I concur with the order’s acceptance of MISO’s proposed Tariff revisions in Docket No. ER24-340-000 to increase milestone payments, adopt an automatic withdrawal penalty, revise certain withdrawal penalty provisions, and expand site control requirements for interconnection facilities. I dissent from the order’s rejection of MISO’s proposed Tariff revisions in Docket No. ER24-341-000 to implement a cap on the total MW value of interconnection requests that may be studied in a cluster, as discussed below.
Faced with a tsunami of interconnection requests from generation developers — many speculative and which will never be built[1] — MISO seeks to ameliorate its interconnection studies process in the near term with a cap on applications.[2] A cap is admittedly a blunt instrument, but it is also a logical one if the goal is to enable MISO to focus its undeniably limited resources to maintain an orderly and efficient interconnection process.[3]
The majority acknowledges that MISO has provided evidence of the benefits of establishing a cap.[4] Yet, the majority rejects MISO’s filing in Docket No. ER24-341-000 due to concerns about the proposed cap exemptions, the description of the cap formula in proposed GIP section 4.1.1.1, and the resource adequacy concerns raised in the record.
The majority expresses three concerns with MISO’s proposed exemptions: (1) the majority believes that providing for exemptions to a cap has the potential to undermine the reasons for imposing one;[5] (2) the majority finds that MISO’s proposed cap exemptions, and particularly the Relevant Electric Retail Regulatory Authority (RERRA) exemption, have not been shown to be consistent with the Commission’s open access requirements;[6] and (3) the replacement generating facility exemption is unduly discriminatory.[7]
I do not believe that any of these concerns warrant rejection of MISO’s section 205 filing. First, the majority’s fear that the exemptions will so exceed the 5% margin to account for exemptions as to significantly dilute the benefits of a cap is speculative. In a telling omission, the order does not cite to evidence in the record that suggests that MISO’s 5% margin significantly underestimates the level of requested exemptions. Moreover, even if MISO were to discover that the 5% margin is inadequate, it could increase this margin in subsequent queue cycles.
Second, I acknowledge that the allegation that MISO’s proposed exemptions from the cap violates the Commission’s open access requirements and may be unduly discriminatory is a serious one. However, I do not believe MISO’s proposal in Docket No. ER24-341-000 violates the Commission’s open access requirements: under MISO’s proposal, all interconnection customers will have the same opportunity to submit their interconnection requests when an application window opens, and all requests will eventually be studied if they remain valid.
In the thoughtful comments from the Organization of MISO States, Inc. (OMS), OMS expresses concerns in particular about how the RERRA exemption will be administered.[8] OMS ultimately concludes, however, that it supports MISO’s filing now because time is of the essence to process MISO’s extreme backlog.[9] OMS also makes it clear that its support for MISO’s cap filing is precisely because it includes an exemption for RERRAs, which would, of course, allow state regulators to designate generating units that are essential to reliability in their own states as exempt from the cap.[10] Given that almost all states in MISO regulate their utilities through state-run Integrated Resource Plan (IRP) processes, this exemption makes sense.[11]
I also note that the order explains the purpose of the Commission’s open access requirements was to remedy undue discrimination in access to the transmission system.[12] Yet not all discrimination among customers is prohibited — particularly when the customers are not similarly situated.[13] Indeed, our own Order No. 2023 — which I supported — requires transmission providers such as MISO to discriminate among interconnection customers, ordering transmission providers to adopt a “first ready, first served” model in place of the older “first come, first served” model. To reduce the number of speculative interconnection requests, Order No. 2023 includes substantial detail as to how transmission providers are supposed to discriminate among interconnection requests — permitting only those interconnection customers who can meet Order No. 2023’s increased financial readiness and site control requirements to move forward in the queue process.[14] In addition, MISO’s filing in Docket No. ER24-340-000, which the instant order accepts, requires MISO to further discriminate among interconnection customers by increasing milestone payments and expanding site control requirements for interconnection facilities.
Similarly, I believe that MISO’s proposed exemptions to the cap in Docket No. ER24-341-000 are not unduly discriminatory or preferential, as the interconnection requests eligible for an exemption would be more likely to achieve commercial operation and, thus, would not be similarly situated to other interconnection requests. For example, a RERRA-supported interconnection request is not similarly situated to other requests because the RERRA’s endorsement suggests that the interconnection request is more likely to be developed or is needed to meet a state’s resource adequacy needs. Further, interconnection requests involving an increase in the capacity of a replacement generating facility are not similarly situated with other requests because they make use of existing infrastructure and are therefore less speculative than new interconnection requests. Thus, I disagree with the majority’s position that there is insufficient basis to justify disparate treatment under a cap.[15]
There is a well-known and long-used principle in constitutional adjudication that evaluates the constitutionality of a law based either “on its face” or “as-applied.”[16] The latter involves a close analysis of the unique factual record in the case and asks whether the law or regulation under challenge is being applied in a constitutional or unconstitutional manner, as opposed to asking the much broader question whether the law is facially unconstitutional, which would have far more sweeping implications. I believe MISO’s filing is not, on its face, a violation of section 205. If MISO applies the exemptions in an unduly discriminatory manner — or in a way that undercuts the efficacy of the cap — that could obviously lead to a section 206 complaint. So I would accept MISO’s filing and give it the benefit of the doubt in how it administers the exemptions, just as OMS is willing to do.
The majority also cites the description of the cap formula in proposed GIP section 4.1.1.1 as basis for rejecting MISO’s filing in Docket No. ER24-341-000. The majority notes that this section provides that MISO will determine the cap “using dispatch assumptions and models that reasonably approximate actual or expected system conditions including dispatch characteristics for Existing Generating Facilities and higher queued Interconnection Requests, as well as study region load.”[17] The majority quibbles that MISO does not explain how the Pmin assumption (i.e., the lowest MW output level that a generator can reasonably maintain and still be online) “reasonably approximate[s] actual or expected system conditions,” as the proposed Tariff language requires.[18] The majority is grasping at straws. The majority does not explain why the Pmin assumption is not a reasonable approximation, nor does the majority cite to any evidence on this point. I note that as Pmin represents a floor for existing generation, the use of the Pmin assumption is actually a conservative measure for purposes of calculating a cap: ceteris paribus, the use of a floor for existing generation rather than a higher value would lead to a calculation of more room available for new interconnections and thus a higher cap.
I also disagree with the majority that resource adequacy concerns justify the rejection of MISO’s filing. I believe such concerns are a red herring. I agree with MISO that concerns that the cap may lead to a resource adequacy crisis are speculative and unfounded. If anything, the cap will promote resource adequacy by enabling the queue study processes to be more efficient.[19] Moreover, as I have previously noted, it is the MISO states — not MISO — which have the primary role in maintaining resource adequacy.[20] As both MISO and OMS have recognized, MISO’s proposed RERRA exemption is designed to facilitate that role.[21]
Here’s the bottom line: MISO is like a homeowner whose house is on fire. MISO is trying to train the most readily available water hose on the fire as quickly as possible to save the house, an action the states in MISO support. The majority acknowledges the house is on fire and that the hose MISO has chosen will likely work,[22] but then, in classic Kafkaesque fashion, says MISO cannot use the hose.[23] Meanwhile, the house burns.
For these reasons, I respectfully concur in part and dissent in part.
[1] See, e.g., MISO, Transmittal, Docket No. ER24-341-000, at 11 (citation omitted) (noting that 70% of total generation capacity initially entered into the now completed 2017 and 2018 queue cycles was eventually withdrawn); id. at 3 (noting that the 2022 interconnection queue cycle alone included 171 GW, which exceeded MISO’s peak load by roughly 50 GW).
[2] In the longer term, MISO will have to comply with our Order No. 2023. Improvements to Generator Interconnection Procedures and Agreements, Order No. 2023, 184 FERC ¶ 61,054 (2023) (Order No. 2023).
[3] E.g., MISO, Transmittal, Docket No. ER24-341-000, at 4 (citations omitted) (“The cap proposal is a necessary ‘safety valve’ that would allow MISO to directly and promptly manage the queue size in order to ensure efficient processing of Interconnection Requests whenever such need arises. This ‘safety valve’ is needed because purely qualitative improvements, such as those included in [MISO’s filing in ER24-340-000], are not sufficient alone to respond timely to the ongoing drastic increases in the queue size.”); see also OMS Docket No. ER24-341-000 Comments at 3 (“The sheer size of MISO’s interconnection queue has resulted in unreliable, outdated, and inaccurate network upgrades identified early in the study process. It is simply infeasible to study clusters of resources that when combined exceed MISO’s all-time peak load by 50 GW.”).
[4] Order at PP 172, 183.
[5] Id. PP 173-174. The majority notes, as an example, that although MISO has indicated that the application of the RERRA exemption will be “very limited,” the Tariff language MISO proposes to implement the RERRA exemption does not contain an attestation requirement tied to fulfilling a state reliability or policy need.
[6] Id. PP 175-177.
[7] Id. PP 178-179.
[8] OMS Docket No. ER24-341-000 Comments at 7-9.
[9] E.g., id. at 1 (“The Commission should accept both filings without delay so that MISO can reopen its 2023 queue cycle and continue processing its extreme backlog of proposed interconnection requests.”).
[10] Id. at 8 (“OMS appreciates MISO’s inclusion of the RERRA exemption to its proposed queue cap as a necessary acknowledgement of states’ authority over resource adequacy issues. While the mechanics of implementing the RERRA exemption are largely undefined in the Cap Filing, OMS views the RERRA exemption as an important but limited feature of the cap to ensure that MISO will timely study generation projects needed to meet resource adequacy requirements.”).
[11] See, e.g., Midcontinent Indep. Sys. Operator, Inc., 180 FERC ¶ 61,141 (2022) (Christie, Comm’r, concurring at P 3) (“[I]t is the states which have the ultimate authority to decide which resources get built and which get retired and whether and how their regulated LSEs have sufficient generating capacity or demand-side programs to ensure that the lights stay on for their states’ residents.”), order on reh’g, 182 FERC ¶ 61,096 (2023), https://www.ferc.gov/news-events/news/commissioner-christies-concurrence-miso-resource-adequacy-construct-proceedings.
[12] Order at P 175 (citing Promoting Wholesale Competition Through Open Access Non-Discriminatory Transmission Servs. by Pub. Utils.; Recovery of Stranded Costs by Pub. Utils. & Transmitting Utils., Order No. 888, FERC Stats. & Regs. ¶ 31,036, at 31,634 (1996) (cross-referenced at 75 FERC ¶ 61,080), order on reh’g, Order No. 888-A, FERC Stats. & Regs. ¶ 31,048 (cross-referenced at 78 FERC ¶ 61,220), order on reh’g, Order No. 888-B, 81 FERC ¶ 61,248 (1997), order on reh’g, Order No. 888-C, 82 FERC ¶ 61,046 (1998), aff’d in relevant part sub nom. Transmission Access Pol’y Study Grp. v. FERC, 225 F.3d 667 (D.C. Cir. 2000), aff’d sub nom. New York v. FERC, 535 U.S. 1 (2002).
[13] See, e.g., Entergy Services, Inc., 93 FERC ¶ 61,156 (2000) (“It is not undue discrimination to treat categories of customers with dissimilar characteristics differently.”) (citing Cities of Bethany v. FERC, 727 F.2d 1131, 1138-39 (D.C. Cir. 1984)).
[14] Order No. 2023, 184 FERC ¶ 61,054 at PP 502-507 (requiring study deposits based on the size of the proposed generating facility associated with the interconnection request); id. PP 583-612 (adding more stringency to the site control requirements to help prevent speculative interconnection requests from entering the interconnection queue); id. PP 690-707 (requiring interconnection customers to submit commercial readiness deposits at the beginning of each study in the cluster study process); id. P 714 (requiring interconnection customers to submit a commercial readiness deposit when executing the LGIA or requesting the filing of an unexecuted LGIA).
[15] See Order at P 179.
[16] See, e.g., Yick Wo v. Hopkins, 118 U.S. 356, 373-74 (1886).
[17] Order at P 180 (citing Proposed Tariff, attach. X, § 4.1.1.1).
[18] Id. (citation omitted).
[19] E.g., MISO, Transmittal, Docket No. ER24-341-000, at 2 (citation omitted) (“The proposed changes will make the GIP more efficient, reduce the time Interconnection Requests currently spend in MISO’s generator interconnection queue, and address certain urgent challenges posed by the rapidly growing size of the queue.”).
[20] Supra n.11.
[21] See supra n.10; MISO, Transmittal, Docket No. ER24-341-000, at 16 (emphasis added) (footnote omitted) (“The RERRA exemption recognizes that some proposed Generating Facilities may be required by one or more MISO States or other jurisdictional entities to meet their load serving obligations. Where such requirements exist, MISO would allow a RERRA to request that such a proposed generating facility be exempt from the cap. Providing this exemption is consistent with the cooperative federalism principles underlying the FPA and placing the primary responsibility over resource adequacy on state regulators.”).
[22] Order at P 183 (emphases added) (“MISO provided evidence that the increasing volume of interconnection requests . . . has had the potential to overwhelm the generator interconnection process and hinder the development of generation in MISO. . . . MISO suggests that establishing a cap, in some form, has the potential to mitigate the unprecedented volume of speculative interconnection requests and improve the generator interconnection process for all classes of participants.”).
[23] Id.