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1
Transmission Cost Allocation
RECB TF Results
Advisory Committee
September 22, 2005
2
Discussion Overview
History & Background - Guiding Principles
Key Components of Proposal to be Filed
Impacts of the Proposal – Sample Projects
Key Issues for Stakeholder, and Compromise
Task Force Majority Positions and Recommendation
Next Steps
2
3
RECB TFBackground and Principles
FERC Generator Interconnection Order 2003
Pro forma Requirements• Generator Upgrades funded by generator and repaid
when transmission service taken• FERC: Ensures Gens don’t pay for Base upgrades;
don’t pay twice; upgrades benefits all grid users
Options for Independent Providers (RTOs)• Less concern about comparable service issues
• Propose alternatives to credit/repayment policy• Request State positions on pricing
4
RECB TFBackground and Principles
Discussed pricing issue with OMS and stakeholders
Did not develop superior proposal to pro forma pricing by filing deadline
Filed pro forma, stating concern for credit policy in RTO with License Plate pricing• May be no transmission service revenues to pay
credits (revenues go to sink zone, or non for NITS)• Unfair burden to TO or local zone customers
Committed to working with stakeholders to develop a preferred policy
3
5
RECB TFBackground and Principles
OMS filed in support of MISO proposal to develop a preferred pricing policy
Offered key principles• Beneficiaries pay, and• Cost-causers pay
Creation of RECB TF – March ‘04• Charter broadened scope to include comprehensive
policy for all upgrades (generation, load growth, any other beneficial upgrades)
• Develop criteria for including all transmission projects in regional plan (MTEP)
• Develop methods for allocating and recovering costs of these projects
6
19 Monthsof RECB Discussions
Measures of benefits of expansions• Customer, supplier, societal benefits
• More efficient dispatch – reduced production cost
• LMP reductions – spot market opportunities
• Reliability benefits
• Reduced reserve requirements
• Flow-based methods – flow reduction, distribution factor impacts
4
7
19 Monthsof RECB Discussions
Measures of causation• “But for” requests – incremental needs
of requestor
• Flow-based causation – contribution to limits
8
Initial Proposal - October ‘04Heavily based on “cost-causation”
Zone load is cost causer - Same as current policy
New Interconnection requests cause upgrades – direct assign costs
5
9
Stakeholder Response to October 04 Proposal
VITOs majority approved
MSATs opposed
IPPs opposed
TDUs opposed
OMS opposed
10
OMS Resolution November ‘04MISO proposal for reliability is primarily cost causers payOMS Principles envisioned allocation of cost between both cost causers and beneficiaries for reliabilityAssigning costs to last requestor/cost causer
• unfairly ignores other contributors to cause• Does not account for other beneficiaries
Recognized that any single best test of beneficiaries is costly in time and resources to implementRecommended that MISO continue to work on creative, workable and cost-effective methods for determining beneficiaries
6
11
RECB Retooled10 more months of discussion considered for reliability projects:• Workability of policies that involve detailed
benefits calculations, negotiation and dispute over each reliability project
• Flow based approaches to cost causation
• Flow based approaches to use of system by others• Benefits as determined by flow reductions from an
upgrade• Relative Electrical proximity to beneficial upgrades
based on flow changes
• Level playing field for new generator entrants• Cost signals for new generators
12
Key Principles of Proposal to be Filed
Transmission Expansion benefits many• Reliability
• LMP• Reserves
• Losses, etc
Benefits of expansions vary but can extend far beyond zone of construction• History shows reliability issues can profoundly
impact distant areas
• A postage stamp component can capture
7
13
Key Principles of Proposal to be Filed
Benefits of expansions attenuate, in general, as move away from upgrade• Electrical “Proximity” can be an indicator of
relative benefit on average
Stakeholders do not want protracted benefits calculations and possible disputes for each and every project• A formulaic allocation was preferred
14
Key Principles of Proposal to be Filed
Generator Interconnects have identifiable element of cost causation, but also benefit many• Transmission expansion benefits
• Support robust supply and competition
Siting cost incentives are a factor for generator interconnects
Some commitment of resource to MISO should be demonstrated for MISO zonal loads to share costs
8
15
Key Components of Proposal to be Filed
3 Project categories• Baseline Reliability (MTEP)• Transmission Access Requests
• Regionally Beneficial Projects$5 M or 5% Net Plant minimum project cost for cost sharing amongst pricing zones
Cost allocation to zones is a blend of Postage Stamp and Sub-regional allocation
Any cost allocations to a Zone recovered through an adder rate collected and distributed to funder(s)
16
Key Components of Proposal to be Filed
Baseline Reliability Projects
Blended cost allocation to pricing zones• 345 kV and higher
• 20% Postage Stamp• 80% Subregional
• 100kV – 344 kV
• 100% Subregional
No cost sharing if less than cost thresholds
No cost sharing for MTEP 05 “Planned”projects list
9
17
Key Components of Proposal to be Filed
Generation Interconnection Projects
50/50 cost sharing between customer and pricing zones, with 1 year contractual commitment to MISO NITS customer
Without contract, direct assigned
Zonal 50% piece is shared as per Baseline Reliability (Blended Postage Stamp/Subregional)
Customer 50% piece is participant funded, or charged as a monthly fixed charge to recover return and O&M, at option of TO
18
Key Components of Proposal to be Filed
Regionally Beneficial Projects
May provide additional benefits by supporting competition, by expanding trading opportunities, or alleviating congestion beyond that achieved by Baseline Reliability Projects or New Transmission Access Projects
MISO identifies benefits and beneficiaries
Facilitate agreements between parties to fund
Included in MTEP if participants agree to funding
Interim proposal to be addressed further within 12 months
10
19
The Postage Stamp Component MISO provided data to support the idea of a Postage Stamp Component to the cost sharing formulation
Showed that for any single zone serving its own load, 20-30% if system use is external
Showed that for a range of actual Proposed Projects from MTEP 05, there are LMP benefits to be had by all Zones totaling more than costs
Demonstrated that the “reach” of the benefits is much greater than can be seen with the the sub-regional flow impact of the LODF matrix
Therefore subregional alone is not enough to capture benefits
20
Support for Postage Stamp
Sample projects reviewed• 3 Cinergy Facilities• 1 Ameren Facility• 3 LGEE Facilities• 1 Vectren Facility• 1 NIPSCo Facility• 1 ATCo Facility• 1 Otter Tail Facility
Total Project Cost = $129.9 M = $26 M annual RR (20% FC)Total Annual Postage Stamp Charges = $7 M (at 20% / 30% PS rule)Estimated Total Annual LMP reductions = $93.1 M
11
21
Areas of Projectand LMP Benefit
Hiple 345-138 #2
HE IPLCIN
VectrenLGEE
AMRNIP
NSP
ALTW
MPMDU
OTP
GRE
Areas of benefit
Project Location
22
Areas of Projectand LMP Benefit
Oak Creek 345-138 #2
NIPS
AMRN
NSP
ALTW
MDU
ATC
CIN, HE
LGEE
IPL
IPCILCCWLP
SIPC
OTP
MP
G
Areas of benefit
Project Location
12
23
Areas of Projectand LMP Benefit
Maple River 345-230 #3
AMRN
LES
MDU
LGEE
IP
SIPC
OTP
MP
CWLP
Areas of benefit
Project Location
24
Areas of Projectand LMP Benefit
Newtonville 161-138 #2
AMRN
LES
MDU
Vectren
IPCWLP
OTP
MP
ALTW
LGEE
CINHEIPL
NSP
GRE
Areas of benefit
Project Location
13
25
Areas of Projectand LMP Benefit
Ghent-OC Tap 138, BlueLick-Bullit County 161 kV reconductor
AMRN
MDU
LGEE
IP
ATC
MP
CILC
METC ITC
FE
OTP
ALTW
CIN
NSPGRE
Areas of benefit
Project Location
26
Areas of Projectand LMP Benefit
Mill Creek-Hardin 345 kV new line
CILCO
CINLES
LGEE
FE
ATC
Areas of benefit
Project Location
14
27
Areas of Projectand LMP Benefit
Franks-Callaway 345 kV new line
CIN,HE
LGEE
FE
METC ITCATC
NIPS
IPL
Vectren
LES
Areas of benefit
Project Location
28
Areas of Projectand LMP Benefit
HillCrest Project and Miami Fort 345-138 #2
CIN
LGEE
FENIPS
HE
v
MTEC
A
NSP
Areas of benefit
Project Location
15
29
The Subregional Component Between a Postage Stamp and pure Local Zone
Based on electrical proximity to the beneficial upgradeCalculate using Line Outage Distribution Factors
Grid impedance based - not sensitive to changeable resource and load relationships
When a line is added to grid topology, the new line will pick up flows from the original grid
Extent to which flows change on branches in one zone as compared to all others, determines proximity, and subregional share
Formula: Sumzone [abs(LODF * Mile)]
SumAll zones [abs(LODF * Mile)]
30
LODF Concept
18
35
Sample Sub-Regional Allocationsfor 22 Facilities Based on LODF
Prair
ie St
ate P
ower
Pla
nt Tr
ansm
ission
ou
tlet
Chisa
go-A
ppleR
iver
Jeffe
rson
City
345/1
61
Jeffe
rson-
Loos
e Cr
eek
345
More
au-A
pach
e Fla
ts 16
1
Ross
er-S
ilver 2
30,
2005
Calla
way-
Fran
ks 34
5, 20
06
Colum
bia-N
Mad
ison
138 k
V co
nver
ted to
34
5, 20
06
Wag
ner-N
W68
th &
Holdr
ege,
2008
Buffa
loRidg
e Spli
t Roc
k-No
bles C
o 345
kV
Buffa
loRidg
e Nob
les-
Lake
field
345
kv
Buffa
loRidg
e Nob
lesCo
34
5-11
5Bu
ffaloR
idge B
uffal
o-W
hite 1
15
Buffa
loRidg
e Cha
nrmb
-Fe
nton 1
15
Buffa
loRidg
e Fen
ton-
Noble
s 115
MillC
rk-Ha
rdin
345
Calla
way-
Fran
ks 34
5
Ston
e Lak
e 345
/161
Aubu
rn N
-Cha
tham
138
North
Mad
ison-
Wau
nak e
Milan
-Pion
eer 1
20
Hilcr
est-E
astw
ood 1
38 k V
FE 202 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 10% 0.0%HE 207 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 3% 0% 0% 0% 0% 0% 0.0%CIN 208 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 14% 0% 0% 0% 0% 0% 100.0%
VECT 210 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 2% 0% 0% 0% 0% 0% 0.0%LGEE 211 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 77% 0% 0% 0% 0% 0% 0.0%
IPL 216 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0.0%NIPS 217 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0.0%
METC 218 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0.0%ITC 219 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 90% 0.0%
ALTW 331 0% 2% 0% 0% 0% 0% 0% 0% 0% 23% 24% 6% 1% 6% 6% 0% 0% 2% 0% 0% 0% 0.0%CWLD 355 0% 0% 0% 0% 1% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0.0%AMRN 356 74% 0% 98% 98% 99% 0% 97% 0% 0% 0% 0% 0% 0% 0% 0% 3% 97% 0% 45% 0% 0% 0.0%
IP 357 26% 0% 1% 1% 0% 0% 3% 0% 0% 0% 0% 0% 0% 0% 0% 1% 3% 0% 24% 0% 0% 0.0%CILCO 359 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 14% 0% 0% 0.0%CWLP 360 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 17% 0% 0% 0.0%SIPC 361 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0.0%ATC 364 0% 5% 0% 0% 0% 0% 0% 100% 0% 1% 1% 0% 0% 0% 0% 0% 0% 31% 0% 100% 0% 0.0%NSP 600 0% 85% 0% 0% 0% 100% 0% 0% 0% 70% 66% 87% 92% 87% 87% 0% 0% 47% 0% 0% 0% 0.0%MP 608 0% 7% 0% 0% 0% 0% 0% 0% 0% 2% 2% 2% 0% 2% 2% 0% 0% 19% 0% 0% 0% 0.0%
GRE 618 0% 1% 0% 0% 0% 0% 0% 0% 0% 1% 1% 1% 1% 1% 1% 0% 0% 1% 0% 0% 0% 0.0%OTP 626 0% 0% 0% 0% 0% 0% 0% 0% 0% 4% 5% 3% 6% 3% 3% 0% 0% 0% 0% 0% 0% 0.0%LES 650 0% 0% 0% 0% 0% 0% 0% 0% 100% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0.0%MDU 661 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0.0%
36
Impacts of the ProposalSample Projects
Callaway-Franks 345 kV (2005)
$28,776,100
Postage Stamp Subregional Total % Total cost
FE 2.40% 0.0% 2.4% $691,765HE 0.12% 0.0% 0.1% $34,328CIN 2.00% 0.0% 2.0% $574,446
VECT 0.22% 0.0% 0.2% $64,386LGEE 1.31% 0.0% 1.3% $376,664
IPL 0.56% 0.0% 0.6% $162,261NIPS 1.56% 0.0% 1.6% $447,676
METC 1.99% 0.0% 2.0% $573,028ITC 0.62% 0.0% 0.6% $179,004
ALTW 0.64% 0.0% 0.6% $184,588CWLD 0.04% 0.0% 0.0% $12,279AMRN 2.00% 77.5% 79.5% $22,867,422
IP 1.05% 2.5% 3.6% $1,031,799CILCO 0.22% 0.0% 0.2% $62,205CWLP 0.08% 0.0% 0.1% $23,462SIPC 0.06% 0.0% 0.1% $18,233ATC 2.39% 0.0% 2.4% $687,627NSP 1.63% 0.0% 1.6% $467,875MP 0.38% 0.0% 0.4% $108,127
GRE 0.14% 0.0% 0.1% $40,050OTP 0.46% 0.0% 0.5% $132,589MDU 0.13% 0.0% 0.1% $36,284
20% 80% 100.0% $28,776,100
19
37
Impacts of the ProposalSample Projects
BuffaloRidge Nobles-Lakefield 345 kv Total% Total cost
$37,070,397 37,070,397$ 100% 100%
Postage Stamp SubregionalFE 2.4% 0.0% 2.4% $891,156HE 0.1% 0.0% 0.1% $44,223CIN 2.0% 0.0% 2.0% $740,021
VECT 0.2% 0.0% 0.2% $82,944LGEE 1.3% 0.0% 1.3% $485,232
IPL 0.6% 0.0% 0.6% $209,031NIPS 1.6% 0.0% 1.6% $576,712
METC 2.0% 0.0% 2.0% $738,195ITC 0.6% 0.0% 0.6% $230,600
ALTW 0.6% 19.5% 20.1% $7,456,492CWLD 0.0% 0.0% 0.0% $15,818AMRN 2.0% 0.1% 2.1% $772,144
IP 1.0% 0.0% 1.0% $388,307CILCO 0.2% 0.0% 0.2% $80,135CWLP 0.1% 0.0% 0.1% $30,225SIPC 0.1% 0.0% 0.1% $23,489ATC 2.4% 0.9% 3.3% $1,232,353NSP 1.6% 53.0% 54.7% $20,277,030MP 0.4% 2.0% 2.4% $875,965
GRE 0.1% 0.8% 0.9% $336,295OTP 0.5% 3.6% 4.1% $1,517,173MDU 0.1% 0.0% 0.1% $46,742
20% 80% 100% $37,050,282
38
Impacts of the ProposalSample Projects
Mill Creek-Hardin 345 kVLGEE
$60,139,000
Postage Stamp Subregional Total % Total cost
FE 2.40% 0.0% 2.4% $1,445,715HE 0.12% 2.1% 2.2% $1,349,991CIN 2.00% 11.1% 13.1% $7,874,810
VECT 0.22% 1.3% 1.5% $910,580LGEE 1.31% 61.9% 63.2% $37,988,259
IPL 0.56% 0.2% 0.7% $439,752NIPS 1.56% 0.0% 1.6% $935,595
METC 1.99% 0.0% 2.0% $1,197,567ITC 0.62% 0.0% 0.6% $374,100
ALTW 0.64% 0.0% 0.6% $385,769CWLD 0.04% 0.0% 0.0% $25,661AMRN 2.00% 2.5% 4.5% $2,692,043
IP 1.05% 1.0% 2.0% $1,224,535CILCO 0.22% 0.0% 0.2% $130,003CWLP 0.08% 0.0% 0.1% $49,034SIPC 0.06% 0.0% 0.1% $38,106ATC 2.39% 0.0% 2.4% $1,437,067NSP 1.63% 0.0% 1.6% $977,810MP 0.38% 0.0% 0.4% $225,975
GRE 0.14% 0.0% 0.1% $83,701OTP 0.46% 0.0% 0.5% $277,097MDU 0.13% 0.0% 0.1% $75,830
20% 80% 100% $60,139,000
20
39
Impacts of the ProposalSample Projects
Stone Lake 345/161 kV (2006)ATC
$8,100,000
Postage Stamp Subregional Total % Total cost
FE 0.00% 0.0% 0.0% $0HE 0.00% 0.0% 0.0% $0CIN 0.00% 0.0% 0.0% $0
VECT 0.00% 0.0% 0.0% $0LGEE 0.00% 0.0% 0.0% $0
IPL 0.00% 0.0% 0.0% $0NIPS 0.00% 0.0% 0.0% $0
METC 0.00% 0.0% 0.0% $0ITC 0.00% 0.0% 0.0% $0
ALTW 0.00% 2.1% 2.1% $171,603CWLD 0.00% 0.0% 0.0% $0AMRN 0.00% 0.0% 0.0% $0
IP 0.00% 0.0% 0.0% $0CILCO 0.00% 0.0% 0.0% $0CWLP 0.00% 0.0% 0.0% $0SIPC 0.00% 0.0% 0.0% $0ATC 0.00% 30.9% 30.9% $2,501,148NSP 0.00% 47.1% 47.1% $3,818,155MP 0.00% 18.9% 18.9% $1,527,845
GRE 0.00% 1.0% 1.0% $81,248OTP 0.00% 0.0% 0.0% $0MDU 0.00% 0.0% 0.0% $0
0% 100% 100% $8,100,000.0
40
Impacts of the ProposalSample Projects
North Madison-Waunakee 138 kV (2008)ATC
$6,500,000
Postage Stamp Subregional Total % Total cost
FE 0.00% 0.0% 0.0% $0HE 0.00% 0.0% 0.0% $0CIN 0.00% 0.0% 0.0% $0
VECT 0.00% 0.0% 0.0% $0LGEE 0.00% 0.0% 0.0% $0
IPL 0.00% 0.0% 0.0% $0NIPS 0.00% 0.0% 0.0% $0
METC 0.00% 0.0% 0.0% $0ITC 0.00% 0.0% 0.0% $0
ALTW 0.00% 0.0% 0.0% $0CWLD 0.00% 0.0% 0.0% $0AMRN 0.00% 0.0% 0.0% $0
IP 0.00% 0.0% 0.0% $0CILCO 0.00% 0.0% 0.0% $0CWLP 0.00% 0.0% 0.0% $0SIPC 0.00% 0.0% 0.0% $0ATC 0.00% 100.0% 100.0% $6,500,000NSP 0.00% 0.0% 0.0% $0MP 0.00% 0.0% 0.0% $0
GRE 0.00% 0.0% 0.0% $0OTP 0.00% 0.0% 0.0% $0MDU 0.00% 0.0% 0.0% $0
0% 100% 100% $6,500,000
21
41
Impacts of the ProposalSample Projects
Westwood-Dequine 345 kV #2
Westwood 345-138 kV #2 Total Cost
Cinergy Cinergy$588,366 $6,093,584.00 $6,681,950.00
8.81% 91.19% 100.00%Postage Stamp Subregional
Postage Stamp Subregional
FE 0.21% 0.0% 0.00% 0.0% 0.2% $14,144HE 0.01% 0.0% 0.00% 0.0% 0.0% $702CIN 0.18% 7.0% 0.00% 78.2% 85.4% $5,707,915
VECT 0.02% 0.0% 0.00% 0.0% 0.0% $1,316LGEE 0.12% 0.0% 0.00% 0.0% 0.1% $7,701
IPL 0.05% 0.0% 0.00% 1.7% 1.7% $114,754NIPS 0.14% 0.0% 0.00% 10.9% 11.0% $737,347
METC 0.18% 0.0% 0.00% 0.0% 0.2% $11,716ITC 0.05% 0.0% 0.00% 0.0% 0.1% $3,660
ALTW 0.06% 0.0% 0.00% 0.0% 0.1% $3,774CWLD 0.00% 0.0% 0.00% 0.0% 0.0% $251AMRN 0.18% 0.0% 0.00% 0.4% 0.6% $40,273
IP 0.09% 0.0% 0.00% 0.0% 0.1% $6,163CILCO 0.02% 0.0% 0.00% 0.0% 0.0% $1,272CWLP 0.01% 0.0% 0.00% 0.0% 0.0% $480SIPC 0.01% 0.0% 0.00% 0.0% 0.0% $373ATC 0.21% 0.0% 0.00% 0.0% 0.2% $14,059NSP 0.14% 0.0% 0.00% 0.0% 0.1% $9,566MP 0.03% 0.0% 0.00% 0.0% 0.0% $2,211
GRE 0.01% 0.0% 0.00% 0.0% 0.0% $819OTP 0.04% 0.0% 0.00% 0.0% 0.0% $2,711MDU 0.01% 0.0% 0.00% 0.0% 0.0% $742
2% 7% 0% 91% 100% 100% $6,681,950
42
Impacts of the ProposalSample Projects
Hilcrest-Eastwood 138 kV Hilcrest 345-138 kV Total CostCinergy Cinergy
$4,613,151 $6,335,189.00 $10,948,340.0042.14% 57.86% 100.00%
Postage Stamp Subregional
Postage Stamp Subregional
FE 0.00% 0.0% 0.00% 0.0% 0.0% $0HE 0.00% 0.0% 0.00% 0.0% 0.0% $0CIN 0.00% 42.1% 0.00% 57.9% 100.0% $10,948,340
VECT 0.00% 0.0% 0.00% 0.0% 0.0% $0LGEE 0.00% 0.0% 0.00% 0.0% 0.0% $0
IPL 0.00% 0.0% 0.00% 0.0% 0.0% $0NIPS 0.00% 0.0% 0.00% 0.0% 0.0% $0
METC 0.00% 0.0% 0.00% 0.0% 0.0% $0ITC 0.00% 0.0% 0.00% 0.0% 0.0% $0
ALTW 0.00% 0.0% 0.00% 0.0% 0.0% $0CWLD 0.00% 0.0% 0.00% 0.0% 0.0% $0AMRN 0.00% 0.0% 0.00% 0.0% 0.0% $0
IP 0.00% 0.0% 0.00% 0.0% 0.0% $0CILCO 0.00% 0.0% 0.00% 0.0% 0.0% $0CWLP 0.00% 0.0% 0.00% 0.0% 0.0% $0SIPC 0.00% 0.0% 0.00% 0.0% 0.0% $0ATC 0.00% 0.0% 0.00% 0.0% 0.0% $0NSP 0.00% 0.0% 0.00% 0.0% 0.0% $0MP 0.00% 0.0% 0.00% 0.0% 0.0% $0
GRE 0.00% 0.0% 0.00% 0.0% 0.0% $0OTP 0.00% 0.0% 0.00% 0.0% 0.0% $0MDU 0.00% 0.0% 0.00% 0.0% 0.0% $0
0% 42% 0% 58% 100% 10,948,340$
22
43
Impacts of the ProposalSample Projects
Jefferson City 345/161
Jefferson -Loose Creek 345 kV
Moreau-Apache Flat Total Cost
AMRN AMRN AMRN$4,677,200.00 $7,242,200.00 $13,297,900.00 $25,217,300.00
18.55% 28.72% 52.73% 100.00%Postage Stamp Subregional
Postage Stamp Subregional
Postage Stamp Subregional
FE 0.45% 0.0% 0.69% 0.0% 1.27% 0.0% 2.40% $606,213HE 0.02% 0.0% 0.03% 0.0% 0.06% 0.0% 0.12% $30,083CIN 0.37% 0.0% 0.57% 0.0% 1.05% 0.0% 2.00% $503,403
VECT 0.04% 0.0% 0.06% 0.0% 0.12% 0.0% 0.22% $56,423LGEE 0.24% 0.0% 0.38% 0.0% 0.69% 0.0% 1.31% $330,081
IPL 0.10% 0.0% 0.16% 0.0% 0.30% 0.0% 0.56% $142,194NIPS 0.29% 0.0% 0.45% 0.0% 0.82% 0.0% 1.56% $392,311METC 0.37% 0.0% 0.57% 0.0% 1.05% 0.0% 1.99% $502,160
ITC 0.12% 0.0% 0.18% 0.0% 0.33% 0.0% 0.62% $156,867ALTW 0.12% 0.1% 0.18% 0.1% 0.34% 0.1% 0.92% $231,112CWLD 0.01% 0.1% 0.01% 0.1% 0.02% 0.3% 0.52% $130,272AMRN 0.37% 14.5% 0.58% 22.5% 1.06% 41.7% 80.73% $20,357,115
IP 0.19% 0.1% 0.30% 0.2% 0.55% 0.0% 1.35% $340,103CILCO 0.04% 0.0% 0.06% 0.0% 0.11% 0.0% 0.22% $54,512CWLP 0.02% 0.0% 0.02% 0.0% 0.04% 0.0% 0.08% $20,561SIPC 0.01% 0.0% 0.02% 0.0% 0.03% 0.0% 0.06% $15,978ATC 0.44% 0.0% 0.69% 0.1% 1.26% 0.0% 2.52% $634,541NSP 0.30% 0.0% 0.47% 0.1% 0.86% 0.0% 1.73% $435,530MP 0.07% 0.0% 0.11% 0.0% 0.20% 0.0% 0.38% $94,755
GRE 0.03% 0.0% 0.04% 0.0% 0.07% 0.0% 0.14% $35,097OTP 0.09% 0.0% 0.13% 0.0% 0.24% 0.0% 0.46% $116,192MDU 0.02% 0.0% 0.04% 0.0% 0.07% 0.0% 0.13% $31,797
4% 15% 6% 23% 11% 42% 100% 100% $25,217,300
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Key Issues for Stakeholders;and Compromises
Postage stamp component
Transition – sharing current planned projects
Generator Network Upgrades
Uncertainty of future impacts on zones
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Key Issues – Postage Stamp
Concern over “reach” of benefits
Disagreement over amount (percentage)
More agreement on high voltage
Many did not want any postage stamp
Some wanted significant postage stamp
One proposal was a PS based on a Load Ration Share weighted by imports to reflect differing use of external systems – not well supported
Compromise was 20% and only if applied to high voltage - 345 kV and above
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Key Issues – TransitionMajority were very concerned about wide variability in current investment projections
A few companies are in a building crest now, others not currently
Some referred to this as “catch-up” mode
TF tried to develop method to identify “catch-up” projects – I.e. long-standing issues – no agreement reached on such a method
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Key Issues – Transition ConclusionFinal position was to define a starting point tied to each companies own representations of Planned Projects approved by the MISO Board in MTEP 05
These projects were represented as Planned Projects to go forward prior to any cost sharing policies
Establishing any starting point will undoubtedly exclude projects that have benefits to others, just as the existing grid includes such beneficial infrastructure
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Key Issues – Generator UpgradesStatus quo is Pro-Forma Order 2003• Generators get a full refund or credit
• Applicable to both traditional transmission providers and RTOs unless RTOs file different
Creates issues in a regional Network Service tariff• No incremental TSR revenues for Network Service
from generators from which to pay credits • Local zone TO or customers bear full burden
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Key Issues – Generator UpgradesEastern RTO/ISO direct assign 100% of generator costs in exchange for financial rights
Final position was to split costs between Interconnection Customer and Zonal sharing• Balances stakeholder positions• Provides incentives for efficient interconnection
costs – both sides• Blends concepts of “but for / cost causation” and
benefits to many of the expansion and the interconnection
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Key Issues – Generator UpgradesEastern RTO/ISO direct assign 100% of generator costs in exchange for financial rights
Final position was to split costs between Interconnection Customer and Zonal sharing• Balances stakeholder positions• Provides incentives for efficient interconnection
costs – both sides• Blends concepts of “but for / cost causation” and
benefits to many of the expansion and the interconnection
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Key Issues – Uncertaintyof future impacts on zones
Concern was raised by one entity that the full impacts of sharing proposals are difficult to gauge and could have unintended consequencesTrue, it is difficult to predict precise impacts going forward because we cannot well predict what expansion needs may occur, when, and whereStakeholders and staff settled on an allocation method that determines Subregional shares separately for each project – although using a fixed formula
This makes it more difficult to predict precise future impacts
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Key Issues – Uncertaintyof future impacts on zones
Principles were built to reflect benefits through a degree of sharing of projects near your system that support reliability and provide market opportunitiesThough a particular system may not need much near-term spending going forward, all are well tied to adjacent systems -hence need and benefit from necessary expansions on those systemsStaff provided numerous sample impacts of projects around systemIndicated that systems stand to gain more from the transmission built by others than they would pay – just in LMP
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Key Issues – Uncertaintyof future impacts on zones
Delaying filing to try to predict impact on each entity for a series future project snapshots would not be productiveThere will always be some set of future projects that will make one area pay more than a different set or more than they would pay under a different cost sharing principle At each step, those entitles may advocate for a “preferred” policy
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Key Issues – Uncertaintyof future impacts on zones
To address the concern for unintended consequences, tariff includes a review provision similar to that included in the SPP cost allocation filing:
“For all such designations (of cost responsibility), the Transmission Provider shall calculate the cost allocation impacts to each pricing zone. The results will be reviewed for unintended consequences by the Transmission Provider and the Tariff Working Group and any such identified consequences shall be reported to the Planning Advisory Committee, and the OMS.”
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Task Force Majority Positions
Motion 1 (Exclude List)
The list of facilities/projects listed on the spreadsheet distributed for the July 22, 2005 list (as modified to exclude Generator Interconnection Driven upgrades and selected other revisions based upon a majority vote of RECB TF members), should be included in the Midwest ISO regional cost sharing filing as projects to which the filed regional cost sharing treatment will not be applicable.
For: 39 Against: 5
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Task Force Majority Positions
Motion 2a (Postage Stamp Formulation LRS)
Assuming there is a Postage Stamp component of the regional cost-sharing proposal, that component should be calculated based on a Load Ratio Share.
For: 37 Against: 8
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Task Force Majority Positions
Motion 3a (Postage Stamp 345 kV Voltage Threshold – Load Growth)
Assuming there is a Postage Stamp component of the regional cost-sharing proposal, that component should be applicable only to facilities of 345 kV and higher for network upgrades driven by other than Generator Interconnections.
For: 38 Against: 9
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Task Force Majority Positions
Motion 3b (Postage Stamp Percentages)
Assuming there is a Postage Stamp component of the regional cost-sharing proposal, that percentage should be 20% for network upgrades driven by requirements other than Generator Interconnections.
For: 28 Against: 16
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Task Force Majority Positions
Motion 3c (Postage Stamp 345 kV Voltage Threshold – Generator Upgrades)
Assuming there is a Postage Stamp component of the regional cost-sharing proposal, that component should be applicable only to facilities of 345 kV and higher for network upgrades driven by generator interconnections.
For: 30 Against: 14
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Task Force Majority Positions
Motion 4a (Pure Postage Stamp for Shared Portion of Generator Upgrades)
Assuming that item 2) b) of the “Compromise” document distributed for the July 22, 2005 RECB TF meeting was accepted, for the 50% of network upgrade costs that is not the responsibility of the generator, that component should be shared using a pure Postage Stamp allocation rather than using an allocation that is a blend of the Sub-regional LODF method and a Postage Stamp method.
For: 8 Against: 36
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Task Force Majority Positions
Motion 4b (Eliminate Requirement for Contract Commitment with MISO NITS Customer)
Assuming that the “Compromise” document distributed for the July 22, 2005 RECB TF meeting was accepted requiring that the Generator is responsible for 50% of network upgrade costs, the requirement that the Generator demonstrate a contract of 5 years or longer with a Midwest ISO Network Customer should be eliminated from the proposal.
For: 18 Against: 26
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Task Force Recommendation
Resolved, That the RECB Task Force recommends to the Advisory Committee that the Midwest ISO file Attachment FF as amended at the September 16 RECB Task Force meeting and related tariff revisions with the Federal Energy Regulatory Commission, notwithstanding the fact that all RECB Task Force members reserve their rights to file comments and/or protests.
Results: Yes: 28
No: 10
Abstentions: 7
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In SummaryAdvantages of Proposal
Some level of cost sharing is more consistent with use of gridEncourages TOs to develop transmission knowing that cost recovery will not be entirely from their local zoneHigher voltage facilities encouraged by wider sharing
Shares generator entry costs with developers and users
More Transmission Customers share in upgrades to integrate new Generation that will be dispatched to efficiently supply load obligations
Incentives for Generators to locate efficiently, and TOs to develop efficient interconnection upgrades
Protects interconnection zone customers from entire upgrade burden
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Next Steps
October 3 filing planned
Continue discussions to revisit sufficiency of treatment for Regionally Beneficial Projects
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