On July 22, FERC approved MISOs revised ERAS proposal. FERC rejected MISO’s initial ERAS filing due to:
MISO quickly revised its initial proposal and submitted a revised proposal in June. The revised proposal now includes a cap on the number of projects that can enter the process (67 projects total), and provides more details about how relevant electric retail regulatory authorities (RERRAs) demonstrate the energy need for the projects.
This new fast-tracked process will create a pathway for generation, which in Louisiana will likely be natural gas power plants, to jump the traditional interconnection queue and connect to the grid while other projects wait years for approval.
The Alliance’s concerns about the impact of a fast-tracked generation approval process on consumers remain. Grid “open access” is best for consumers as it ensures low cost, competitive generation can connect to the grid and serve consumers. Ensuring reliability and adequate future resources to meet energy demand in the state of Louisiana, and across MISO, is critical. We will monitor Louisiana projects approved through the ERAS process and will continue to advocate for ratepayer protections against undue risk associated with allowing new, costly natural gas power plants to skip ahead of other low-cost energy resources.
Like many regions of the U.S., the MISO footprint is facing rising demand for power and has struggled to manage the high volume of new projects waiting to connect to the grid and serve that demand, known as its interconnection queue. Instead of focusing efforts on fixing this backlog of projects awaiting approval, MISO has chosen to abandon their queue by proposing a separate interconnection process called the Expedited Resource Addition Study (ERAS), which hands utilities a free pass to get generation projects in a fastlane that can zoom past low-cost options.
It is critical that Louisiana electricity consumers should be able to rely on their market operator and utilities to connect needed generation that supports the needs of all ratepayers in the state. However, the Midcontinent Independent System Operator (MISO), which is supposed to maintain independence in their grid planning processes, filed a controversial proposal with the Federal Energy Regulatory Commission (FERC) last month that would create a discriminatory fast track for utility owned generation to connect to the grid, bypassing fair grid access and competition, and putting consumers at risk.
Ratepayers lose when low cost, competitive generation is blocked from serving electricity demand, and bipartisan former FERC Commissioners have warned consumer costs will rise if ERAS moves forward. This is why FERC has required “open access” to the power grid for more than two decades, to ensure that all generation resources, including competitive options, can connect and serve electricity consumers. ERAS gives incumbent utilities fast track access to the queue while imposing unworkable requirements on competitive generation options, putting up barriers to shovel-ready, low-cost generation. Making matters worse, MISO asks each state to sign-off on generation projects entering the ERAS queue, with no requirement for competition or selection through a non-discriminatory resource solicitation to ensure least cost outcomes.
The Louisiana Public Service Commission supports this proposal pointing to the need for new utility investments, largely intended to serve growth for data centers. The Louisiana Commission praises the flexibility MISO gives states in the ERAS sign-off process, but is quick to note that “ERAS does not determine the outcome of any state process, or lack of state process.” This should raise red flags. Utilities in Louisiana commonly use a competitive process to ensure new power plants are the “lowest reasonable cost solution” for customers. But that protection is eroding. The Louisiana Commission is currently considering Entergy’s request to skip this competitive requirement to find a least-cost solution for the $2.3 billion of investment in new power plants and transmission to serve a new data center near Holly Ridge – the exact same power plants that Louisiana hopes to fast-track through ERAS.
Where does this leave Louisiana electricity consumers? It means incumbent utilities in Louisiana may be able to put expensive new power plants into consumer bills by jumping the interconnection queue and avoiding competition. And Louisianans aren’t the only ones at risk in MISO. Arkansas already passed legislation that lets incumbent utilities not only charge consumers for “strategic investment” power plants through a special rider before construction even begins, but to also speed through their Certificate of Public Convenience and Necessity (CPCN) review in 90 days rather than six months.
It doesn’t have to be this way. The establishment of a limited fast-track queue process to meet specific reliability gaps in the future could be a critical tool for the southern part of MISO – if designed correctly. But MISO’s ERAS proposal gets it wrong in multiple ways. It not only discriminates against low-cost competitive power and fails to protect consumers from higher costs – it may not bring in the needed resources fast enough. MISO has promoted ERAS as a way to meet short term reliability needs, but the final proposal to FERC shows it will include projects that wouldn’t be operational as late as 2032. Many independent energy developers of both natural gas and clean energy have pointed out the current proposal actually threatens regional reliability.
The ERAS proposal now rests with FERC for final approval. Louisiana consumers are relying on FERC to maintain its long-held position that grid “open access” is best for consumers. Ensuring reliability and adequate future resources in the state of Louisiana, and across MISO, are critical – but this proposal was not developed in a way that will meet those needs while protecting consumers. Therefore, MISOs fast-track generation approval process should be rejected by FERC.
