the contract path on cost allocation.

But MISO said an analysis showed accounting for the contract path “indicated minimal change to the cost allocation.”

MISO and PJM have so far recommended seven TMEPs, five that received approval in 2017 and two up for approval this month from the RTOs’ respective boards of directors. The combined projects will cost under $25 million and are expected to reap about $132 million in benefits. (See MISO, PJM Endorsing 2 TMEPs for Year-end Approval.)

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