Fedorchak, Senators Hoeven and Cramer, urge FERC to rein in unfair transmission cost-shifting in MISO
Washington, D.C. – Congresswoman Julie Fedorchak, joined by Senators John Hoeven and Kevin Cramer, supported a complaint filed at the Federal Energy Regulatory Commission (FERC) challenging the regional cost-allocation formula used to charge customers for new electric transmission lines. The complaint, led by the North Dakota Public Service Commission (PSC) and joined by regulators from four other states, argues that MISO’s cost-allocation rules unfairly shift transmission costs onto North Dakotans. The delegation warns that these rules force North Dakotans to subsidize other states’ aggressive renewable energy mandates while putting grid reliability at risk.
“The massive build out of transmission in the MISO region is driven by the aggressive decarbonization goals of several MISO states, but North Dakota is not one of them,” Fedorchak said. “States must pay the costs of their own goals. That’s a basic principle of cost allocation. The current formula in MISO does not follow these principles and needs to change.”
The North Dakota PSC’s complaint challenges MISO’s “Multi-Value Project” (MVP) cost-allocation system, which spreads the expense of massive new transmission lines across all ratepayers in the region regardless of who benefits. These lines are often built to connect remote wind and solar projects in states with renewable mandates, shifting costs onto states like North Dakota that neither pursue those policies nor directly benefit from the projects.
While serving on the ND Public Service Commission, Fedorchak was the liaison to MISO and the Organization of MISO states (OMS) for eight years, including a term as OMS president. Fedorchak advocated for a generator-pays cost-allocation formula, which MISO ultimately declined to pursue.
KEY LETER EXCERPTS:
“The bulk power system is under increasing strain from the rapid uptake of intermittent wind and solar generation and the concurrent retirement of baseload resources. The North American Electric Reliability Corporation (NERC) warns that two-thirds of our grid is at elevated or high risk of electricity shortfalls. Over the next decade, an estimated 122,000 MW of dispatchable generation is slated to retire even as electricity demand surges due to data centers, electrification, and industrial growth.
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“As we work to bring more load-serving power online, we must also address the negative incentives created by current transmission cost allocation policies. Under “socialized” regional cost sharing, a state or utility can propose massive transmission expansions (often to support remote wind and solar projects) and spread much of the bill to other states’ ratepayers. In MISO, so-called Multi-Value Projects (MVPs) have their costs shared broadly across the footprint. This model was intended to fund projects with widespread benefits. In practice, it has enabled scenarios where states with aggressive renewable energy mandates shift the costs of the transmission needed to meet those goals onto states with different policies and values.
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“This not only raises fairness concerns, but it also dulls economic signals. If a state can socialize the expense of distant generation hookups, it has less incentive to consider cheaper or more reliable solutions closer to home.
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“In short, the current approach to cost allocation is a subsidy scheme that alleviates certain states of the costs of their most aggressive energy policies. It allows these states to force their utilities into compliance with Renewable Portfolio Standards, while out-of-state ratepayers bear the costs. This approach is corrosive to the cooperative spirit we need in regional planning.
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“If FERC does not act decisively, Congress may step in to legislatively rebalance how transmission costs are allocated. The last thing we want is a patchwork of dissatisfied states or a collapse in public confidence that federal regulators enforce just and reasonable rates.”
CLICK HERE to read the full letter.
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