Comments of Louisiana Energy Users Group and Texas Industrial Energy Consumers. MISO South Market Congestion Planning Study. September 18, 2015

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1 Comments of Louisiana Energy Users Group and Texas Industrial Energy Consumers On MISO South Market Congestion Planning Study September 18, 2015 In response to the MISO Staff s September 11, 2015 request for stakeholder feedback on the MTEP15 South Market Congestion Planning Study (MCPS), the Louisiana Energy Users Group (LEUG) and Texas Industrial Energy Consumers (TIEC) would like to offer the comments that follow. LEUG and TIEC request that the MISO Staff publicly post these comments as soon as possible with the meeting materials for the next MISO stakeholder or committee meeting in which the South MCPS will be discussed and provide notice of the posting to participating stakeholders. If the MISO Staff has any questions or concerns with respect to these comments, please do not hesitate to contact one of the following LEUG or TIEC representatives: Jim Dauphinais (Consultant to LEUG and TIEC): jdauphinais@consultbai.com Katherine King, Kean Miller LLP (Counsel to LEUG): katherine.king@keanmiller.com Katie Coleman, Thompson & Knight LLP (Counsel to TIEC): Katie.Coleman@tklaw.com As a follow up to the September 9, 2015 Market Congestion Planning Study (MCPS) - South Region, the MISO Staff on September 11, 2015 requested feedback/participation on the following items: Potential project candidates (pending stakeholder feedback) for recommendation to MISO Board of Directors located in Texas and Central Arkansas o Newton Bulk - Leach 138 kv Rebuild + NSub2 Lewis Creek 230 kv project o Mabelvale Bryant South 115 kv re-conductor project Performing generation sensitivity, moving Regional Resource Forecast (RRF) unit located at Little Gypsy site inside the Amite South Load pocket and continue further evaluation in the Amite South and DSG load pocket in MTEP16. Newton Bulk Leach 138 kv Rebuild + Nsub2 Lewis Creek 230 kv project We recommend that, as part of the MTEP15 planning cycle, MISO complete the reliability analysis noted on Slide 27 of its September 9 th Robustness Testing Presentation for this Texas project. However, the analysis should look at not just the complete $122.5 million Newton Bulk Leach 138 kv Rebuild + Nsub2 Lewis Creek 230 kv project, but also just the $31.5 million Newton Bulk Leach 138 kv Rebuild project alone. MISO s analysis shows that the Newton Bulk Leach 138 kv Rebuild project alone has a Page 1 of 5

2 more robust forecasted weighted average benefit to cost ratio (3.13 to 5.58) and a forecasted benefit to cost ratio in excess of 1.26 under all MISO futures and generation sensitivities. While the full Newton Bulk Leach 138 kv Rebuild + Nsub2 Lewis Creek 230 kv project has the potential to produce a greater total dollar net benefit, its forecasted weighted average benefit to cost ratios are not as robust (1.50 to 2.88) and not all MISO futures and generation sensitivities are forecasted to produce a benefit to cost ratio in excess of 1.00 (specifically, under Generation Scenario 1 (1800 MW of CCGT and CT generation additions in WOTAB), the Business as Usual (BAU) future has a forecasted benefit to cost ratio of 0.83 and the South Industrial Renaissance (SIR) future has a forecasted benefit to cost ratio of 0.86). Study and review of both projects as potential MISO Other Projects by Entergy and stakeholders may lead to the conclusion to proceed only with the Newton Bulk Leach 138 kv Rebuild project alone for MTEP15 and delay a decision on the Nsub2 Lewis Creek 230 kv portion of the project to the MTEP16 planning cycle. MISO does not currently have the authority under its tariff to require the construction of economic transmission projects except to the extent such a project qualifies as a Market Efficiency Project or Multi-Value Project, or is an Other Project that has a funding sponsor. We believe the MTEP14 and MTEP15 MCPS results have demonstrated this is a serious shortcoming of the MISO Tariff for MISO South in light of the way 230 kv facilities in MISO South are often utilized in the same role as 345 kv facilities in MISO North and Central. We believe the MTEP15 MISO South MCPS results further emphasize the need to consider: (i) lowering the voltage threshold for MEPs in MISO South below 345 kv or (ii) establishing a new class of below 345 kv MISO economic transmission projects for MISO South whose costs would be allocated to each transmission pricing zone in MISO South in direct proportion to the forecasted weighted average Adjusted Production Cost savings of the project for that transmission pricing zone. Resolution of this issue would address the dependency of these projects on Entergy s discretion and the cost allocation issues that can surround these projects when they are pursued as an Other Project by a particular transmission owner, but provide significant cost savings to other transmission pricing zones besides the one where the transmission owner is located. In light of MISO s inability to require construction of the Newton Bulk Leach 138 kv Rebuild + Nsub2 Lewis Creek 230 kv project as an MEP under the current MISO Tariff, we believe that Entergy, as part of its duty to provide bundled retail electric service at the lowest reasonable cost, should undertake its own economic study of the project as soon as possible to assure that the project can be proposed for approval by the MISO Board of Directors in MTEP15 as an Other Project, if the study shows that the project, or at least the Newton Bulk Leach 138 kv Rebuild portion of the project, warrants construction. Mabelvale Bryant South 115 kv re-conductor project We do not have a position with respect to this proposed $6.1 million 115 kv economic transmission project that has been proposed for Central Arkansas other than to note that, like with the above Texas project, MISO does not currently have the ability under its tariff to require construction of this project Page 2 of 5

3 unless it is pursued as an Other Project with a funding sponsor. As with the above Texas project, we believe that Entergy, as part of its duty of providing bundled retail electric service at the lowest reasonable cost, should undertake its own economic study of this Central Arkansas project. Amite South and Downstream of Gypsy (DSG) Issues We find the MISO approach with respect to MISO s MTEP15 MCPS analysis of the Amite South and DSG load pockets in Southeastern Louisiana to be insufficient and disappointing. We request that as part of MISO s ongoing 2015 MCPS analysis, and without having to delay for another year to the 2016 study process: (1) MISO conduct the sensitivity analysis it previously indicated that it would perform utilizing a generation source located outside of the load pocket rather than assuming Entergy construction of a new self-build Little Gypsy CCGT; (2) MISO perform the sensitivity analysis with respect to both the $98.8 million Waterford-Nsub1 230 kv project and the smaller scale $37.9 million Union Carbide-Wesco 230 kv project alternative; (3) MISO complete analysis of any potential transmission projects droppedoff in screening analysis that would show benefits with the sensitivity analysis; (4) the MISO sensitivity analysis include and accurately reflect current, updated Entergy plans for generation deactivations or retirements, including Willow Glen 2 and 4, Little Gypsy 1, Ninemile 3, and Michoud units; and (5) MISO hold another meeting with stakeholders to present the results of its analysis. In addition, we also request that MISO identify how and when it plans to incorporate into its studies an examination of whether there are fixed generation costs that could be completely or partially avoided through the addition of transmission projects, as was requested in our previous comments submitted June 2, Over the past several months, first in the VLR planning study and later in the MCPS, stakeholders have struggled to have the MISO Staff understand the importance of fully considering the sensitivity of its analysis to future generation assumptions in the load pockets in MISO South and the need to make sure that initial screening does not unduly discard candidate projects whose economics are sensitive to those future generation assumptions. While the MISO Staff did, with the exception of the Little Gypsy CCGT, ultimately include the requested generation sensitivities in its MTEP15 MCPS analysis, MISO has not reasonably demonstrated that its initial screening process for transmission projects in MTEP15 did not unduly discard any candidate projects due to assuming generation additions in the load pockets. In addition, the Little Gypsy CCGT sensitivity analysis should have been performed as the MISO Staff previously proposed at the August 7 th MCPS meeting. The MISO Staff should not have eliminated the sensitivity analysis. The MISO Staff indicated during the September 9 th MCPS meeting that lessons learned from initial screening and sensitivity analysis in the MTEP15 planning cycle will be applied to the MTEP16 planning cycle. We believe it is imperative that the sensitivity study be conducted in the 2015 study process, and not delay another year to the 2016 process. To be clear, when new generation facilities located in a load pocket are clearly an alternative to new transmission facilities, unless the generation facilities in question have been certified by the applicable local retail regulatory authority and/or are actively under construction, we believe: (i) the generation facilities in question should not be included in the initial screening analysis and (ii) a sensitivity analysis Page 3 of 5

4 should be performed both with and without the generation facilities. Our expectation is that MISO s approach in the MTEP16 planning cycle will be generally consistent with this view. As indicated above, with respect to the MTEP15 planning cycle, we recommend that the Little Gypsy CCGT sensitivity analysis be completed as MISO previously indicated at the August 7 th MCPS. The sensitivity analysis should be performed for both the $98.8 million Waterford-Nsub1 230 kv project and the smaller scale $37.9 million Union Carbide-Wesco 230 kv project alternative. However, caution must be exhibited in performing the sensitivity analysis. Specifically, MISO noted during the September 9 th MCPS meeting that removal of the Little Gypsy CCGT addition increases transmission congestion upstream of Little Gypsy diminishing the forecasted Adjusted Production Cost savings that would come from the two 230 kv projects being considered by MISO. This is not surprising as the two projects are primarily addressing congestion in the DSG load pocket. However, it is likely that, if the Little Gypsy CCGT is not ultimately constructed, other reliability or economic transmission upgrades would occur upstream of Little Gypsy such that the two projects being examined to primarily reduce congestion in the DSG load pocket would produce Adjusted Production Cost savings similar to that exhibited in MISO s analysis to date with the Little Gypsy CCGT addition included. With respect to recommending approval of Waterford-Nsub1 230 kv project (or Union Carbide-Wesco 230 kv project) in the MTEP15 planning cycle, based on the analysis completed to date and the proposed 2021 and 2022 in-service dates for the projects, we concur that MISO not further consider either of these projects in the MTEP15 planning cycle beyond completion of all of the aforementioned sensitivity analysis. However, both projects, as well as possible alternatives to them, should be studied in detail in the MTEP16 planning cycle with the goal of attempting to identify a project that should be pursued for approval in that planning cycle. As an aside, more so than for the Southeastern Louisiana economic transmission project that came out of MTEP15 and the Texas project discussed earlier in these comments, the two 230 kv projects discussed herein to primarily address congestion in the DSG load pocket may raise serious cost allocation questions if they are pursued as MISO Other Projects. Specifically, it appears the two projects may involve construction of transmission facilities by Entergy Louisiana, LLC, but also may provide a benefit primarily to Entergy New Orleans, Inc. customers. The delay of further evaluation of the two projects beyond the aforementioned sensitivity analysis to the MTEP16 planning cycle will provide more time to potentially address such cost allocation issues. As a final note, it is our understanding that various Entergy generating units with approved Attachment Y requests have been, or will by June 2016, be retired from service. We ask that MISO identify in its MTEP15 report those generation facilities that are retired, or will be retired by June 2016, that were modeled as being operational in the MTEP15 South MCPS study beyond June Page 4 of 5

5 Northern Louisiana In the MISO Staff s September 9 th Robustness Testing presentation, the MISO Staff identified the $4.2 Alto Series Reactor project in Northern Louisiana as a project that has a large weighted average benefit to cost ratio (7.49). The MISO Staff indicted it is not recommending the project at this time because it would like to investigate broader, more comprehensive alternatives. Given the proposed 2024 inservice date for the Alto Series Reactor, we do not object to not exploring this project further in the MTEP15 planning cycle. However, this project, as well as possible alternatives to it, should be studied in detail in the MTEP16 planning cycle with the goal of attempting to identify a project that should be pursued for approval in that planning cycle. Page 5 of 5