FERC Conditionally Approves MISO Queue Reform

On Friday, March 30, 2012, the Federal Energy Regulatory Commission (the "Commission") conditionally approved a proposal from the Midwest Independent System Operator ("MISO") to change its generator interconnection queue procedures to address backlogs and late-state terminations of generation interconnection queue agreements (FERC Docket No. ER12-309-000).  The new procedures are effective January 1, 2012.  The reforms approved on Friday are MISO's third set of significant queue reforms since 2008 as MISO has continued to shift its procedures for processing interconnection applications from a "first-come, first-served" approach to a "first-ready, first-served" approach.  

For developers, the most critical changes are the new cash-at-risk milestones required for projects to enter the Definitive Planning Phase and after execution of a Generator Interconnection Agreement ("GIA").  The purpose of these new milestones is to require interconnection customers to put more money at risk earlier in the process so that projects that advance through MISO's queue to the Definitive Planning Phase will be more likely to reach commercial operation.  Other important changes include revised timelines, new study procedures, and Net Zero Interconnection Service.

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Energy Storage in the MISO Footprint

Two new energy storage studies are getting underway this summer in the Midwest Independent System Operator (MISO) footprint: the Energy Storage Study and the Manitoba Hydro Wind Synergy Study. At MISO’s Energy Storage Workshop held on June 29, 2011, MISO explained that its goals are to explore the potential reliability, market, and planning benefits of energy storage technologies and estimate the price inflection point where energy storage provides benefits to MISO markets. 

The Energy Storage Study will focus on battery technology, compressed air, and pumped storage. The first phase of the study will be completed in November 2011 and a second phase by the end of June 2012. MISO’s new Energy Storage Technical Review Group will meet for the first time on August 3, 2011, when it will consider the Draft Energy Storage Study Scope. The Manitoba Hydro Wind Synergy Study will focus on Manitoba Hydro’s capabilities as essentially a “super-sized pumped storage plant.”

These studies are the next steps in MISO’s efforts to incorporate long-term storage into its markets. In February 2008, a FERC Order on Ancillary Market Services directed MISO to evaluate operational and procedural adjustments to remove barriers to the comparable treatment of new technologies (Docket No. ER07-1372). In a December 31, 2009 Order, FERC conditionally accepted MISO tariff provisions for Stored Energy Resources (Docket No. ER09-1126), finding that the operating requirements and compensation for Stored Energy Resources would be comparable to other resources providing regulating reserves. Pursuant to the December 31, 2009 Order, MISO also submitted an informational report to FERC on March 1, 2010 describing its efforts to incorporate long-term storage resources into the market. The two energy storage studies starting this summer move these efforts to a formal study phase. 

Stoel Rives' Mark Hanson and Greg Jenner to speak at Renewable Energy in the Midwest

Join Stoel Rives Partners Mark Hanson and Greg Jenner in Minneapolis, for Renewable Energy in the Midwest States: New Policy, Business and Legal Developments.  Here they will meet with leading renewable energy professionals, innovators and regulators to address opportunities and challenges for developers  and entrepreneurs in the Midwest renewable market and the developing Smart Grid sector.

Both Mark and Greg will present on Friday, August 26, and will discuss environmental issues and updates of federal and state programs, as well as ways to move renewable projects forward with less government support.

For full conference details, click here.

FERC Decision Opens Door for New Wind Development in the Upper Midwest

The Federal Energy Regulatory Commission (FERC) opened the door today for new investment in transmission lines in the Upper Midwest that will deliver new wind energy to market.  By establishing a methodology for sharing the cost of new transmission lines, FERC’s decision could provide a significant boost to wind development in the region.  For more information, see our full alert.

Report Identifies Transmission Corridors to Deliver 8,600 MW of New Wind in the Upper Midwest

The Upper Midwest Transmission Development Initiative (UMTDI) issued its final report last week on transmission planning and cost allocation issues associated with delivering renewable energy from wind-rich areas to the region’s customers. Through UMTDI, the governors of Iowa, Minnesota, North Dakota, South Dakota, and Wisconsin collaborated to identify six renewable transmission corridors that could serve as the primary pathways to move thousands of megawatts of wind power. This buildout would cost an estimated $3 billion and serve as a backbone for future energy needs in the five-state region and potentially further east.

Considering the significant cost and shared benefits of regional transmission development, UMTDI also developed a set of general cost allocation principles. This work occurred in parallel and with similar goals to the development of the Midwest ISO’s multi-value project cost allocation proposal filed with the Federal Energy Regulatory Commission in July (Docket No. ER10-1791-000). UMTDI is deferring further development of its cost allocation principles while it monitors the progress of the Midwest ISO’s tariff filing. UMTDI does not take any position on the tariff filing, but acknowledges that construction of transmission lines in its six corridors would be very difficult without a cost sharing mechanism. 

UMTDI’s renewable transmission corridors are based on the Midwest ISO’s estimate that about 8,600 MW of new renewable capacity will be needed in the region by 2025 to serve the renewable energy standards and goals of these five states. The group identified twenty “wind zones” where it would be most efficient to develop wind power based on available wind resources, existing wind generation, existing interconnection queue requests, and local geography. The six transmission corridors were chosen as the best general areas for transmission lines to move wind energy from the wind zones to load centers in a cost-effective manner.

AWEA, Others File Protests at FERC to MISO Proposed Cost Allocation

On August 13, 2009, the American Wind Energy Association, Wind on the Wires and certain wind developers filed protests at the Federal Energy Regulatory Commission to the Midwest Independent Transmission System Operator's (MISO) recent filing at FERC.  The MISO filing proposes to revise MISO's cost allocation methodology for network upgrades for generator interconnection, and resulted from MISO's Regional Expansion Criteria & Benefits (RECB) Task Force.

The current cost allocation methodology in place provides that the cost of network upgrades for generator interconnection are funded initially by generator interconnection customers, and the customer is entitled to a 50% reimbursement where it is demonstrated that the output will serve MISO’s network customers or the facility has been designated a network resource. For facilities rated 345 kV and higher, 20% of the refund cost is allocated to all MISO pricing zones on a postage-stamp basis, and 80% is allocated among pricing zones using a line outage distribution factor (LODF) method.

Under the MISO proposal, cost allocation would be as follows: (i) for network upgrades below 345 kV, 100% to the interconnection customer, and (ii) for network upgrades 345 kV and above, 90% to the interconnection customer and 10% to all transmission customers through a postage stamp-type charge.

To read any of the documents related to the MISO filing, go to the FERC eLibrary website and enter in Docket No. ER09-1431.

Michigan Passes Renewable Portfolio Standard

On September 18, 2008, the Michigan legislature sent the state's first Renewable Portfolio Standard to the Governor's desk for signature.  The package mandates "10 percent of the state's energy come from renewable sources by 2015, regulatory reform that protects Michigan ratepayers and allows utility companies to build new electricity generation in Michigan, and a requirement that utilities meet an additional 5.5 percent of Michigan's annual electricity demands through energy efficiency by 2015."  AWEA estimates that Michigan is one of the top twenty states in terms of wind energy potential.

The RPS package, however, has its skeptics.  The Detroit News published an editorial that criticized the RPS for imposing a high financial burden on customers - for example, all customers must immediately begin paying a monthly surcharge to allow the utility to recover the incremental cost of complying with the utility's renewable energy plan, although utilities aren't required to take any concrete steps until 2012.

Michigan joins Ohio, which passed its RPS last spring, as the latest Midwestern state (and the 28th state nationwide) to pass an RPS.

Upper Midwest Transmission Development Initiative Created

On September 18, 2008, the Midwest states of Minnesota, Iowa, Wisconsin, North Dakota and South Dakota announced creation of a regional transmission planning effort that will "promote regional electric transmission investment and cost sharing" among the states.  Several entities, including MISO (which is currently conducting transmission planning studies in the region) and ITC, have issued press releases in favor of the initiative.  The initiative, scheduled to have its first planning meeting in October, will coordinate efforts among entities involved in transmission matters, including state regulatory agencies, transmission companies, utilities, independent generation owners and other key stakeholders.