MISO members must pay tariff for $5.2bn wind transmission project

Midcontinent System Operator MISO pay tariff for wind power transmission lines Duke Energy FirstEnergy

The 7th Circuit U.S. Court of Appeals issued a ruling last week upholding a plan by the Midcontinent System Operator (MISO) to place a tariff on its 130 members to help fund new transmission lines. The new power lines will carry power from wind farms to urban centers in the Midwest.

The Federal Energy Regulatory Commission approved the plan in 2010. According to court documents, the plan imposed a tariff on MISO members for the construction of new high-voltage lines called “multi-value products” (MVP), which are intended to transmit electricity generated by remote wind farms. The amount of the tariff to MISO members is based on the amount of electricity used.

The plan was challenged by MISO members, including the Illinois Commerce Commission, and upheld in a 26-page ruling issued by a three-judge panel of the appeals court.

The court wrote in its decision “the promotion of wind power by the MVP program deserves emphasis,” noting that wind power accounts for 3.5 percent of the nation’s electricity and is expected to continue growing.

“No one can know how fast wind power can grow,” Judge Richard Posner wrote in the decision. “But the best guess is that it will grow fast and confer substantial benefits on the region served by MISO by replacing more expensive local wind power, and power plants that burn oil or coal, with western wind power.”

The court did not rule on whether FirstEnergy (NYSE: FE) and Duke Energy (NYSE: DUK), former MISO members, would be liable for any of the costs of the transmission lines, ruling that the challenge on liability for costs is premature until a final administrative decision from FERC. Although the commission has ruled allocation of the costs to departing is proper in principle, it has not determined what costs may be allocated to the two utilities.

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