FERC issues decision on grid support costs for power plants in MISO

The Federal Energy Regulatory Commission (FERC) on Feb. 19 addressed several proceedings related to the allocation of costs associated with operating generation resources needed to maintain reliability in the American Transmission Co. LLC (ATC) pricing zone within the Midcontinent Independent System Operator (MISO) region.

MISO can designate as a System Support Resource (SSR) unit any generating resource that otherwise would shut down, if the SSR unit is needed for reliability. The SSR agreements with the power plant operator are filed with the commission, and they specify the terms and conditions of the service, including the compensation to be provided to the resource for its continued operation.

In a July 2014 order, the commission held that MISO could not allocate SSR costs to all load-serving entities within the ATC pricing zone on a pro rata basis because that allocation does not follow cost causation principles. The Feb. 19 order denies rehearing and affirms that SSR costs must be allocated to the load-serving entities that require the operation of the SSR unit for reliability purposes. The order also finds that MISO’s current practice fails to allocate costs of the three SSR facilities located within the ATC pricing zone directly to the entities that benefit from their operation.

The order directs MISO to file a new study method to identify the entities that benefit from the operation of those units and allocate costs directly to them. The order does not direct any refunds at this time and instead holds that the commission will address any refund requirements in a future order addressing MISO’s new study methodology.

In addition, FERC said in a Feb. 19 statement, the order rejects a MISO filing to revise the allocation of the costs for the three SSR facilities to reflect new local balancing authority boundaries in the ATC pricing zone. Finally, it dismisses a complaint contesting that proposed allocation, finding that MISO must allocate SSR costs directly to benefitting load-serving entities without reliance on local balancing authority boundaries.

In a related Feb. 19 order, FERC dismissed as moot two complaints objecting to the formation of the new local balancing authority and the corresponding cost allocation implications for the three SSR facilities in the ATC zone.

This case has to do with the White Pine, Escanaba and Presque Isle power plants in Michigan’s Upper Peninsula, which have been subject to retirement plans and needed SSR payments to keep them open while grid fixes are made. MISO, incidentally, filed a Feb. 18 request with FERC to drop the SSR payments for the coal-fired Presque Isle plant, since plant owner Wisconsin Electric Power now plans to keep the facility open while it waits to sell the plant to a new operator, Upper Peninsula Power. Wisconsin Electric has also lately won back as power customers some iron ore mining operations in the region, which means the demand is back for power from the Presque Isle plant.

The Feb. 19 FERC order requires further compliance filings and directs MISO to file a new method to allocate the costs associated with the Presque Isle, White Pine and Escanaba SSR units directly to benefitting load serving entities (LSEs).

The complaint about the local balancing authority (LBA) was filed in September 2014 by iron ore miners Tilden Mining Co. LC and Empire Iron Mining Partnership against MISO and Wisconsin Electric Power. In their initial complaint, the mining companies asked the commission to prohibit Wisconsin Electric from splitting the Wisconsin Electric LBA into the WEC LBA and a new Michigan Upper Peninsula LBA without commission approval, and to prohibit MISO from accepting and implementing the proposed formation of the Michigan Upper Peninsula LBA without a commission-approved rate filing. The commission in the Feb. 19 order dismissed the complaint as moot since it had made other decisions in this area.  

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.