Commissioner James Danly Statement
April 29, 2022
Docket Nos. ER22-477-000, ER22-477-001
I dissent from today’s order[1] because it impermissibly denies Midcontinent Independent System Operator, Inc.’s (MISO) request to allow transmission owners to unilaterally elect to fund Merchant High Voltage Direct Current (MHVDC) transmission connection requests with and without Injection Rights. It thereby denies the transmission owners’ right to receive a return on and of the capital costs of network upgrades, necessary upgrades, and transmission owner system protection facilities, identified in the MHVDC Transmission Connection Procedures.[2]
While the Commission voices its preference for a different proposal in rejecting the proposed changes,[3] the Commission’s preference is irrelevant. The proper inquiry in evaluating any submission under section 205 of the Federal Power Act (FPA) is whether the proposal before us is just and reasonable.[4] The fact that an alternative proposal might be better does not inform that analysis.[5]
The Commission has already found just and reasonable the Transmission Owner Initial Funding option currently in effect in MISO’s Open Access Transmission, Energy and Operating Reserve Markets Tariff (Tariff) for modifications to the transmission facilities owned and operated by MISO transmission owners, provisions of MISO’s Tariff that are triggered by a request to connect to the MISO transmission system.[6] Here, for some reason, the Commission declares that MISO failed to adequately address prior claims regarding the funding options for the upgrades at issue.[7] However, MISO adequately demonstrates that its proposal is both consistent with existing Tariff provisions and with Commission precedent. Moreover, MISO explains that the proposed Tariff provisions were specifically developed to address a gap that it had identified following the approval of the original Tariff language and which had only come to light in the face of pending, mature MHVDC transmission connection requests.
All of which is to say, absent some evidence to the contrary, MISO’s proposed Tariff revisions bear all the hallmarks of relatively minor improvements to a Tariff already deemed just and reasonable. As MISO points out, the Commission already has accepted Transmission Owner Initial Funding for purposes of merchant transmission connection procedures in other regions.[8] And while the Commission acknowledges that it had “previously accepted MISO’s explanation of similarities between generator interconnection upgrades and MHVDC-related upgrades for purposes of studying a request for MHVDC connection with Injection Rights,” it offers no more than the tepid and ultimately irrelevant explanation that this admitted similarity “may not be determinative in determining the appropriate means to finance an upgrade.”[9]
Lastly, the Commission’s additional reliance, in part, on Central Hudson[10] fails because that case is inapposite.[11] It was also wrongly decided.[12]
MISO met its burden under FPA section 205 and the Commission should have voted to approve its proposed Tariff provisions.
For these reasons, I respectfully dissent.
[1] See Midcontinent Indep. Sys. Operator, Inc., 179 FERC ¶ 61,074 (2022).
[2] See id.
[3] Id. P 97 (“MISO’s proposal does not extend all funding options available for Network Upgrades to Necessary Upgrades under the pro forma [Transmission Connection Agreement (TCA)], such as the option to build and liquidated damages.”); id. P 100 (“We find that MISO has failed to justify why it is just and reasonable and not unduly discriminatory or preferential to extend Transmission Owner Initial Funding to Necessary Upgrades and not to extend all funding options available to MHVDC customers for Network Upgrades under Attachment GGG to Necessary Upgrades.”); id. (“MISO’s representation that the Necessary Upgrades and Network Upgrades should be treated consistently for the purposes of Transmission Owner Initial Funding under the pro forma TCA fails to adequately justify why the same rationale cannot be applied to all funding options available to Network Upgrades under the pro forma TCA and not Necessary Upgrades.”).
[4] 16 U.S.C. § 824d.
[5] See, e.g., Midwest Indep. Transmission Sys. Operator, Inc., 131 FERC ¶ 61,185, at P 25 (2010) (“[T]he mere fact that the methodology can be refined does not undercut [the Commission’s] conclusion that [a proposed] method affords a just and reasonable rate for transmission customers. As the court noted . . . ‘reasonableness is a zone, not a pinpoint.’”) (citation omitted); Cities of Bethany v. FERC, 727 F.2d 1131, 1136 (D.C. Cir. 1984) (the Commission properly did not consider “whether a proposed rate schedule is more or less reasonable than alternative rate designs” and an applicant under the FPA need not show that its proposal is “superior to alternative[s]”); see also Oxy USA, Inc. v. FERC, 64 F.3d 679, 692 (D.C. Cir. 1995) (stating that a proposal “need not be the only reasonable methodology, or even the most accurate”); Louisville Gas & Elec. Co., 114 FERC ¶ 61,282, at P 29 (“[T]he just and reasonable standard under the FPA is not so rigid as to limit rates to a ‘best rate’ or ‘most efficient rate’ standard. Rather, a range of alternative approaches often may be just and reasonable.”), order on reh’g sub nom. E.ON U.S. LLC, 116 FERC ¶ 61,020 (2006).
[6] See Midcontinent Indep. Sys. Operator, Inc., 164 FERC ¶ 61,158, at PP 28-34 (2018) (Ameren Remand Order), order on reh’g, 169 FERC ¶ 61,233, at P 150 (2019) (Ameren Remand Rehearing Order); see also Ameren Servs. Co. v. FERC, 880 F.3d 571 (D.C. Cir. 2018).
[7] Midcontinent Indep. Sys. Operator, Inc., 179 FERC ¶ 61,074 at P 100 (citing Midcontinent Indep. Sys. Operator, Inc., 165 FERC ¶ 61,016, at P 59 (2018) (MHVDC Order)).
[8] See Midcontinent Independent System Operator, Inc. November 24, 2021 Transmittal at 10 & n.43 (citing ISO New England Inc., 151 FERC ¶ 61,024, at PP 7-8 (2015); ISO New England Inc. Open Access Transmission Tariff, Sched. 25, App. 6, § 11.3).
[9] Midcontinent Indep. Sys. Operator, Inc., 179 FERC ¶ 61,074 at P 106 (citing MHVDC Order, 165 FERC ¶ 61,016 at P 37).
[10] Cent. Hudson Gas & Elec. Corp. v. N.Y. Indep. Sys. Operator, Inc., 176 FERC ¶ 61,149 (2021) (Central Hudson).
[11] Midcontinent Indep. Sys. Operator, Inc., 179 FERC ¶ 61,074 at PP 103-104.
[12] Central Hudson, 176 FERC ¶ 61,149 (Danly, Comm’r, dissenting), order addressing arguments on reh’g, 178 FERC ¶ 61,194 (2022) (Danly, Comm’r dissenting).