Three reasons why MISO and SPP must jointly plan the transmission system

At the January 11 policy meeting, SPP staff explained their rationale to skip an economic planning cycle in favor of reliability planning studies due to the potential for misalignment of planning assessments in 2025. MISO had seen this before and did the same thing, skipping the 2020 “futures” assessment cycle in favor of 2021 futures. Another common thread among MISO and SPP is the high demand for renewable project interconnections. This demand is why SPP and MISO have jointly studied and identified a set of transmission projects that facilitate renewable interconnections at their border.

Both RTOs should plan their transmission system jointly because the transmission customers would benefit. An RTO conducts economic planning assessments to identify transmission projects that reduce congestion. The load pays the higher congestion costs. By skipping economic planning, consumers won’t know which projects reduce their costs. With more distributed energy resources projected to participate in organized markets, RTOs should plan the transmission system jointly.

Definitions – Economic Planning and Reliability Planning

Reliability transmission planning refers to planning for complying with the NERC reliability criteria such as an increase in demand, loss of a single largest generator, loss of a major transmission line, and short circuit studies, to name a few.

Economic transmission planning refers to complying with FERC orders on regional and interregional planning, such as reducing transmission congestion. RTOs like MISO and SPP conduct reliability planning as a NERC Planning Coordinator/Planning Authority, whereas RTOs conduct economic planning as a FERC jurisdictional transmission provider.

First, there is precedent given the Joint Targeted Interconnection Queue (JTIQ) Study

Both MISO and SPP have released their JTIQ report identifying transmission projects on the seams to facilitate renewable projects. The next step is how to allocate costs for those network upgrades. Interconnection customers have a clear line of sight when interconnecting at an RTO about network upgrade costs, but when their project has an impact on the neighboring RTO’s transmission system, it gets unclear.

Leveraging the MISO SPP Interregional Planning Stakeholder Advisory Committee (IPSAC) process established in 2014, MISO and SPP CEOs announced the JTIQ study in 2020. On a historical note, the first joint meeting of both MISO’s top planning advisory committee for economic planning and SPP’s economic studies working group was held in 2011. So, the seeds for coordination were set in motion in 2011 and formalized in 2014 via IPSAC.

Since then, MISO and SPP had IPSAC meetings to comply with FERC Order 1000 on interregional planning but had nothing to show for transmission project identification. Hence the 2020 JTIQ study. It is time for MISO and SPP to take their planning protocols to the next level by jointly working on reliability planning.

Second, MISO and SPP planning staff are both balancing economic and reliability planning needs

MISO and SPP transmission planning processes are similar in 3 aspects:

  1. Both conduct economic planning “futures” assessments in addition to reliability,
  2. Both have cost allocations procedures for the portfolio of transmission projects that address state policies such as Renewable Portfolio Standards, and
  3. Both have established trust with state regulators when it comes to transmission planning.

Hence this proposed joint exercise on reliability planning should work for states in MISO and SPP. Montana, North Dakota, South Dakota, Missouri, Arkansas, and Texas would benefit the most, where MISO and SPP operate.

By skipping an economic cycle, the consumers in these vertically integrated states are not seeing the benefits of participating in RTOs. Moreover, with delays in the interconnection queues, consumers cannot benefit from lower-cost resources sooner.

Third, MISO and SPP anticipate an increase in distributed energy resources

In addition to increasing renewable energy, including energy storage resources, both RTOs could see an increased demand for the distribution-connected resources to participate in the organized markets due to FERC Order 2222. Aggregated distributed energy resources can participate in energy, capacity (SPP does not have one), and ancillary services markets.

To ensure DER market registration, RTOs must coordinate with the distribution utilities. But these distribution companies must follow state-approved distribution interconnection rules because RTOs don’t have authority over distribution systems. Hence, for MISO and SPP staff to coordinate with states, this proposed approach of jointly planning the transmission system can reduce RTO staff time, and RTOs can use that freed up time to coordinate DERs integration with state regulatory staff.

NERC Compliance obligations can be delegated

Both MISO and SPP take on transmission planning compliance obligations for their transmission owning members. It is one of the benefits of participating in RTOs. Jointly conducting transmission planning TPL NERC assessments can follow the “delegation agreement” approach. MISO and MISO TOs have a delegation agreement that states, the transmission owners have delegated to MISO some of their TPL compliance responsibilities since they participate in MISO model building and related planning assessments. At MISO, this is called MISO Transmission Expansion Plan (MTEP). It works similarly at SPP. Hence MISO and SPP jointly conducting reliability planning would follow this delegation approach.

Deferring to RTO planning assessments is not new to NERC. NERC Long Term Reliability Assessments (LTRA) take information from MISO and SPP resource assessments. This NERC LTRA avoids duplication of efforts among RTOs and the NERC regional entity, the Midwest Reliability Organization (MRO). SPP had a regional entity, but SPP dissolved that in July 2017 to focus more on RTO functions. That SPP RE footprint was absorbed in MRO.

Conclusion

In addition to recently having one NERC regional entity, multi-state RTOs like MISO and SPP have built trust from joint economic planning set in motion since 2011. It is time to take that trust built from economic planning and apply it to reliability planning.

Distributed energy resources and energy storage resources are adding a new set of planning challenges to RTO staff in addition to renewables interconnection. If both RTOs don’t collaborate further in transmission planning, the benefits of participating in RTOs for transmission owners and customers will reduce. That reduction in benefits translates into higher load costs, which means states will question their utility participation in RTOs. To avoid this by 2025, both MISO and SPP transmission planning staff should jointly conduct reliability planning instead of skipping economic planning cycles.