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Without the change, MISO faces a December 31 defection of two members that own transmission in the wind-rich portion of its footprint and the threat of more withdrawals.
The revisions require interconnecting customers to bear 100% of the costs of network upgrades of less than 345 kV associated with interconnection projects that meet MISO's regional expansion criteria and benefits standards. For upgrades at 345 kV or above, the interconnection customer could, under some circumstances, pay 90% of the costs.
Under the existing tariff, interconnection customers can get refunds of 50% of those costs from the transmission owner that builds the upgrade, regardless of size. The transmission owners pass the burden of those refunds entirely to their customers.
This approach is well-suited for reliability projects that generally provide a benefit to transmission customers, MISO explained, but it causes big problems when there are expensive upgrades associated with generation projects in remote areas, like wind power, that are not needed to serve local load.
The problem is so severe for Otter Tail Power and Montana-Dakota Utilities that they have announced plans to leave MISO as the end of the year if cost allocation remains the same. Otter Tail, the filing explained, faces a 5,200% increase in RECB charges -- which would force a 24% rise in its transmission rates -- from the interconnection of 2,000 MW of wind projects that are expected to execute agreements with MISO by the end of September.
"The benefits of remaining a transmission-owning member of the Midwest ISO are dwarfed by the costs that will be allocated to us" if the cost allocation does not change, JoAnn Thompson, manager of federal regulatory compliance and policy at Otter Tail, said in testimony attached to the MISO filing. Because the issue "is not unique to Otter Tail and MDU," the grid operator said in the filing that it fears a domino effect if they leave.
"The purpose of the proposal... is to ensure that the Midwest ISO is preserved" as a regional grid operator, said the filing, which depicted the revisions as a "first, interim phase of an ongoing refinement of the RECB cost-allocation principles."
This interim solution advances the "broader long-term goal of integrating renewable resources by ensuring that areas offering high-capacity-factor wind power remain fully integrated in the Midwest ISO's regional energy market and regional planning process," MISO added.
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