Midwest ISO Unveils New Cost Allocation Methodology

CARMEL, Ind., July 16 /PRNewswire/ -- After more than 19 months of collaborative work with its stakeholders, yesterday the Midwest ISO filed its proposed cost allocation methodology for new transmission projects. Multi Value Projects (MVPs), transmission projects that have a regional impact and are part of a regional plan, will now have a 100% regional allocation of costs, pending the Federal Energy Regulatory Commission's (FERC) approval.

"This system will fairly and equitably share the cost of projects that benefit the entire region and enable the Midwest ISO and its members to continue delivering low cost and reliable energy to the region," said John Bear, President and CEO of Midwest ISO. "We are proud of the hard work done by our team and our stakeholders to develop this system that will help us meet our nation's future energy needs."

The current proposal was developed with the input and guidance of many industry stakeholders who saw the need to develop a fair cost allocation methodology in order to maintain the electric grid's reliability and support renewable integration, public policy and economic goals.

"Working together to create a more robust and reliable transmission infrastructure is essential to furthering our nation's goal of developing cleaner energy resources.  The Midwest ISO's proposal will help us realize the environmental and economic benefits that can only be achieved from a stronger transmission infrastructure," said Tom Voss, Chairman, President and Chief Executive Officer of Ameren Corporation, a Transmission-Owning member of the Midwest ISO.  "A stronger transmission system will ultimately help us provide the most efficient and reliable energy to meet our customers' needs today and in the future."

"The Midwest ISO's Multi Value Projects proposal will help us achieve the environmental and economic benefits that can be realized from wind energy," said Beth Soholt, Executive Director of Wind on the Wires, a non-profit organization that works to bring wind power to market.  "We look forward to working further with the Midwest ISO to ensure Multi Value Projects are moved into the regional transmission plan."

The major elements of the proposal include:

• Allocating 100 percent of regional transmission costs to load and exports,
• Maintaining the current cost allocation for generator interconnection projects,
• Maintaining a local allocation of new costs for projects that are generally small and local in nature including those developed for reliability purposes; and
• Avoiding re-allocation of existing transmission costs.

Two existing cost allocation methods for reliability and market congestion reduction transmission upgrades, also known as RECB I and RECB II, will remain in their current form. New generation interconnection projects will continue to pay the cost of their individual network upgrades, as they do under the current tariff.

"Although this issue is clearly divisive and a difficult problem to solve, we were able to develop this proposal after reflecting on the immense amount of feedback we have received from all interested stakeholders," said Clair Moeller, Vice President of Transmission Asset Management. "This is an innovative solution that will make the necessary regional grid investments possible and help Midwest ISO maintain and increase the benefits it provides to the region."

The Midwest ISO has requested a FERC response to the filing by the Commission's December open meeting. In the meantime, the Midwest ISO will continue to work with stakeholders to analyze potential refinements to the existing methodologies. The Midwest ISO will also begin the study process to assess the first projects that may qualify for cost sharing under this methodology.

For more information, please see the filing posted on the Midwest ISO website under Documents > FERC Filings and Orders > FERC Filings.

About the Midwest ISO

The Midwest ISO ensures reliable operation of, and equal access to power lines in 13 U.S. states and the Canadian province of Manitoba. The Midwest ISO manages one of the world's largest energy markets, clearing nearly $23 billion in energy transactions annually. The Midwest ISO was approved as the nation's first regional transmission organization (RTO) in 2001. The non-profit 501(C)(4) organization is governed by an independent Board of Directors, and is headquartered in Carmel, Indiana, with operations centers in Carmel and St. Paul, Minnesota. Membership in the organization is voluntary. For more information, visit www.midwestmarket.org.

SOURCE Midwest ISO