Commissioner See’s Concurrence on MISO’s Expedited Resource Addition Study (ERAS) Filing, Docket No. ER25-1674

Reliable power is essential to all our daily lives and is critical to our nation’s economic growth and security.  As such, I fully respect MISO’s drive to find a solution to get needed resources connected to the grid faster than its current processes would otherwise allow.  And indeed, the Commission has accepted before targeted, interim measures to address concerns very much like those MISO faces—twice just in the last year.[1]  As the majority’s order explains, however, MISO’s Expedited Resource Adequacy Study (ERAS) proposal is both overly broad and underly certain to bring its promised results to light.  So my vote to reject MISO’s proposal is a reluctant one.  I write separately to explain certain aspects of my support for today’s decision and to urge MISO to bring us a revised proposal that the Commission may be able to accept on another day soon.  

Sections 205 and 206 of the Federal Power Act are built on the twin notions that rules affecting rates and charges must be just and reasonable and must not be unduly discriminatory or preferential.[2]  Both prongs of this familiar standard can help grid operators like MISO ensure reliability.  The broad just and reasonable standard gives those on the front lines flexibility to find workable solutions to concrete problems.  “Best” solutions are not the standard—even novel “good enough” proposals can do.[3]  The command to avoid undue preference or discrimination pulls in the same direction.  Upholding open access lets competition and innovation thrive.  Especially when it comes to regulated markets, rules promoting fair access instead of protectionism can be critical in ensuring that the best resources get on the grid (and stay there).[4]  So paring back open-access principles comes with costs.  In circumstances like this, where a proposal’s goal is to get some interconnection requests through the study process faster than others, the Commission is by definition asked to greenlight discrimination.  To justify that step under our statutory mandate, priority processes should be tailored enough to accomplish the identified ends.[5] 

Today’s majority decision explains how the ERAS process fails to clear that hurdle.  I add to that analysis here to explain why the roles ERAS gives to state commissions and Relevant Electric Retail Regulatory Authorities (RERRA) do not alter my conclusion.

The States’ traditional powers concerning energy policy and their important role in the electric wholesale-retail cooperative federalism regime demand respect.  The States assess need when it comes to resource adequacy questions in their borders.  Add to that legal baseline the fact that MISO is largely comprised of vertically integrated States,[6] and I would be skeptical if a proposal like ERAS didn’t give the States a leading role in assessing which interconnection projects are most important to meet urgent resource adequacy needs.  So I agree with Chairman Christie and Commissioner Rosner that the States’ perspectives are critical in this context and I commend MISO for engaging substantially with the States in crafting this proposal.  Even so, two problems persist in the ERAS process when it comes to the States’ and RERRAs’ role.

First, the proposal respects many States in MISO’s territory—but not all of them.  Although the Organization of MISO States as a whole supports the proposal, both the Illinois and Michigan commissions urge FERC to reject.  Illinois, for instance, explains how the current proposal does not work for restructured States—which means it “will unduly prejudice generation resources that seek to locate in Illinois and will give an undue preference to generation resources locating in vertically integrated states.”[7]  MISO understands that this concern has weight, assuring us that it is working to develop a proposal that can better account for the state outliers.[8]  But that proposal is not before us.  Because the Commission should remain evenhanded when it comes to our state partners, a proposal that discriminates among the States themselves gives me serious pause.

Second, ERAS goes beyond appropriate respect for the States’ roles in resource adequacy issues and outsources the expedited study selection process altogether.  Recall that the proposed tariff language requires only that interconnection requests come with a “notification” from the relevant RERRA that the project “should be considered for the ERAS process in order to meet a resource adequacy and/or reliability need.”[9]  This notice does not need to explain the factors that placed the project on the list or how the RERRA tailored its processes to target only those projects most essential for reliability or resource adequacy.  Nor does the notice ask if RERRAs compared similarly situated projects or how it chose the ones best positioned to meet near-term resource adequacy needs.  The tariff also does not require a standard certification—the RERRA can “certif[y] or determine[]” or use “any other method consistent with the RERRA’s procedures.[10]  Further, the ERAS proposal emphasizes that MISO (and the Commission) must not read too much into the notification process: Notifications are “not intended to constitute or provide evidence of any final determination of need or suitability of the project for any purpose” other than requesting ERAS treatment.[11]  This caveat is smart; state commissions cannot prejudge future matters, and in most or all States, a full need assessment would be impractical at the early study phase where ERAS operates.  But when the rest of the proposal is silent how RERRAs will go about their selection task, its insistence that need determinations are not on the table adds more question marks about how projects are selected.  

Ultimately, whatever other benefits ERAS’s high premium on flexibility may have, it becomes a problem in evaluating whether MISO’s proposal is just and reasonable and not unduly discriminatory.  MISO is the regulated entity, not the States, and the Commission’s statutes require us to evaluate its processes.  Yet although MISO promises “the ERAS process is open, competitive, technology/fuel agnostic, and does not involve MISO favoring or selecting certain projects over others,”[12] nothing in the tariff explains how it will live up to those goals.  Simply put, the Commission cannot evaluate criteria that do not yet exist, that will vary State-by-State when they do, and that MISO does not plan to police.[13]  So how can the Commission, under Section 205, say that the ERAS process is adequately tailored to enable MISO to bring online the resources it claims it most urgently needs?

Even with great respect for and confidence in the States’ judgments, based on the record before us (including the other failings the majority opinion describes), MISO has not shown how its proposal is just and reasonable and not unduly preferential or discriminatory.  Nonetheless, I urge MISO to continue to retain a strong role for the States in any future proposals—I am confident that with additional criteria or other cabining factors, an ERAS-like proposal can honor Section 205, give States their appropriate voice, and address important and urgent resource adequacy concerns. 

A final note ending back at the beginning: I believe it’s critical to hold the statutory line today precisely because the problems at stake are real.  In the face of ongoing interconnection delays, MISO may need interim solutions to address its rapidly arriving resource adequacy threat.  But proposals that are not just and reasonable and not unduly preferential or discriminatory are vulnerable to judicial scrutiny.  In an era of growing load demand, a win today but a loss in court months (or years) later would not help MISO address its resource adequacy concerns.  So although I would have welcomed a proposal I could vote for now, the next best option is the potential to vote again on a refocused proposal after MISO and its stakeholders reconsider the problem.  Instead, just as it did with its recent queue cap proposal,[14] I hope that MISO will revise its proposal to account for the Commission’s concerns so we may be able to give a different answer soon. 

For these reasons, I respectfully concur.