Attachment FF-6 and Potential Tariff Gap

Transcription

1 Attachment FF-6 and Potential Tariff Gap Regional Expansion Criteria & Benefits Working Group Workshop (RECBWG) May 26, 2016 Revised 5/31/2016

2 Overview Objective Review original intent of Attachment FF-6 Highlight tariff gap for interregional economic projects outside of MISO Discuss options to address gap Key Takeaways Two of our Joint Operating Agreements (JOAs) allow for interregional projects to reside wholly in another RTO Attachment FF-6 only addresses projects terminating in MISO Attachment FF-6 gap for interregional economic projects located wholly outside of MISO. MISO is presenting 4 potential options: No tariff change and apply existing Market Efficiency Project (MEP) cost allocation Modify Attachment FF-6 with threshold test Benefiting Local Resource Zones (LRZs) pay Apply 20% postage stamp to sub-regions 2

3 Hypothetical Interregional Projects During the Transition Period Scenario 1 Economic project terminates exclusively in MISO North/Central Provides benefits to MISO North/Central and/or South MISO North/Central pays Scenario 2 Economic project terminates in MISO North/Central AND South Benefiting LRZs pay 80% and the remaining 20% is postage stamped across the MISO footprint Scenario 3 Economic project terminates exclusively in MISO South Provides benefits to MISO North/Central and/or South MISO South pays Scenario 4 Project terminates wholly outside of MISO Provides benefits to MISO North/Central and/or South Current gap in Attachment FF-6 regarding who pays GAP

4 Option 1 No Tariff Change, Default to Existing Att FF MEP Cost Allocation Since Att FF-6 is silent on what to do with an interregional project that terminates solely outside of MISO, an option is to default to current Attachment FF procedures for economic projects. This however, implements a 20% postage stamp allocation of costs across the entire MISO footprint. Hypothetical Examples Interregional project provides economic benefits to MISO but is located wholly outside of MISO: Hypothetical Examples for Option 1 A B C Total Interregional Project Cost $100M $100M $100M Total MISO Benefit 30% 30% 30% Analysis Results North/Central Benefit 100% 0% 50% Analysis Results South Benefit 0% 100% 50% MISO Cost Share $30M $30M $30M MISO Regional Cost Allocation in Attachment FF LRZs 80% 80% 80% Postage Stamp Footprint Wide 20% 20% 20% Allocation of 80% to Benefitting LRZs LRZs in North/Central Planning Area Cost $24M $0 $12M LRZs in South Planning Area Cost $0 $24M $12M 20% Postage Stamp Allocation Footprint Wide $6M $6M $6M 4

5 Option 2 - Modify Attachment FF-6 Introduces a benefit threshold to address a scenario where analysis shows that benefits span across North/Central and South. If at least 80% of MISO s benefit is to one particular region, then default to transition period language outlined in Attachment FF-6 Projects would be treated as if they terminate in the area benefiting by 80% or greater Modification to Attachment FF-6 required and only effective for the remainder of the transition period Hypothetical Examples Interregional project provides economic benefits to MISO but is located wholly outside of MISO. 80% of benefit resided in one MISO sub-region: Hypothetical Examples for Option 2 D E Total Interregional Project Cost $100M $100M Total MISO Benefit 30% 30% Analysis Results North/Central Benefit 80% of the 30% = 24% 20% of the 30% = 6% Analysis Results South Benefit 20% of the 30% = 6% 80% of the 30% = 24% MISO Cost Share $30M $30M MISO Cost Allocation for South Transition Period 100% to where project terminates North/Central Planning Area Cost $30M $0 South Planning Area Cost $0 $30M 80% Threshold met Hypothetical Examples for Option 2 F Total Interregional Project Cost $100M Total MISO Benefit 30% Analysis Results North/Central Benefit 75% of the 30% = 22.5% Analysis Results South Benefit 25% of the 30% = 7.5% MISO Cost Share $30M Allocation of 80% to Benefitting LRZs = $24M LRZs in North/Central Planning Area Cost 80% of $22.5M = $18M LRZs in South Planning Area Cost 80% of $7.5M = $6M 20% Postage Stamp = $6M North/Central Planning Area Cost Load ratio portion of $6M South Planning Area Cost Load ratio portion of $6M 80% Threshold not met 5

6 Option 3 Benefiting LRZs Pay 100% of Cost Project cost would be paid 100% by LRZs that benefit Elimination of postage stamp Modification to Attachment FF-6 required Hypothetical Examples Interregional project provides economic benefits to MISO but is located wholly outside of MISO: Hypothetical Examples for Option 3 A B C Total Interregional Project Cost $100M $100M $100M Total MISO Benefit 30% 30% 30% Analysis Results North/Central Benefit 100% 0% 50% Analysis Results South Benefit 0% 100% 50% MISO Cost Share $30M $30M $30M New Cost Allocation in Attachment FF-6 LRZs 100% 100% 100% Allocation of 100% to Benefitting LRZs LRZs in North/Central Planning Area Cost $30M $0 $15M LRZs in South Planning Area Cost $0 $30M $15M 6

7 Option 4 Postage Stamp applied to sub-regions Project cost would be paid 80% by LRZ(s) that benefit and the remaining 20% would be postage stamped to the benefiting subregion(s) Modification to Attachment FF-6 required Hypothetical Examples Interregional project provides economic benefits to MISO but is located wholly outside of MISO: Hypothetical Examples for Option 4 A B C Total Interregional Project Cost $100M $100M $100M Total MISO Benefit 30% 30% 30% Analysis Results North/Central Benefit 100% 0% 50% Analysis Results South Benefit 0% 100% 50% MISO Cost Share $30M $30M $30M New Cost Allocation in Attachment FF-6 Sub-region 100% 100% 100% Allocation of 80% to Benefitting LRZs = $24M LRZs in North/Central Planning Area Cost $24M $0 $12M LRZs in South Planning Area Cost $0 $24M $12M 20% Postage Stamp = $6M North/Central Planning Area Cost $6M $0 $3M South Planning Area Cost $0 $6M $3M 7

8 Next Steps MISO South Transition Period gap Apr May Jun Jul Aug Sep Oct Nov Dec Review summary of issue and conceptual proposal In meeting stakeholder discussion RECBWG Workshop related to Attachment FF-6 In meeting stakeholder discussion Review draft Tariff redlines In meeting stakeholder discussion Stakeholders provide feedback Review final Tariff redlines File with FERC, if needed 2016 Blue highlight = RECB meeting month 8

9 Eric Thoms (651) Contacts Davey Lopez (317) Cathy Brewster (317)

10 Appendix 10

11 Regional Project Types and Cost Allocation Allocation Category Driver(s) Allocation to Beneficiaries Participant Funded ( Other ) Transmission Delivery Service Project Generation Interconnection Project Transmission Owner identified project that does not qualify for other cost allocation mechanisms. Can be driven by reliability, economics, public policy or some combination of the three. Transmission Service Request Interconnection Request Paid by requestor (local Pricing Zone) Generally paid for by Transmission Customer; Transmission Owner can elect to roll-in into local Pricing Zone rates Primarily paid for by requestor; 345 kv and above 10% postage stamp to load Baseline Reliability Project NERC Reliability Criteria 100% allocated to local Pricing Zone Market Efficiency Project Multi-Value Project Reduce market congestion when benefits are 1.25 in excess of costs Address energy policy laws and/or provide widespread benefits across footprint 345 kv and above: 80% distributed to Local Resource Zones commensurate with expected benefit, 20% postage stamp to load 100% postage stamp to load and exports other than what is exported to PJM 11

12 SPP SERTP PJM Interregional Planning and Cost Allocation Project Requirements Metrics Used Seam Transmission Need Reliability Benefit to Cost Interconnection in both RTOs > $5 Million Avoided Cost Adjusted Production Cost Net Load Payments Economic >1.25 Public Policy Reliability >1.25 Economic >1.25 Public Policy >1.25 Reliability Economic Public Policy As of 5/23/