Dive Brief:
- Utilities are overstating how much time competitive solicitations can add to the transmission development process, the Midcontinent Independent System Operator told federal regulators on Wednesday in response to a complaint filed by incumbent companies seeking exclusive rights to build certain power lines.
- “MISO disagrees with the exaggerated length of the delay alleged in the Complaint as MISO’s actual experience differs from the alleged 16-20-month timeframe,” the grid operator said in a filing with the Federal Energy Regulatory Commission.
- Although MISO challenged assertions in the complaint, it stopped short of taking a position on whether FERC should grant or deny the utilities’ requested relief. Looking ahead, the dispute at FERC could affect who gets to build regional transmission projects in MISO and the Southwest Power Pool and could spill over into other regions.
Dive Insight:
The April 6 complaint at FERC is the latest effort by incumbent utilities to limit competition in transmission development. It also comes amid a surge in demand forecasts driven by data center development that indicate more transmission capacity may be needed across the United States.
In their complaint, Entergy, Xcel Energy and seven other utility and transmission companies said that requiring competitive bidding for certain transmission projects in MISO and SPP slows transmission development by 16 to 20 months on average — a claim MISO refuted.
The utility coalition proposed two options: exempt any transmission project from bidding requirements if delaying the project would delay service to generation or load; or pause the solicitation requirements for five years.
In addition to pushing back on the timing issue, MISO also said the effects of the bidding process may not be as dramatic as the utilities say given that competitive projects are a limited subset of all MISO transmission projects. Incumbent and non-incumbent projects face similar challenges, the grid operator added.
An independent analysis released this week also appears undermine the utilities’ claims that competitive solicitation slows transmission buildout.
The report by the free market-oriented R Street Institute found that even with bidding processes, competitive projects in MISO and SPP are built more quickly than those built by incumbent utilities.
Meanwhile, states, consumer advocates and power suppliers have come out strongly against the utilities’ complaint.
The National Association of State Utility Consumer Advocates urged FERC to reject the complaint, which it said was a “wholesale attack” on the commission’s Order 1000, which requires competitive bidding for regional transmission projects.
Ratepayers receive “substantial benefits” from competitive bidding for transmission, according to the group.
Instead of accepting the complaint, “FERC would be better served examining why competition is difficult in the current regulatory structure and improving processes so we achieve the desired competitive outcome,” NASUCA said.
If FERC accepts the complaint, it should put in place consumer protection measures to offset the loss of competitive bidding in MISO and SPP, including reducing authorized returns on equity and eliminating any ROE incentives and other financial protections for projects that are removed from competitive bidding processes, the group said.
Limiting competitive transmission solicitations for regional transmission projects would deprive customers of “innovative and cost-effective solutions,” the Electric Power Supply Association and the Solar Energy Industries Association said in joint comments at FERC.
Incumbent utilities have been working for years to regain a monopoly over regional transmission projects, according to Invenergy Transmission, an independent transmission company.
“Complainants now ask the Commission to override duly promulgated rules and disregard state laws to grant them a monopoly over transmission projects,” Invenergy said. “And because their prior efforts were rejected on the merits, they have repackaged the same request under a new banner: grant their Complaint or lose the artificial intelligence … race with China.”
Also, the complaint is legally flawed because it asks FERC to upend various transmission-related rules without going through a rulemaking process, according to Invenergy.
In separate filings, utility regulators from Illinois, Kansas and Missouri asked FERC to dismiss the complaint.
Although SPP’s competitive bidding process could be improved, it benefits consumers, according to the Kansas Corporation Commission.
SPP, for example, estimated that the 345-kV Elm Creek to Tobias project would cost $147.8 million, but the winning bidder proposed building the project for $32 million, with a $45 million cost cap, according to the KCC.
“If FERC finds delays to be a legitimate concern, it could direct SPP to explore and propose reforms that target the discrete causes of specific delays, thereby shortening the developmental timeline for competitive projects,” the KCC said.
However, QTS Data Centers urged FERC to accept the utilities’ complaint.
“Enabling incumbent utilities to proceed directly with the development of urgently needed transmission facilities provides the certainty required to support large-scale infrastructure investment,” the data center company said.
Areas that give utilities a right-of-first refusal to build power lines have “materially improved outcomes,” according to QTS.
“In those regions, the ability of incumbent utilities to initiate development promptly has reduced delays, improved coordination with load interconnection timelines, and increased confidence in project delivery,” the company said.
Some MISO utilities also urged FERC to approve the complaint, saying that giving incumbent utilities the right to build regional transmission will bring needed infrastructure online more quickly.
“In addition to delaying much-needed transmission capacity, the evaluation of a competitive solicitation can impose substantial costs and burdens on RTOs, with no significant cost savings resulting from competition,” said the utilities, which included Dairyland Power Cooperative, MidAmerican Energy, Minnesota Power, Montana-Dakota Utilities and Otter Tail Power, among others.
