The Midcontinent Independent System Operator (MISO) and regulators in three states want federal regulators to reconsider a special surcharge on power flow exceeding 1,000MW between MISO's midwest territory and the Gulf coast region that joined the organization in late 2013.
MISO and the adjacent Southwest Power Pool have been battling over the limited connection between MISO's existing midwest region and the Entergy transmission network since Entergy and other utilities in Arkansas, Louisiana, Texas and Mississippi joined the midwest grid in late 2013, becoming the MISO south region. Internal transfer capacity between the MISO regions is limited to a single 1,000MW transmission line.
The southwest pool began billing MISO when transfers exceeded the 1,000MW physical limit, calling it a violation of the joint operating agreement with MISO. MISO responded by working to limit power flow, then by introducing a "hurdle rate" of $9.57/MWh on transfers in excess of 1,000MW in July to allow power flow only when the value was expected to exceed transmission charges.
MISO's latest filing indicates the southwest pool billed MISO more than $19mn for transmission service from mid-July to December. Previously, the pool had billed MISO at least $30mn.
The Federal Energy Regulatory Commission (FERC) in December conditionally accepted the surcharge, but said the hurdle rate calculation was too low and ordered changes.
MISO yesterday made a compliance filing to recalculate the hurdle rate while also requesting that FERC rehear its entire December order.
MISO said the way the commission ordered the rate calculated would increase the initial hurdle rate to nearly $42/MWh and the adjusted rate to $170/MWh, "eliminating any opportunity to realize the benefits associated with allowing flows to exceed the 1,000MW limit."
This compares with the southwest pool's transmission service rate of about $6/MWh.
Even when MISO limits power flow to 1,000MW, the grid said it can be subject to charges under the southwest pool's service agreement based on an instantaneous peak billing methodology.
Separately, state regulators in Arkansas, Louisiana and Texas asked FERC to rehear the December hurdle rate order for different reasons. The states said FERC erred in allowing the revenue raised from the hurdle rate to be treated like a congestion charge.
MISO's distribution of revenue generated by the hurdle rate, similar to congestion charge revenue, results in the potential for double charging utilities in MISO south for transmission service, state regulators said.
The commission order deprives Entergy, Cleco and other utilities that seek to import power "of the benefits of the regional economic dispatch that is a key promise of centralized markets" like MISO, state regulators said.
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