Docket No. ER23-2490-000
I concur with today’s order as consistent with current Commission precedent.[1] As the order explains, the MPFCA at issue conforms with MISO’s pro forma MPFCA and reflects the state of the law today.
I write separately to note two interrelated principles. First, generation developers in RTOs should pay the full “but for” costs of their interconnection, including network upgrades. Consumers (i.e., load) should not pay one nickel. They are not the ones seeking to profit from the interconnection by gaining access to the revenues available in RTO markets, revenues that are ultimately paid by retail consumers already. This is the compelling principle underlying participant funding of interconnection in RTOs.[2]
Second, and equally important, when the developer pays the full “but for” costs of its interconnection, including the network upgrades, the transmission owner should not be able to profit on this investment, as the developer incurs a cost of capital, not the transmission owner. Allowing the transmission owner to profit on someone else’s capital investment (i.e., through a return on equity, or ROE) results in an unearned windfall. Plus, the transmission owner is free to seek cost recovery through applicable utility accounting rules for the operations and maintenance (O&M) costs it incurs associated with the upgrade.
In the pending Am. Clean Power Ass’n v. FERC remand proceeding, I look forward to the Commission addressing, among other things, the extent to which MISO’s interconnection-related pro forma agreements adhere to these principles.
For these reasons, I respectfully concur.
[1] See, e.g., Midcontinent Indep. Sys. Operator, Inc., 164 FERC ¶ 61,158 (2018), order denying reh’g, 169 FERC ¶ 61,233 (2019), order on reh’g and compliance, 172 FERC ¶ 61,248 (2020), remanded sub nom. Am. Clean Power Ass’n v. FERC, 54 F.4th 722 (D.C. Cir. 2022).
[2] The same rationale applies to developers of merchant transmission lines who seek to interconnect. Midcontinent Indep. Sys. Operator, Inc., 181 FERC ¶ 61,218 (2022) (Christie, Comm’r, concurring at P 1), https://www.ferc.gov/news-events/news/commissioner-christies-concurrence-concerning-funding-interconnection-costs-rtos.