Here are the highlights from MISO’s interconnection reform plan

MISO control room (Courtesy: MISO)

As anticipated, the Midcontinent Independent System Operator (MISO) has filed generator interconnection reforms at the Federal Energy Regulatory Commission (FERC). MISO will open the more than 3-month delayed 2023 queue only after the FERC decision on this proposal. Unlike past queue reforms, MISO has filed 2 separate filings, each containing specific reforms, but is seeking FERC’s approval on both simultaneously.

The most controversial component of MISO’s plan is a megawatt cap proposal. Even though MISO states it is planning to provide four exemptions to the cap, developers will surely protest. MISO is seeking an effective date of January 22, 2024.

There are two filings – the First Filing (Generator Interconnection Procedures “GIP” Improvements) and the Second Filing (GIP Cap Filing or Cap Filing)

The milestone payments, withdrawal penalties, and site control changes are all in the First filing called the “GIP Improvements.” Even in this GIP Improvements filing, MISO told FERC the three major components are independent of each other, and the grid operator is requesting FERC review each of the proposals included in this filing on their own merits.

The second filing is focused on the cap on the total MWs of interconnection requests that may be included in a cluster or cycle. This second filing is called the “cap” filing. If FERC sides with MISO, we can likely expect MW caps at other grid operators. That’s the reason why developers could protest this cap filing. Hence, MISO’s legal strategy is to split the cap issue from other reforms.

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GIP improvements

Milestone payments

MISO proposed a DPP entry milestone (M2) increase from $4,000 to $8,000 per MW. DPP Phase II entry milestone (M3) has increased from 10% of the Network Upgrade (NU) costs minus the M2 to 20% of the NU costs minus the revised M2. If 20% of NU is less than the M2 payment, the IC will be required to pay $1,000 per MW for M3 under the proposed reform. MISO did not adopt a similar requirement for M4 based on stakeholder feedback.

DPP Phase III entry milestone (M4) has also increased from 20% of the NU costs to 30% of NU costs minus the M2 and M3 payments. This part of MISO’s proposal is less controversial.

Automatic withdrawal penalties

MISO is proposing an “Automatic Withdrawal Penalty” to fix the uncertainty caused by restudies. If a project withdraws before the start of the DPP cycle, there is no penalty. But if a project withdraws during DPP Phase I, the IC is charged 10% of the M2 value. If a project withdraws after Decision Point I or before Decision Point II, the IC is charged 35% of the M2 value. If a project withdraws after Decision Point II or before Decision Point III, the IC is charged 75% of the M2 value.

Finally, if a project withdraws after the start of GIA negotiations, then the IC is charged 100% of the M2 value. This part of MISO’s proposal is also less controversial.

Site control changes

MISO is proposing – 1) ICs provide evidence of site control for at least 50% of the mileage of Interconnection Customer Interconnecting Facilities (ICIF) at the queue submission time, 2) ICs need to show continued evidence of Site Control for POI at Decision Point II and may be required to demonstrate site control for 50% of switchyard upon MISO’s request, and 3) Before the GIA is executed, site control for 100% of ICIF is required. But ICs will have the option to post financial security instead of site control.

ICs need to post $80,000 per line mile for the entire line mileage to the POI, and this amount will be refunded if IC demonstrates site control to the POI at Decision Point I. MISO states there are some exceptions, but FERC might have questions for MISO on these site control exceptions.

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Megawatt cap filing

MISO listed the MW cap amounts in the testimony filed by staff in the cap filing. These MW cap amounts range from nearly 4,000 MW in the Wisconsin region to 27,000 MW in the South regions of MISO. The Indiana state, which falls in the Central region, has a cap of 10,000 MW. The western region includes states like Minnesota, which has a cap of 16,500 MW. Michigan has a cap of nearly 18,700 MW.

If FERC approves MISO’s proposed cap, MISO will approve interconnection requests against this cap on a “first come first served” basis in those regions. MISO states it will reevaluate these caps after each cycle, but there is no cap on the number of interconnection requests submitted by each developer.

Four Exemptions from the cap

MISO has proposed four exemptions from the MW cap in its cap filing. These exemptions must be identified 30 days before the Definitive Planning Phase (DPP) process starts.

Replacement facility exemption – MISO proposes retaining the current replacement facility option for interconnection customers and adding an exemption for any incremental MW requested on top of the replacement amount.

ERIS to NRIS conversion exemption – This exemption from Energy Resource Interconnection Service to Network Resource Interconnection Service is puzzling. Under current MISO Attachment X GIP (effective June 27, 2023) section 4.4.2, any modifications from ERIS to NRIS are considered material modifications. Developers have to pay for network upgrades to obtain NRIS and go to another queue cycle, meaning there is no upside for the developers. A better exemption would have provided willing ERIS developers an opportunity to step up to NRIS in the same queue cycle.

Provisional Generator Interconnection Agreement (PGIA) exemption –MISO stated in its FERC filing that since developers requesting PGIA are in similar circumstances like the replacement facility and ERIS to NRIS conversion exemptions, this PGIA Exemption is also provided. MISO provides the same opportunity for PGIA customers under the current tariff. So, there is nothing new gained here for developers with this PGIA exemption.

Relevant Electric Retail Regulatory Authority (RERRA) exemption – All the state regulatory authorities, including electric cooperative boards, are collectively called RERRAs. This RERRA exemption is for interconnection requests needed for a state to meet its reliability or resource adequacy requirements. MISO says it anticipates these RERRA exemptions to be limited.

MISO requested an effective date of January 22, 2024

MISO requested an effective date of January 22, 2024, signaling to the renewable developers it still plans to open the 2023 queue cycle in the first quarter of 2024. If FERC provides a written decision before January 22, MISO might have 2 queue cycles in 2024 – the delayed 2023 cycle and the scheduled September 2024 cycle.