transmission cost allocation - spp.org tf report to ac 092205.pdf · transmission cost allocation...

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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

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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


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


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

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13


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


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


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


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

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17


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


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

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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

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Areas of Projectand LMP Benefit

Hiple 345-138 #2

HE IPLCIN

VectrenLGEE

AMRNIP

NSP

ALTW

MPMDU

OTP

GRE

Areas of benefit

Project Location

22


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


Maple River 345-230 #3

AMRN

LES

MDU

LGEE

IP

SIPC

OTP

MP

CWLP

Areas of benefit

Project Location

24


Newtonville 161-138 #2

AMRN

LES

MDU

Vectren

IPCWLP

OTP

MP

ALTW

LGEE

CINHEIPL

NSP

GRE

Areas of benefit

Project Location

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25


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


Mill Creek-Hardin 345 kV new line

CILCO

CINLES

LGEE

FE

ATC

Areas of benefit

Project Location

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27


Franks-Callaway 345 kV new line

CIN,HE

LGEE

FE

METC ITCATC

NIPS

IPL

Vectren

LES

Areas of benefit

Project Location

28


HillCrest Project and Miami Fort 345-138 #2

CIN

LGEE

FENIPS

HE

v

MTEC

A

NSP

Areas of benefit

Project Location

15

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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)]

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LODF Concept

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31

LODF Concept

32

LODF Concept

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33

LODF Concept

34

LODF Concept

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35

Sample Sub-Regional Allocationsfor 22 Facilities Based on LODF

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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%

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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

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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

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Mill Creek-Hardin 345 kVLGEE

$60,139,000


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

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Stone Lake 345/161 kV (2006)ATC

$8,100,000


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

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North Madison-Waunakee 138 kV (2008)ATC

$6,500,000


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

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41


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


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%



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$

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43


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



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

23

45

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

24

47

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

25

49

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

26

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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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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

27

53


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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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.”

28

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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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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

29

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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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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

30

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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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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

31

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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

transmission cost allocation - spp.org tf report to ac 092205.pdf · transmission cost allocation...

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