FERC Initial Decision Would Deny Allocation of MISO Costs to PJM, NYISO Load, Preserving Retail Supply Contracts

An initial decision from a FERC ALJ would deny a proposal from the Midwest ISO and International Transmission Company (Joint Applicants) to recover from load in PJM and the New York ISO certain costs associated with Phase Angle Regulating transformers (PARs) located at Bunce Creek on the Michigan-Ontario, Canada border, which were meant to address Lake Erie loop flow issues.

See prior story for background on the PAR cost allocation

In brief, the allocation of PAR costs to non-MISO load exposed such load, including load served by competitive retail suppliers in PJM and NYISO, to costs which could not reasonably have been anticipated or hedged by retail suppliers or accounted for in existing customer contracts, since such costs from another RTO footprint are nowhere provided for, or even possible, under the existing PJM/NYISO tariffs.

The ALJ found that MISO's tariff filing seeking PAR cost recovery from PJM and NYISO is contrary to Commission policy and precedent. Among other reasons, the ALJ found that, (1) there is no customer or contractual relationship between the Joint Applicants and PJM or NYISO that justifies the proposed cost allocation; (2) the Commission has rejected unilateral filings by a utility to impose loop flow costs on neighboring utilities, requiring instead consensual resolution, which is absent here; and (3) Order Nos. 1000 and 1000-A do not apply to this case, but the policy contained therein predates issuance of those Orders and precludes the filing.

Specifically, the ALJ said that section 205 of the FPA only permits assessment of costs to entities with which that utility has a customer or contractual relationship.

"The Joint Applicants do not provide transmission service or make wholesale sales of electric power to PJM or NYISO, so there is no customer relationship that justifies the filing," the ALJ said.

Furthermore, "[t]here is no agreement between, or among, the Joint Applicants and NYISO or PJM that permits the unilateral imposition of costs proposed in the filing," the ALJ said.

Docket No. ER11-1844-002