How To Fix The Att Fd-6 Gap For Interregional Projects Outside Of Miso

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Jessie Jacobs
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1 Potential Attachment FF-6 Tariff Gap Options Regional Expansion Criteria & Benefits Working Group (RECBWG) April 19, 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 2 of our 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 economic interregional projects located wholly outside of MISO. MISO is presenting 2 potential options: No tariff change and apply existing MEP cost allocation rules Modify Attachment FF-6 2

3 Attachment FF-6 Background MISO South transition period Transmission Expansion Planning Cost Allocation Transmission Projects Baseline Reliability Projects (BRPs) Market Efficiency Projects (MEPs) Multi-Value Projects (MVPs) Location Terminating in MISO North/Central and MISO South Terminating exclusively in one planning area 3

4 Background Why does the Att FF-6 gap only exist for economic beneficial interregional projects located wholly in another RTO? Reliability & Public Policy Interregional projects driven solely by reliability utilize the avoided cost of specific BRP projects when determining cost allocation, so those costs would be assigned to the original entity whose regional project was avoided. Public policy driven projects also utilize avoided cost. Those who would have paid the cost of the regional project would pay the cost of the interregional project. Economic Interregional projects that provide economic benefits utilize APC benefits, which are regionally cost shared both from a LRZ (80%) and a footprint wide postage stamp (20%) standpoint. There is no avoided project. 4

5 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 $100 million $100 million $100 million Total MISO Benefit 30% 30% 30% Analysis Results North/Central Benefit 100% 0% 50% Analysis Results South Benefit 0% 100% 50% MISO Cost Share $30 million $30 million $30 million 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 Cost $24 million $0 $12 million LRZs in South Cost $0 $24 million $12 million 20% Postage Stamp Allocation Footprint Wide $6 million $6 million $6 million 5

6 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 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 $100 million $100 million 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 $30 million $30 million MISO Cost Allocation for South Transition Period 100% to where project terminates North/Central Planning Area $30 million $0 South Planning Area $0 $30 million Allocation of 80% to Benefitting LRZs LRZs in North/Central Cost $24 million $0 LRZs in South Cost $0 $24 million 20% Postage Stamp North/Central Planning Area Cost $6 million $0 South Planning Area Cost $0 $6 million 6

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

8 Appendix 8

9 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 9

10 Interregional Planning and Cost Allocation Project Requirements Metrics Used Seam PJM 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 SERTP Economic >1.25 Public Policy >1.25 Reliability SPP Economic Public Policy 10

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