In the March 16 meeting of the Interconnection Process Working Group (IPWG), stakeholders were invited to submit feedback on Generator Replacement transfer restriction revisions. Please provide feedback by March 30.
March 25, 2021
Invenergy LLC ("Invenergy") appreciates the opportunity to comment on MISO's March 16, 2021 Generator Replacement Transfer Restriction proposal presented at the IPWG. Invenergy appreciates MISO's attention to this matter as many generator replacement commercial agreements hang in the balance. Invenergy agrees that MISO should revise its generator replacement procedures (GRP) to facilitate the types of legitimate transactions that would be hindered by the current Transfer Timing Restrictions. Invenergy will be glad to see something filed at FERC in July but is concerned that absent a more definitive timeline for MISO to make its planned filing, the opportunities for creative replacement projects will slip away. In addition, there are already some issues with MISO's proposal that Invenergy would welcome seeing addressed by the time stakeholders discuss this issue again in April.
The proposal currently would require MISO’s consent prior to generation facility or GIA transfers, but timing is critical and customers’ commercial arrangements should not be subject to MISO’s administrative process and timeline, particularly when MISO’s goal of ensuring Tariff compliance could be achieved by simply allowing MISO to later review related transfer documentation.
In addition, the proposal currently suggests that the retiring generator and the replacement generator must be held by the same special purpose entity, but this could create serious obstacles, such as potential liabilities associated with the retiring generator, to developing the replacement facility.
And while the proposal permits certain interest transfers to investors, it requires the interconnection customer to retain ownership interests in the special purpose entity through the replacement facility’s commercial operation date. If a tax equity investor’s interests are not disregarded in this analysis – and MISO has not explained why a tax equity investor’s passive interests would not be – MISO should at least clarify that these ownership interest restrictions continue only through mechanical completion rather than commercial operation
The proposal should also clarify that ownership interests can be held and transferred upstream of the special purpose entity and specify how MISO will assess “control” over the special purpose entity.
Last, but certainly not least, given the fact that investment tax credits will only be available for a few more years, stakeholders cannot afford to wait for a proposal to be filed by an uncertain date. Invenergy would suggest a FERC filing deadline no later than June 1, 2021.
Thank you.
Nicole Luckey
Vice President, Regulatory Affairs
Invenergy LLC
NextEra Energy Resources, LLC (“NextEra”) appreciates the opportunity to comment on the Generator Replacement transfer restriction proposal. NextEra appreciated MISO’s thorough presentation and explanation at the March Interconnection Process Working Group (“IPWG”) meeting. NextEra supports MISO’s proposal to allow for limited changes to the current Generator Replacement policy transfer restrictions. NextEra utilizes tax equity financing as part of its overall capital structure, and we agree that the problem areas that MISO has outlined in the presentation at the March IPWG are legitimate. NextEra believes that the current Generator Replacement policy did not consider the ITC/tax equity implications when the policy was created. Tax equity financing can be quite complicated and sometimes requires multiple LLCs to accommodate the overall structure. NextEra believes that the Special Purpose Entity transfer ability will address the shortcomings in the current policy, all the while ensuring that the underlying policy and its intended purpose remains intact. NextEra supports MISO’s swift timeline to enact these changes, as the generator replacement process is likely to be utilized much more frequently as energy providers continue to evaluate their energy mix and start to shift towards alternate energy sources.
Alliant Energy supports MISO’s proposed exception to current transferability restrictions with the generation replacement process. This change provides potential benefits to customers, resource owners and developers by enabling more financing options for replacement projects.
The current replacement process prohibits transfers and assignments of a replacement facility or GIA prior to and during the replacement process. This severely limits the ability of resource owners and developers, such as Alliant, to work with others on the development of new generation and capture benefits for customers. In particular, this change is needed to enable the use of tax equity partners with solar replacement projects to help monetize the Investment Tax Credit for the benefit of customers.
MISO’s proposal to allow Interconnection Customers undergoing the Generator Replacement process to transfer their Generating Facility/assign their GIA to an SPE during the transfer restriction window is helpful in that it: 1) supports efficient resource transitions by providing increased flexibility with how the replacement process can be used and allow additional financing options for new resources; 2) facilitates cost savings to customers by enabling Investment Tax Credit benefits to be realized; and 3) addresses an issue not considered when the generation replacement process was originally put in place. The needs of tax equity structures were not considered by MISO or FERC when the current replacement process was created. With the large amount of resource development activity continuing to occur, MISO should move quickly to file and implement the proposal so the benefits of the change can begin to be realized.
DTE is supportive of MISO's proposed exception to current transferability restrictions with the generation replacement process.
Clean Grid Alliance Comments on Generator Replacement Transfer Restrictions
March 30, 2021
Clean Grid Alliance appreciates the opportunity to provide comments on MISO’s March IPWG presentation regarding transfer restrictions on Generator Replacement facilities. We appreciate MISO’s attention to this topic and believe that the proposal strikes the right balance in easing restrictions that create barriers for Generator Replacement projects, while still upholding the intent of the restrictions, which is to prevent the sale of “interconnection rights”. We support MISO in making these changes.
Sincerely,
Rhonda Peters, Ph.D.
Consultant for Clean Grid Alliance