RECBWG: MISO's LRTP Cost Allocation Proposal (20210728)

Background

During the July 28, 2021 RECBWG meeting stakeholders were invited to submit feedback on MISO's Long Range Transmission Planning (LRTP) Cost Allocation Proposal. 

Alliant Energy Comments

Alliant Energy continues to believe APC and reliability will drive most of the benefits from LRTP projects and views exploring potential ways to allocate costs to generators as beneficial.  Given MISO’s current direction focusing on a MVP type cost allocation for LRTP projects, Alliant Energy offers the following enhancements to the MISO proposal:

• Benefit/Cost (B/C) Ratio:  The required B/C ratio for LRTP projects must be at a minimum 1.25.  The use of a 1.0 B/C ratio does not take into account the potential level of uncertainty with MISO’s planning and related assumptions used.  Transmission planning involves uncertainty, for example, across different periods, locations, forecasts, and resource siting decisions. Further, the amount of change occurring in the energy industry and with technology is unprecedented.  It cannot be assumed that uncertainty and unaccounted for factors will all accrue to positive benefits for customers.  In addition, the certainty of LRTP project costs, on average, will likely be higher than the certainty of project benefits.  The use of a 1.0 B/C ratio does not account for this difference in uncertainty between costs and benefits and is another reason why a B/C ratio of higher than 1.0 is needed.  Other forms of planning and cost estimating provide for some measure and reflection of uncertainty, MISO’s criteria should be no different.

• Business Case Requirements:  Business case requirements should be added to MISO’s proposal and included in tariff language.  These requirements should include:
  • Sensitivities – demonstrate the value of a proposed LRTP project against a series of sensitivities intended to test the robustness of projected project benefits.
  • Consideration of alternatives – demonstrate how a proposed LRTP project was evaluated against potential alternatives including non-traditional transmission alternatives, potential low-cost solutions including solutions that may not meet the qualifications of a LRTP project and non-transmission alternatives.
  • Cost impact – provide the expected impact on transmission costs from the proposed project.
  • Resource siting analysis – demonstrate that a proposed LRTP project contains sufficient benefits under multiple potential resource siting scenarios.
  • Underbuild impact – show the potential impact and upgrades needed to lower voltage systems created by the addition of a LRTP project.

LRTP projects stand to materially increase transmission costs for customers.  The enhancements identified above must be included with any final proposal MISO puts forward in order to provide appropriate protections for customers.  The use of a higher B/C ratio and having business case requirements stated in the tariff are needed to ensure that LRTP projects approved and costs incurred by customers are just and reasonable. 

Response of ACP to Request by RECBWG for Stakeholder Feedback

August 6, 2021

The American Clean Power Association (ACP) is a national trade association representing a broad range of entities – including renewable developers, transmission owners, utilities, manufactures, suppliers, financiers, marketers and customers – with a common interest in encouraging the expansion and facilitation of wind, solar and storage energy resources.  

ACP appreciates this opportunity to provide these very brief comments in response to the request by RECBWG for stakeholder feedback on MISO’s July 28^th Long-Range Transmission Plan (LRTP) cost allocation proposal.

In essence, the proposal is to allocate the costs of LRTP projects under the Multi-Value Project (MVP) category but instead of applying a footprint wide postage stamp, applying a subregional postage stamp to the North and TBD subregional allocation to the South. 

ACP strongly supports MISO’s cost allocation proposal.  It would facilitate the construction of greatly needed backbone transmission for the benefit of customers seeking low-cost reliable clean energy, and would result in costs being allocated roughly commensurate with benefits.  In addition, and consistent with this statement of support, ACP endorses the comments submitted by the Environmental Sector in response to this request for comments.

In conclusion, ACP will take this opportunity to note that it is a strong supporter of the entire LRTP process which is designed to identify efficient transmission and non-transmission solutions to reliably support the portfolio shift underway across the MISO footprint. We applaud MISO’s steadfast efforts related to the LRTP, and look forward to continued active engagement in the process.

COMMENTS OF THE

CITIZENS UTILITY BOARD OF MICHIGAN

 August 6, 2021         

Feedback Submission to: Regional Expansion Criteria and Benefits Working Group (RECBWG)

Re: RECBWG: MISO's LRTP Cost Allocation Proposal (20210728)

The Citizens Utility Board of Michigan (CUB-MI) represents the interests of residential ratepayers in Michigan and is a member of the MISO Public Consumer Group.  We appreciate the opportunity to provide feedback on MISO’s cost allocation proposal for Long Range Transmission Plan (LRTP) projects issued on July 28, 2021.

The electric grid is in a state of substantial change. Market economics, technology advancements, government policies, and corporate (including utility) zero or net zero carbon goals are driving a dramatic shift in the mix of generation resources. As MISO has shown in LRTP meetings, 17 utilities have clean energy or net zero carbon goals of greater than 80% and five states considering or having adopted clean energy or net zero carbon goals. This future electric grid will have to be more nimble and flexible than the one we have today and part of what is required to get there is more forward-looking transmission infrastructure.

CUB-MI conceptually supports the comprehensive approach of the Long Range Transmission Plan to proactively connect areas of the grid to new generation resources and shifting load. Though specific projects and project portfolios should be well vetted in the transmission planning process, the goal of LRTP to holistically, reliably and efficiently meet the future needs of the grid through a portfolio of projects is appropriate. Further, the benefits of these types of projects tend to extend broadly across the region and will surely be subject to shifts over the long life of transmission assets.

However, as Michigan consumer advocates, CUB-MI is concerned that limitations in the connectivity between the state and MISO will limit the potential flow of benefits to customers. Michigan is currently about 20% of the load in MISO and therefore would pay 20% of the costs under the proposed use of the MVP methodology in MISO north and central. However, a large portion of the state is subject to a capacity import limit due to the need for more transmission between Michigan and the rest of the MISO region. These connections bring the benefits of generation resource diversity and availability, along with access to lower market prices. Therefore, in order to fully support the cost allocation proposal (as known on this date), CUB-MI would like to see additional transmission interconnections developed as part of the LRTP to ensure Michigan customers the full benefit of their contribution to regional transmission development.

Thank you for consideration of these comments.

John Liskey

General Counsel

Citizens Utility Board of Michigan

921 N. Washington Ave

Lansing, MI  48848

517-913-5105

john@liskeypllc.com

MEMORANDUM TO: MISO REGIONAL EXPANSION CRITERIA AND BENEFITS WORKING GROUP (RECBWG)
FROM: THE ENTERGY OPERATING COMPANIES AND OTHER MISO SOUTH TRANSMISSION OWNERS
SUBJECT:  MISO’s LONG RANGE TRANSMISSION PLANNING (LRTP) COST ALLOCATION PROPOSAL
DATE:  AUGUST 6, 2021

The following feedback is offered by the Entergy Operating Companies ("EOCs")1 and other MISO South Transmission Owners2 in response to the request made during the July 28th, 2021 RECBWG meeting concerning MISO’s Long Range Transmission Planning (LRTP) Cost Allocation Proposal. Accompanying these comments is the Proposal of the MISO South Retail Regulators and Stakeholders (“MISO South Proposal”), which is offered for consideration by MISO and other stakeholders as a means of addressing the issues and concerns detailed below. The MISO South Proposal reflects the EOCs collaboration and work among various retail regulators and transmission owners to address their shared objectives and concerns. We look forward to continuing to work in good faith with MISO and MISO stakeholders to arrive at a consensus solution that addresses the needs and concerns of the broader MISO community.

The EOCs appreciate MISO’s decision to advance its own cost allocation proposal for stakeholder consideration. While earlier efforts by the Organization of MISO States as well as a subset of Transmission Owners (the “Certain TOs” or “CTOs”) have been constructive and helped advance the dialogue around this topic, the EOCs believe that MISO’s introduction of a proposal has helped facilitate progress in these discussions.

The EOCs strongly support MISO’s concept of addressing cost allocation in a bifurcated manner between the MISO Midwest and MISO South subregions. While present limitations on transfers between MISO Midwest and MISO South are a factor in considering such an approach, there are additional considerations and sharply differing circumstances between the two subregions that support MISO’s decision to adopt separate cost allocation methodologies tailored to each subregion and not to allocate costs of projects sited in one subregion to customers in the other.

Most importantly, MISO has indicated that the current LRTP effort is focused on developing transmission solutions needed to achieve a transition away from fossil generation (especially coal) and toward more dependence upon renewable resources and distributed resources (including electric storage), consistent with sustainability goals adopted by various MISO utilities and various MISO states/regulators. MISO has indicated that the LRTP also is driven by technological changes and an anticipation of significant electrification of the economy. Although MISO Midwest and MISO South are both undergoing this transition and to varying degrees have adopted these goals, they start from very different places, and their circumstances differ in many important respects. In short, while fleet evolution generally is accepted across the industry, the rate at which the transition occurs will vary. For example:

• MISO Midwest is at the forefront of the portfolio transition described above and that MISO describes as underlying the LRTP and its broader Reliability Imperative initiative. The projected levels of renewable resource additions, particularly wind projects, coupled with forecasted retirements of legacy fossil units puts MISO Midwest squarely on a path where there is urgency to seek the sort of benefits LRTP projects are intended to provide. MISO’s LRTP Future 1 assumes that MISO Midwest will be integrating 18,504 MW of wind by 2040 (vs. 200 MW in MISO South) and retiring 38,951 MW of coal by 2040 (vs. 5,876 MW in MISO South).

• On the other hand, the MISO South subregion does not face these pressures to the same degree given its dearth of wind resources, its relatively minor dependence upon retiring coal resources, and its anticipated continued reliance upon modern dispatchable natural gas resources (with some utilities transitioning to hydrogen as a fuel source as technology evolves), solar additions, and battery storage technology. These circumstances render any immediate need for large-scale transmission projects designed to move large quantities of renewable energy (and gas-powered energy, to address the intermittency of renewables) over long distances to load centers less apparent – and indeed, MISO’s illustrative map of transmission needs utilizing Future 1 reveals that the most pressing need areas are in MISO Midwest, with very few needs identified in MISO South.

• MISO’s projections of technical electrification potential also show significant differences between the pace and degree of projected electrification in MISO Midwest and MISO South, with MISO Midwest having significantly larger electrification impacts in Future 1 – driven in part by space-heating loads in MISO Midwest that, owing to a warmer climate, are not as significant in MISO South.

• In sum, geographic diversity, resource mixes, policies (both existing and pending), as well as economics, affect different areas of the MISO footprint to different degrees.

Because of these circumstances, it is reasonable to maintain separation between cost allocation for projects in MISO Midwest and cost allocation for projects in MISO South – and not to allocate costs of projects in one subregion to customers/loads in the other subregion. Moreover, it will allow MISO to put in place different cost allocation methodologies for each subregion that reflect the sharply different circumstances, policy views, and preferences of the retail regulators and stakeholders in the two subregions.

With respect to the specifics of the cost allocation proposal, the EOCs strongly oppose the use of a postage stamp methodology to allocate projects in the MISO South subregion. Instead, the MISO South Proposal for allocation of LRTP project costs in the MISO South subregion is based on the criteria used to justify the candidate project. This approach is consistent with the policy that transmission costs should be allocated in a manner that is consistent with the planning assumptions that gave rise to the incurrence of such costs. Moreover, the MISO South Proposal for LRTP cost allocation is consistent with the “beneficiaries pay” principle of cost allocation.
Separate from subregional cost allocation, the EOCs, continue to have concerns over certain elements of MISO’s proposal. The two most serious concerns are as follows:

• First, MISO proposes to apply a 1.0 benefit to cost (“B/C”) ratio to LRTPs. The 1.0 B/C standard fails to account for the significant uncertainties that arise in calculating the costs and benefits of transmission projects designed to address needs forecasted decades in the future. For transmission projects of the size and scope contemplated by the LRTP initiative ($30-100 billion per MISO’s estimates), the EOCs continue to believe a B/C ratio of 1.25 will help ensure selected projects ultimately deliver benefits that exceed development costs. Such a B/C ratio also aligns with MISO’s assurances to stakeholders and regulators that it is only interested in approving projects with robust and durable business cases. A project with benefits that merely equal its costs does not have a strong business case. Costs are certain once an investment is made, while benefits, particularly when the needs being addressed are many decades in the future, are not.

• Second, MISO’s proposal lacks sufficient detail around how the reliability benefits associated with LRTPs are to be defined and calculated. While MISO’s existing Market Efficiency Project tariff provides clear guidance and a model for how to capture and evaluate the quantifiable economic benefits offered by new transmission projects, MISO’s proposal does not explain how MISO would go about identifying the benefits of new transmission projects that are expected to resolve projected reliability challenges anticipated to emerge potentially decades into the future. MISO has repeatedly said that the reliability needs it is seeking to address are real and compelling. The tariff criteria for reliability benefits require more rigor to align with MISO’s statements and to ensure that the reliability needs upon which business cases for new MVPs are based are real, objective, and measurable. As MISO staff recognized at the July 28th RECB Working Group meeting, the issue of how to allocate reliability benefits under MVP Criterion 3 was one of first impression, as the 2011 MVP Portfolio was allocated based on MVP Criterion 1.

The EOCs and other MISO South Transmission Owners appreciate the opportunity to comment on these significant issues.

1 The Entergy Operating Companies are Entergy Arkansas, LLC, Entergy Louisiana, LLC, Entergy Mississippi, LLC, Entergy New Orleans, LLC, and Entergy Texas, Inc.

2 The other MISO South Transmission Owners are Arkansas Electric Cooperative Corporation, Cleco Power, LLC, and Cooperative Energy.

Proposal of the MISO South Retail Regulators and Transmission Owners
August 6, 2021

The MISO South Retail Regulators1 and Transmission Owners2 offer the following proposal (“MISO South Proposal”). In crafting this proposal, the sponsors worked from the MISO proposal provided at the July 28, 2021 RECB Working Group meeting (“MISO Proposal”) and then made modifications, endeavoring to change as little as possible. In areas where this proposal adds more detailed rules and criteria to the MISO Proposal, those details are intended primarily to codify the planning approaches (as we understand them) that are already utilized by the MISO Planning staff in evaluating and developing portfolios under the current MVP tariff rules. We look forward to continuing good faith discussions with our fellow MISO stakeholders in pursuit of a constructive solution that addresses the needs and concerns of the broader MISO community.

Project Type MVP

Criterion: One of 3 MVP Criterion

C1: Reliably and economically support state or federal energy policy

C2: Multiple types of economic value across multiple pricing zones with B/C > 1. 25

C3: Addresses NERC/reliability criteria and economic issues with benefits across multiple pricing zones in excess of cost (with modifications to the language in Attachment FF Section II.C.2c as outlined below)

A Multi-Value Project must address more than one Transmission Issue associated with projected violations of a NERC or Regional Entity standard (“Reliability Benefits”) and provide quantifiable economic benefits (“Economic Benefits”) across more than one pricing zone. The project must generate total financially quantifiable benefits, including quantifiable Reliability Benefits, with a total Benefit-to-Cost ratio of 1.25 or higher, based on the definition of financial benefits and Project Costs provided in Section II.C.7 of Attachment FF. In determining whether a candidate project has Reliability Benefits or Economic Benefits as defined above, MISO shall apply only the following criteria (i.e., these criteria are intended to be exclusive):

• Reliability Benefits: The candidate project, in addition to meeting the above criteria, must address Transmission Issues associated with a projected violation of a NERC or Regional Entity standard that occurs in multiple model years (e.g., 10-year out model and the 20-year out model) and in multiple planning scenarios (e.g., summer peak and winter peak) within one of those years. The Reliability Benefits associated with the LRTP project are to be quantified, for purposes of the required B/C ratio, as the Net Present Value of the cost of the solutions otherwise required to address the reliability issues avoided by the LRTP project(s) (i.e., the Avoided Reliability Project costs).
• Economic Benefits shall be determined in the manner set forth above in Criterion 2 (as modified).

Requires Portfolio:  Yes

Benefits Existing MVP but with the modifications identified below:

• Eliminate the “catch all” MVP benefit (“any other financially quantifiable benefits”)
• Modify the Avoided Reliability Project costs definition such that the following requirements are also met:

The TPL-001 P6 and P7 contingency analyses used to identify projected NERC or Regional Entity violations allows for the use of Remedial Action Schemes, including redispatch, interruption of firm transmission service or non-consequential load loss.

B/C Ratio: 1.25 (for C2 and C3)
Minimum Voltage: 230 kV
Minimum Cost: $20M

Cost Allocation   Cost Allocation shall be specific to the MISO Midwest or South sub-region

Projects that are sited within the Midwest Sub-Region: Postage Stamp cost allocation only to MISO Midwest using MVP Usage Rate Methodology
For projects that are sited within the South Sub-Region:

Cost allocation only to MISO South as follows based on the criteria used to justify the candidate project, and in all cases shall be based on demand not energy withdrawn: 3

• C1: Allocate based on the agreement of the Relevant Electric Retail Regulatory Authority (RERRAs) whose policies the candidate project is intended to address or fulfill.
• C2: Allocate to the Cost Allocation Zones identified as the recipients of the economic benefits used to achieve the required B/C ratio. The MEP cost allocation methodology shall be used as applicable.
• C3: Allocate as follows:
• Step 1 – Allocate project costs first in the manner set forth for C2 (i.e., based on Economic Benefits and using MEP cost allocation methodology)
• Step 2 – If in Step 1, the Economic Benefits are not sufficient to allocate 100% of the projected costs of the project, then MISO will allocate the remaining project costs according to each pricing zone’s proportional share of Reliability Benefits identified from the project.

Hierarchy:  MVP > MEP > BRP

Qualifies for MISO CTA Process?:  Yes

Change to GIP?   No; however, the proponents of this proposal wish to continue to work with MISO on the development of an expanded cost allocation methodology that eventually incorporates the assignment of LRTP-related costs to new generating facilities that benefit from these projects. This expanded cost allocation methodology should include provisions to ensure that load that may designate a generator as a network resource does not pay twice – once for the MVP/LRTP costs allocated to the load directly and again for the MVP/LRTP costs allocated to the generator that the load may designate as a network resource.

1 Staff and outside counsel/consultants of the Mississippi Public Service Commission and Louisiana Public Service Commission participated in the development of the MISO South Proposal and sign on in support. Staff and outside counsel/consultants of the Mississippi Public Service Commission and Louisiana Public Service Commission have recommended or will recommend to their principals that they support the Proposal. In light of the short timeframe for review of MISO’s proposal, formal retail regulator approval of the MISO South Proposal is in progress. Staff and outside counsel/consultants of the Public Utility Commission of Texas also participated in the development of the MISO South Proposal and intend to seek support for the proposal from their commission.

2 This proposal is sponsored and supported by the following MISO South Transmission Owners: Arkansas Electric Cooperative Corporation (“AECC”); Cleco Power, LLC (“Cleco”); Cooperative Energy (“Cooperative”); Entergy Arkansas, LLC, Entergy Louisiana, LLC, Entergy Mississippi, LLC, Entergy New Orleans, LLC, and Entergy Texas, Inc. (collectively, “Entergy OpCos”).

3 If a portfolio is developed using a combination of C1, C2, and/or C3, then each allocation method shall be used in proportion to that criterion’s share of the total project benefits.

The IPP Sector expresses it appreciation for the thoughtfulness, effort, and attention MISO Staff, RECBWG leadership, and stakeholders have provided the Long Range Transmission Planning (LRTP) and related cost allocation discussion. The IPP Sector highlights the transmission needs addressed in the LRTP are reliability based. The LRTP projects addressing the region’s transmission reliability needs provide benefits to all MISO customers and ensure the reliable operation of the transmission system as the industry transition continue. At the July 28, 2021 meeting of the RECBWG, MISO reviewed its cost allocation proposal. The IPP Sector offers its support for that cost allocation proposal and views it as a common sense way to assign costs to portions of the MISO membership that benefit most from the completion of certain transmission projects. With that, the IPP Sector encourages the RECBWG and MISO to make necessary changes to the Tariff and/or BPMs expeditiously. Our Sector's support of moving the cost allocation proposal forward without delay is because MISO has already completed a robust and comprehensive study that highlights transmission projects that are needed to address existing and future reliability issues. The IPP Sector’s only unique request is for MISO to maintain its existing policy of not assigning existing generators with any form of a usage rate related to injecting MWs into the MISO system after those resources funded needed upgrades to support such injections.

The Michigan Public Service Commission (MI PSC) appreciates the opportunity to provide feedback on MISO’s latest cost allocation proposal for Long Range Transmission Planning projects. At the July 28, 2021, RECBWG meeting, to approve and cost allocate LRTP projects, MISO proposed to modify certain MVP project criteria and to revise the  MVP cost allocation method to exclude MISO South from a MISO Midwest postage stamp cost allocation that uses the MVP usage rate methodology. 

The MI PSC is supportive of MISO’s efforts to produce a long-range transmission plan that enables future generation resources to reliably and economically serve customer demand. However, we are concerned with the proposal to allocate LRTP project costs across the Midwest sub-region on a postage stamp basis given existing transmission constraints.

Indeed, MISO’s proposal seems to recognize that transmission transfer constraints should be considered when developing cost allocation methodologies, but only for MISO South. The apparent reason that MISO South would be separated from the MISO Midwest sub-region for purposes of postage stamp cost allocation is to reflect the real transmission transfer constraints that exist between the Midwest and South regions. Yet this same issue is also relevant to LRZ 7. LRZ 7 comprises most of Michigan’s Lower Peninsula, has only one adjacent MISO LRZ to its South containing only one transmission tie line to the NIPSCO balancing area, and has lengthy seams with the PJM and the Ontario Independent Electricity System Operator (IESO). To the North, limited transmission infrastructure in Michigan’s Upper Peninsula and an HVDC flow control device at the Straits of Mackinac significantly limit power flows into Zone 7 from Zone 2. The MI PSC believes it to be unbalanced to recognize transfer limitations for one area of the MISO footprint but not for others when devising a cost allocation method. To the extent the physical and system transfer limitations are mitigated through the LRTP process, that could be reflected in cost allocation and make a broader sharing of costs more appropriate.  

Without addressing these real physical system and transfer constraints and limited transmission pathways into Zone 7, these constraints diminish the benefits that Michigan ratepayers will reap from geographically and electrically distant LRTP projects. Because disproportionate cost assignments to constrained areas of the MISO footprint are likely to occur under the MVP postage stamp method, as is recognized by the proposal to exclude MISO South, the MI PSC believes it is appropriate to apply a cost allocation method across its entire system to reflect existing physical system and transfer constraints.

East Texas Electric Cooperative (ETEC) would like to thank MISO and the RECBWG leadership for the opportunity to respond to MISO’s cost allocation proposal. ETEC and our consultants at GDS Associates will continue to be active in the related planning discussions at the PAC and the LRTP workshops as that work progresses.

Please consider the following points in response to MISO’s LRTP Cost Allocation Proposal presented at the RECBWG on July 28^th.

1. Support for Separate MVP Cost Allocations for MISO Midwest and MISO South: ETEC supports the aspect of MISO’s proposal that includes separate cost allocation structures for MISO South and MISO Midwest. This approach recognizes that the two sub-regions have important differences (topology, weather and load patterns, existing fuel mix, etc.) and preferences for allocating costs across each sub-region.
   
   
2. Support for Competitively Bidding MVP Projects: ETEC supports the element of MISO’s proposal that would provide a path for competitive bidding including the ability for bidders to propose cost containment provisions, which is an important element in keeping costs as low as possible for our members and ultimately retail customers across MISO.
   
   
3. Need for More Value Creation: The resource transition is creating an opportunity for MISO to demonstrate its ability to be the most value creating RTO, but the current proposal—which largely recycles the existing MVP approach—seems to be missing something as an optimized solution for the LRTP. While it has the comfort of the familiar, it lacks the innovation or perhaps the step forward that the physical grid will be experiencing from the LRTP itself.
   
   
4. Robust Solutions (Multiples on the B/C ratios) not Break Evens: Given MISO’s strength and experience in regional transmission planning and the fact that we now have operating MVP projects, the 1.0 B/C Ratio component of the proposal (criterion 2 and 3) is too low a target for a regionally-benefitting project (or portfolio).  With MISO’s vantage point, planning staff quality and multi-year experience, MISO should be pushing itself to find undeniably robust solutions that bring economic benefits that are multiples of the costs, not those that might break even at 1.0 if reality ultimately matches the analysis. One element of the RTO value proposition is that “it” can be done better centrally, but a 1.0 B/C ratio floor seems to cut against the grain of that assumption and MISO’s own aspiration to be the most value creating RTO.
   
   
5. Target Reasonably Precise Allocations not Blunt Subsidies: MISO’s proposal will result in all loads in MISO Midwest paying for projects although the Future 1 outcomes are largely driven by specific generation retirements and their new but distant resources. It seems there is more middle ground to find in allocating those costs rather than abandoning today’s 90-100% cost responsibility (in the GI queue) for network upgrades in favor of a postage stamp allocation across the sub-region.

At the July 28^th RECB Work Group meeting, MISO invited stakeholders to submit feedback on their proposal to use a modified Multi-Value Project (MVP) category to allocate the costs of LRTP projects.

Although MISO did not propose specific new tariff language, their general proposal is to use the existing MVP category for LRTP projects but allocate MVP project costs by sub-region instead of across the entire MISO footprint—depending on where the project is located.  Specifically, the cost of projects in the Midwest sub-region would be allocated within that sub-region using the existing Postage Stamp Usage Rate Methodology.  The cost allocation method for the South sub-region remains under review.

The Minnesota Public Utilities Commission (Commission) and the Minnesota Department of Commerce (Department) staff (Minnesota Staff) strongly support of the direction MISO is heading on cost allocation. Minnesota Staff will continue to evaluate MISO’s proposal as more details are available and will provide additional comments. The LRTP is designed to address transmission needs resulting from rapid utility fleet changes that are, in turn, driven by changing economics and customer demand for clean energy. Based on the most recent MISO interconnection queue data, the demand for clean energy is MISO-wide. (MISO Generation Queue Overview)  For example, MISO Central has 222 projects at 36.4 GW in the interconnection queue.

Further, at the June 30 LRTP Workshop, MISO’s analysis showed many region-wide reliability issues under MTEP Future 1 assumptions.  Addressing these reliability issues through incremental “bottom up” transmission upgrades by individual MISO transmission owners would likely cost significantly more over the long-run than developing optimized region-wide solutions. 

Therefore, LRTP projects will likely not only address reliability issues to accommodate clean energy projects but also save money for rate payers by optimizing the solutions.  With this perspective—following months of detailed review of potential cost allocation options—the Commission and the Department believe that MISO’s proposed subregional MVP modification is the best option available. 

John Wachtler: Minnesota Department of Commerce

Hwikwon Ham: Minnesota Public Utilities Commission

Organization of MISO States (OMS)

Transmission Cost Allocation Work Group (TCAWG) and

Transmission Planning Work Group (TPWG)

Feedback on MISO’s July 28, 2021 LRTP Cost Allocation Proposal to the RECBWG

August 6, 2021

            The OMS TCAWG and TPWG (OMS WGs) appreciate the opportunity to provide feedback on the important issue of cost allocation.  The OMS WGs reiterate that they continue to support the OMS Cost Allocation Committee (CAPCom) Guiding Principles[1]. We also request clarification on a number of areas relating to MISO’s July 28, 2021 proposal on LRTP cost allocation.[2]  Specifically, the OMS WGs request that MISO provide written responses to the following questions:[3]

Cost Allocation

• Please explain how LRTP projects are sufficiently similar to MVPs such that they require a similar cost allocation methodology given that the long-haul projects are intended to move power over farther distances.

• What is the justification for differences in the methodology between the Central/North region and MISO South?

• How is MISO ensuring that the costs for solution sets are allocated to those causing the need for the lines, particularly as the portfolios making up the solution sets are fragmented over time?

Cost/Benefit Analysis

• In the RECBWG, MISO indicated that cost allocations may go to some zones that have negative benefits, please explain why MISO believes that would be just and reasonable.

• In assessing a B/C analysis, how does MISO match benefits and costs to those who must pay for them?  

• MISO proposed to use existing benefit metrics. The term “any other financially quantifiable benefit” is vague and could be overly inclusive. Please provide an example of what type of benefit this would involve.  Please also explain how this has been applied in past MVP assessments.

Stranded Costs

• How will ratepayers be held harmless if the assumed generation development does not materialize in accordance with the LRTP planning process?

• How would MISO propose to allocate costs incurred in planning for a generation site that no party takes an interest in developing?

• How is MISO proposing to allocate any costs incurred as part of the LRTP process for projects that are started but not completed due to financial difficulties or other unexpected impediments?

• How does MISO intend to avoid a possible disconnect between the LRTP planning and cost allocation process for transmission and the resource planning processes under state jurisdiction for generation?

Portfolios

• Please clarify how MISO plans to determine and implement its proposed portfolio approach.  In MISO’s response, please address the following topics:

• How will the term “portfolio” be defined and implemented?
• Will MISO group multiple projects into one “portfolio” but approve portions of the “portfolio” over the course of multiple MTEP cycles or alternatively, will MISO approve multiple “portfolios” in successive MTEP cycles?
• Will the portfolio be determined in one year?  Will those portfolios shift and change over time?
• Will the portfolio of LRTP projects be fully developed in 2021?
• Does MISO plan to put forth several discrete portfolios of projects in future MTEP cycles, or will it identify a single LRTP portfolio and modify it over time?

• How would this fit in MISO’s articulation of one power pool for LRTP planning? For example, hypothetically, would it make better sense to propose a 345 kV line with the whole footprint taken into account over a 230 kV line with only N/C taken into account?  How would MISO undertake such a determination?

• Will MISO’s planning approach be separated between MISO-North and Central regions as one plan and MISO-South as a separate plan?

Related Planning Topics

• Has MISO considered waiting until the outcome of the FERC ANOPR and/or the Federal-State Joint Task Force before making a final determination on proposed changes to the LRTP process?  What if those outcomes conflict with MISO’s LRTP?

• Would there be a limit on the number of LRTP projects included in an MTEP or LRTP portfolio?

• Does MISO’s transmission planning process run the models with any constraints on capital budgets or limits on average rate increases? In the absence of such constraints, is MISO indicating that there is unlimited pot of money available for capital expenditures by utilities for transmission?    

Siting

• If a portion of the portfolio does not receive siting authority, will MISO recalculate benefits/allocations? 

• Does MISO plan to limit proposed portfolios to DOE designation corridors?

Market Signals

• How does the LRTP help price signals for generation location?

• Is MISO seeking to accomplish zero congestion costs?

• Would some level of congestion be desirable to send proper price signals and to enable states to meet their own reserve/resource needs? If so, what is the appropriate level?

• Would generation and transmission intended to be built in a public utility’s service territory have to be built by that investor-owned utility or would it be able to bid out for competition?

Comments

of the

Association of Businesses Advocating Tariff Equity (ABATE),

Illinois Industrial Energy Consumers (IIEC),

Louisiana Energy Users Group (LEUG),

Texas Industrial Energy Consumers (TIEC),

Coalition of MISO Transmission Customers (CMTC),

Midwest Industrial Customers (MIC)

And

NIPSCO Large Customer Group (NLCG)[1]

Regarding

RECBWG: MISO’s Long Range Transmission Plan (LRTP) Cost Allocation Proposal

August 6, 2021

ABATE, IIEC, LEUG, MIC, TIEC and CMTC, as representatives of the End-Use Customer (EUC) Sector, and NLCG appreciate this opportunity to provide comments to MISO.

Background

During the July 28, 2021 meeting of the MISO RECBWG, MISO advanced for consideration and discussion its proposal for the cost allocation of LRTP projects.  The most significant components of MISO’s proposal include:

• The cost allocation for LRTP projects located in MISO North/Central would be accomplished using a sub-regional postage stamp approach and an energy usage rate based on monthly net energy withdrawals
• The cost allocation for projects located in MISO South remains under review and may be different than MISO’s proposal for MISO North/Central
• LRTP projects would be evaluated using the existing MVP benefit metrics
• LRTP projects that provide economic benefits would be subject to a benefit to cost ratio of 1.0, but no benefit to cost threshold is proposed for LRTP projects that support state or federal energy policies
• Minimum voltage threshold of 100 kV
• Minimum cost threshold of $20 million
• LRTP projects would be treated as Multi-Value Projects (MVPs) in the MISO project hierarchy
• LRTPs would be subject to competitive bidding, unless restricted by state right of first refusal laws

MISO asked for written stakeholder feedback on its LRTP cost allocation proposal by August 6, 2021.    

ABATE/IIEC/LEUG/TIEC/CMTC/MIC/NLCG Comments

We appreciate the opportunity to comment on the LRTP cost allocation proposal that MISO put forth for consideration.

We previously submitted a letter to MISO dated July 22, 2021 that set forth our concerns with the LRTP cost allocation proposal that certain MISO transmission owners (Certain TOs) submitted to MISO on July 9, 2021.[2]  MISO’s July 28, 2021 LRTP cost allocation proposal largely mirrors the Certain TOs’ proposal to rely on an MVP cost allocation method for LRTPs, with the exception that MISO has not yet proposed a cost allocation method for LRTP projects located in MISO South.  Therefore, the concerns that we expressed in our July 9, 2021 letter with respect to the Certain TOs proposal remain applicable to MISO’s proposal.  We have the following concerns with MISO’s LRTP cost allocation proposal:

First, MISO proposes to charge LRTP costs to customers on an energy basis rather than on a 12 CP demand basis.  This approach is inconsistent with cost causation principles which dictate that fixed, sunk transmission costs should be allocated on a demand basis.  Moreover, this component of MISO’s proposal does not reflect the fact that the transmission system is predominantly built to ensure sufficient capacity during peak demand periods, rather than to meet energy requirements throughout the year.  Recovering LRTP costs on an energy basis would inappropriately shift costs to large, high load factor customers and would require such customers to bear an LRTP cost burden that is inconsistent with their contribution to the incurrence of LRTP costs. 

MISO has not submitted any analysis of currently contemplated LRTP projects that demonstrates that an energy charge for LRTP projects is more reflective of cost causation for such projects relative to a 12 CP demand charge.  Absent such evidence, it is not reasonable to shift significant LRTP costs onto high load factor customers by applying an energy charge for LRTP projects.

Second, MISO proposes to apply a sub-regional postage stamp allocation of LRTP costs for projects located in MISO North/Central.  MISO also proposes to treat LRTPs as MVPs and to place LRTPs above Market Efficiency Projects (MEPs) in the MISO transmission project hierarchy, meaning that any future MEPs in MISO North/Central would be allocated on a sub-regional postage stamp basis if they also meet the LRTP eligibility criteria.  This allocation approach broadly spreads LRTP costs across a wide range of the MISO footprint, without regard to the actual distribution of benefits for each project.  MISO recently engaged in an extensive, multi-year stakeholder process that resulted in a Federal Energy Regulatory Commission (FERC) decision to eliminate the 20% component of the MEP cost allocation method, on the basis that elimination of the postage stamp component and 100% reliance on objective, quantifiable benefit metrics to allocate MEP costs would result in a cost allocation that is more commensurate with the distribution of project benefits.  MISO’s LRTP cost allocation proposal would effectively roll back these recently enacted MEP cost allocation reforms and replace them with a 100% postage stamp cost allocation that makes no attempt to link the cost allocation of LRTP projects to the beneficiaries of these projects.  As such, MISO’s proposal contradicts the FERC’s beneficiaries pay principle and also results in muting pricing signals to generators with respect to their siting decisions. 

MISO has not presented any analysis of the distribution of benefits associated with currently contemplated LRTP projects that demonstrates that a sub-regional postage stamp allocation would result in a cost allocation that is commensurate with the distribution of project benefits.  Absent such a showing, it is unreasonable to proceed with a sub-regional postage stamp cost allocation approach for LRTPs.  As we heard from some stakeholders during the July 28, 2021 RECBWG meeting, there are significant transmission constraints within MISO North/Central that make it unreasonable to assume, without objective analysis, that a sub-regional postage stamp allocation would appropriately honor the beneficiaries pay principle for LRTPs.

Third, MISO proposes to apply a 1.0 benefit to cost ratio to LRTPs that provide economic benefits and that are not driven solely by state or federal policy mandates.  This approach fails to appropriately recognize the uncertainties in forecasting the costs and benefits of transmission projects over a 20-year time horizon.  Without an appropriate margin of projected project benefits in excess of their costs, MISO’s proposal could result in the approval of LRTP projects that may ultimately not provide benefits to MISO customers that exceed their costs.  To avoid such outcomes and to ensure that transmission projects provide positive benefits to customers, the MEP project category relies on a more appropriate 1.25 benefit to cost ratio.  To protect customers from excessive LRTP costa that do not provide net benefits, a 1.25 benefit to cost ratio would also be more appropriate for LRTPs.

Finally, MISO proposes to potentially apply different LRTP cost allocation methods for projects that are located in MISO North/Central vs. MISO South.  To date, MISO has not demonstrated that there are significant differences in the nature of potential LRTP projects in these two sub-regions that would justify different cost allocation methods for LRTP projects solely due to their geographic location in the MISO footprint.  Without such evidence, a MISO proposal to apply different sub-regional cost allocation methods could potentially be rejected at the FERC due to concerns regarding undue discrimination among otherwise similarly situated projects, if the only basis for differences in cost allocation is the geographic location of the project(s) in question.   

We believe that the aforementioned concerns can be addressed through an alternative LRTP cost allocation approach that leverages the MEP benefit metrics that the FERC recently approved following a multi-year MISO stakeholder process.  Under this approach, LRTP costs would first be allocated to beneficiaries using the approved MEP benefit metrics in the current MISO Tariff, up to the total value of the calculated benefits using these metrics.  If there are any residual LRTP project costs that are unaccounted for after the application of the MEP benefit metrics, such remaining costs could be deemed to be reliability-related and could be allocated to beneficiaries using a new benefit metric that measures the distribution of reliability-related project benefits using an objective, quantifiable measure such as increases in transfer capability.    In addition, LRTP project costs should be charged to customers on a 12 CP demand basis.  Moreover, LRTPs should be subject to a 1.25 benefit to cost ratio.  This cost allocation approach would apply to LRTP projects in both MISO North/Central and MISO South. 

Relative to MISO’s proposal, the combination of the aforementioned elements would result in an LRTP cost allocation approach that is more consistent with cost causation, that more closely reflects the beneficiaries pay principle, and that better protects consumers by ensuring that LRTP project benefits exceed the cost of these projects.  The application of a consistent cost allocation method across the MISO sub-regions would also alleviate any undue discrimination concerns with MISO’s proposal.  We urge MISO to seriously consider this alternative cost allocation method for LRTP projects.

Thank you again for giving us an opportunity to provide these comments.  If you have any questions concerning our comments, please do not hesitate to contact:

Jim Dauphinais

Brubaker & Associates, Inc.

(Consultants to ABATE, IIEC, LEUG, NLCG and TIEC)

(636) 898-6725

jdauphinais@consultbai.com

Ali Al-Jabir

Brubaker & Associates, Inc.

(Consultants to ABATE, IIEC, LEUG, NLCG and TIEC)

(361) 994-1767

aaljabir@consultbai.com

Bob Stephens

Brubaker & Associates, Inc.

(Consultants to ABATE, IIEC, LEUG, NLCG and TIEC)

(636) 898-6725

bstephens@consultbai.com

 Kevin Murray

McNees Wallace & Nurick LLC (for CMTC)

(614) 719-2844

murraykm@mcneeslaw.com

Kavita Maini

KM Energy Consulting, LLC (Consultants to MIC)

(262) 646-3981

kmaini@wi.rr.com

Minnesota Power Feedback on MISO’s LRTP Cost Allocation Proposal

During the July 28, 2021 meeting of the Regional Expansion Criteria & Benefits Working Group (RECBWG) stakeholders were invited to submit feedback on MISO’s Long Range Transmission Planning (LRTP) Cost Allocation Proposal. Minnesota Power (MP) appreciates the opportunity to provide feedback on the proposal and provides the following public feedback for consideration.

At this time, Minnesota Power does not support the July 28^th MISO proposal. MISO should not rush to reform its cost allocation methods but should take the time required to deliberately and fully engage with stakeholders to develop a LRTP cost allocation proposal that allocates project costs to transmission and generation interconnection customers based on the forecasted benefits to those customers and in a manner that is consistent with the principles of cost causation.

 MISO should always strive to allocate costs to those that benefit where beneficiaries can be identified but MISO’s July 28^th proposal broadly spreads LRTP costs across a wide range of the MISO footprint, without regard to the actual distribution of benefits for each project. MISO should attempt to link the cost allocation of LRTP projects to beneficiaries of these projects where ever practical. For example, MP supports the use of all currently approved benefit metrics in the tariff (MVPs and MEPs) to identify potential projects and to allocate a portion of overall project costs. LRTP costs should first be allocated to identified economic beneficiaries. If beneficiaries cannot be accurately identified, a sub-regional allocation may be needed to ensure the broader benefits of a LRTP line are captured. When considering a sub-regional allocation, MISO should consider MISO North (CAZ 1-3) and MISO Central (CAZ 4-7) as sub-regions rather than just assuming the appropriate sub-regional allocation would automatically be to MISO Classic (CAZ 1-7).  

Critical to any cost allocation change is assurance that customers are not disproportionately assigned costs if they are not receiving actual benefits. A “no harm” test should also be considered in a review of cost allocation methodologies. Some large Cost Allocation Zones (CAZs) have several Transmission Pricing Zones (TPZs). To the extent that costs are being allocated to a CAZ, it may not be just and reasonable to allocate costs to each TPZ in that CAZ if a specific TPZ is showing negligible or negative benefits. In these situations, consideration should be given to reallocating any such costs to the benefiting TPZs.

MP supports further discussion on allocating costs to generators including exploring options that are used in other RTOs. Many transmission projects benefit both generation and load. Over the past 3 MTEP cycles, over $11B in transmission upgrades have been approved and load has paid over 90% of those upgrades. Any discussion that includes sharing additional generator interconnection costs with load must also include sharing costs currently paid by load with generation. While MP believes current cost allocation distributes costs roughly commensurate with benefits exploring additional changes to recognize the multiple beneficiaries of transmission is warranted. Having generators share in LRTP related costs, was also a principle unanimously agreed to by the Organization of MISO States and should continue to be discussed.

ENVIRONMENTAL SECTOR COMMENTS FOR THE RECBWG

AUGUST 6, 2021 

The Environmental Sector strongly endorses the cost allocation proposal presented by MISO in the July 28, 2021 RECBWG meeting. The Long-Range Transmission Planning (LRTP) projects are intended to prepare the MISO footprint for a rapidly changing generation mix, including both retirements and new capacity placed in new locations, and to ensure the reliable delivery of electricity to load given the assumptions in the future scenarios. Application of the cost allocation created for the Multi-Value Projects (MVPs) is appropriate for LRTP projects, because the LRTP projects are quite similar to the MVPs.

I.  The Environmental Sector would recommend that MISO consider the following modifications or clarifications to their proposal:  

(1)    Add a New Definition of Portfolio and Subregion to the Existing MVP Tariff:   

The Environmental Sector supports adding a new definition of portfolio to allow the MVP project type to also apply to the subregions of MISO North or MISO South.  However, we recommend that MISO retain the original definition of a portfolio across the full footprint.  The existing MVP tariff requires a portfolio of projects whose benefits are spread broadly across the entire MISO footprint. For the LRTP projects, MISO is proposing to enable portfolios that provide broad benefits across a subregion and to then distribute the costs only to that subregion (not the entire MISO footprint).  MISO proposes that MISO North and MISO South be the subregions. Adding to the original definition of portfolio -- rather than replacing it -- would allow for the use of a full footprint wide portfolio if appropriate in the future.  This would avoid the need to file another tariff change, if such a footprint wide portfolio is ever found to be needed. 

(2)   Cost Allocation Methodology for MISO South  

While MISO is proposing to distribute costs on a postage-stamp basis for MISO North, it has not committed to whether this same methodology would apply to MISO South.  The Environmental Sector questions whether FERC will accept two different cost allocations for the same project type.  See Order 1000 ¶ 686.   If MISO decides to submit a different cost allocation for MISO South for the LRTP projects, the Environmental Sector recommends that MISO file an alternative proposal should FERC reject MISO’s initial proposal.   

Specifically, we recommend that MISO file a cost allocation in the alternative that would say if FERC rejects the proposed different cost allocation for MISO South, then MISO requests the same cost-allocation that applies to MISO North also be applied to MISO South. This approach would obviate potential delays for approving the cost allocation applicable to any transmission solutions identified through MISO’s LRTP process.   

II.  During the July 28th meeting, stakeholders raised the following concerns to which we would like to respond: 

(1)    Applicability of only an MEP Allocation to LRTP: 

Some stakeholders have suggested that a new project type is not needed for LRTP and MISO should instead apply the MEP methodology to the LRTP projects. However, the MEP methodology was created to apply to transmission solutions that provide cost savings derived only from reducing economic congestion. This methodology does not recognize the full range of benefits provided by LRTP projects and, therefore, could not actually distribute the costs to be “roughly commensurate” with the benefits, i.e. applying only the MEP methodology to LRTP would not meet Order 1000 requirements. For example, the MEP methodology does not adequately recognize the regional reliability benefits provided by LRTP projects. 

Other stakeholders argued that the recent elimination of the postage-stamp component from the MEP tariff should signal that a postage-stamp allocation is inappropriate for all project types.  This argument is without merit. The postage stamp under the MVP tariff is FERC approved and withstood judicial scrutiny; both finding that postage-stamping is a just and reasonable cost allocation. MISO Tariff, Attachment FF, Section III(A)(2)(g)(i), and Attachment MM, Section 5; Ill. Commerce Comm’n v. Fed. Energy Regulatory Comm’n, 721 F.3d. 764, 773-78 (7th Cir. 2013); see also Order 1000, ¶¶ 605 & 748. MISO’s decision to eliminate the postage-stamp component from the MEP tariff is inapposite to whom should pay for regional reliability projects. The MEP did not, nor was it intended to, supersede the MVP tariff and postage stamping, instead it was meant to provide a different cost allocation for a different type of benefit, economic congestion.  

(2)   Long-Range Transmission Planning’s Efficacy in Preparing for the Future:

A few stakeholders have questioned whether MISO’s long-term transmission planning process will identify the best solutions for 10 to 20 years in the future. While questioning MISO’s process, these stakeholders offer no alternative methodologies for how to prepare our regional transmission grid for the radical transformation we are witnessing today. Instead, it appears some of these stakeholders would prefer that new infrastructure be driven by individual utility plans for new generation and retirements. However, this balkanized approach belies the very reason our states and utilities have joined a regional transmission organization and is based on parochial interests, not the public interest. 

Put simply, MISO’s long-range transmission planning is designed to identify the most cost-effective solutions to prepare for transformational change across a diverse geographical footprint. Indeed, the scenario planning MISO uses to prepare for the future is state-of-the-art.^[1]  The 2011 MVPs are demonstrable proof that MISO’s long-term planning is effective, which achieved benefits to ratepayers beyond the original conservative estimates.  Each of the MVP Triennial Reviews showed increased savings from the MVPs with the last review (2017) showing a benefit-to-cost ratio ranging from 2.2:1 to 3.4:1 for every dollar spent.^[2]  

The Environmental Sector asks those criticizing this tested and proven methodology to develop a better alternative to ensure our regional grid can cost-effectively accommodate the rapidly changing grid. In absence of a better alternative, it should be recognized that MISO has clearly  demonstrated its ability to deliver a cost effective solution to manage the changing landscape.    

(3)   Applicability of the Price Signal Issue to LRTP Projects: 

Some stakeholders have suggested that MISO must address the generator-pay issue through the LRTP cost-allocation tariff.  However, the LRTP cost-allocation methodology will send no price signals--either positive or negative--to developers relative to optimized generation and transmission siting. Accordingly, discussions about creating additional price signals should be conducted in other forums. 

Price signals for generators are intended to encourage generators to interconnect to the transmission grid in locations where it will be most cost effective for the customers, i.e., where the cost to interconnect will be lowest and help drive down the overall cost of electricity. The generation interconnection process is already providing price signals and that is the proper forum for discussing generator-pay issue.   

It is noteworthy that generators who choose to interconnect with an LRTP project will not drive up the cost of delivered energy to load. Indeed, those interconnecting generators will be capturing efficiencies through interconnecting to existing infrastructure thereby lowering the cost of delivered energy.  

Wolverine generally supports MISO’s Long Range Transmission Plan (“LRTP”) effort to further improve the integration – key to ensuring reliability and affordability – of the grid especially during the impending, unprecedented generation resource mix transition and growth of beneficial electrification (e.g., electric vehicles, HVAC, water heaters, etc.). However, Wolverine is concerned with aspects of MISO’s proposal (supported by Certain Transmission Owners - “CTOs”) to establish the criteria for categorizing and cost allocating LRTP projects.

I. Wolverine Supports

Wolverine supports significant components of the LRTP, including the use of the existing Multi-Value Project (“MVP”) as a starting point for developing the LRTP project criteria, in particular:

-        Projects must be driven by state or federal policies, provide multiple types of economic value, and/or address reliability and economic issues,

-        Project benefits must be greater than costs, and

-        Projects with voltages at or above 100kV should be considered as such voltages have direct and palpable impact on grid reliability and capacity availability.

II. Wolverine concerns

Use of MVP Framework

While the use of the existing MVP category for the LRTP effort is a good starting point, it is inapt in certain situations (see below) due to existing seams issues as well as changes in both the MISO membership and transmission configuration since the MVP category was created over a decade ago. Some non-exhaustive examples of this evolution, as provided by the Michigan Public Service Commission (“MPSC”) at the July 28 meeting, include:

-        the PJM island (ComEd/AEP footprint) in MISO North,

-        the MISO South/North interface, and

-        the HVDC flow control device between Michigan’s Upper and Lower Peninsulas.

Artificially high (and arbitrary) cost threshold for LRTP Project Inclusion

Wolverine largely supports retaining most of the MVP criteria, except for the minimum cost threshold of $20 million. Establishing a minimum cost threshold is counterproductive to providing reliable and affordable service of an integrated grid because it precludes lower cost projects from being constructed even if the project(s) provides value by meeting all other MVP criteria (benefit metrics, voltage threshold, B/C ratio).

Cost Allocation for LRTP Projects

Wolverine supports the socialization of costs but only when those costs are commensurate with benefits. The transfer limitations identified by the MPSC provide several clear examples of why footprint-wide/regional (MISO North/South) postage stamp cost allocation is not commensurate with benefits (Michigan’s Lower Peninsula’s “isolated” electrical configuration). That said, Wolverine would support a proposal focused on true sub-regional allocation (e.g., pricing zones that see benefit). Such a targeted allocation could result in a regional allocation if a project benefits everyone but, more importantly, will prevent unreasonable and imprudent allocation for projects that only benefit a limited area.

III. Conclusion

Wolverine supports all cost-effective efforts to improve reliability and ensure availability of resources while the region manages the coming generation mix transition.  To that point, Wolverine appreciates and supports MISO’s efforts to maintain an integrated and reliable grid by appropriately identifying, valuing, and allocating costs for LRTP projects.  Wolverine supports an LRTP framework that:

1. Meets certain core criteria of the existing MVP category – justification drivers, benefit must exceed cost, and 100kV voltage threshold,
2. Is the lowest cost method of meeting and exceeding these core criteria (i.e. does not arbitrarily set a minimum cost for study and treatment), and
3. Socializes costs commensurate with benefits.

WEC Energy Group reiterates and incorporates by reference its comments submitted in response to the July 15, 2021 RECB meeting.  We maintain our recommendation that MISO and stakeholders consider the “Option 2” proposal from the Environmental Sector to first allocate LRTP costs to identified economic beneficiaries using benefits metrics already developed.  Any remaining LRTP costs not assigned to economic beneficiaries are then allocated more broadly based on system-wide reliability enhancements, consistent with the LRTP objectives.  We believe the Environmental Sector proposal is superior to the allocation of all LRTP costs on a postage stamp basis because the benefits metrics are designed to identify both local and more wide-spread beneficiaries in proportion to their benefits.  If there are no local but more wide-spread beneficiaries (and vice-versa), costs are allocated relative to those benefits.  A postage-stamp allocation assigns costs to all load in proportion to the load regardless of forecasted benefits and has the potential to over or under allocate costs to that load (or allocate costs to load that have negative economic benefits).  Additionally, a postage-stamp cost allocation has the inherent potential to identify more transmission than what is required to bolster the argument for a postage stamp cost allocation.

We remain concerned with the proposal to apply a full postage stamp cost allocation to a LRTP portfolio that is developed and incrementally approved over multiple MTEP cycles spanning several years.  A more targeted cost allocation mechanism, such as that described above, will capture incremental beneficiaries and allocate costs as LRTP projects are incrementally approved.  This is especially important because the LRTP portfolio is expected to contain both high-voltage (≥345 kV) and lower-voltage (<345 kV) transmission lines who beneficiaries could be more local, more regional, or a combination of both.

Regardless of the “base” LRTP cost allocation, WEC Energy Group strongly supports the development of a mechanism to allocate a portion of the LRTP total costs to future generation interconnection customers in proportion to the benefit those customers receive from the LRTP portfolio.  A transmission price signal within the Generation Interconnection Queue that incorporates all relevant transmission requirements, including a proportional share of the LRTP costs, will allow developers and LSEs to make reasoned siting decisions based on a full accounting of costs (including transmission, capacity factors, land, material, labor, etc.).

We also note that the discussion of a different LRTP cost allocation mechanism for MISO North/Central and MISO South will further balkanize the two sub-regions and introduce even more barriers to address the Regional Directional Transfer (RDT) constraint between the two.  As we have already experienced with the lack of inter-RTO/ISO transmission upgrades, different transmission cost allocation mechanisms create barriers.  MISO and its stakeholders should aspire to remove barriers, especially within its own borders.

MISO RECBWG Feedback

Big Rivers Electric Corporation

City Water Light & Power (City of Springfield, IL)

Hoosier Energy

Southern Illinois Power Cooperative

 RECBWG Draft Cost Allocation Proposal (20210728)

August 6, 2021

Big Rivers, CWLP, Hoosier Energy, and SIPC (“The Respondents”) thank MISO for this opportunity to provide our perspective on MISO’s Long Range Transmission Planning (“LRTP”) Cost Allocation Proposal as presented at the July 28, 2021, RECBWG meeting.

Our understanding is that MISO proposed to treat all LRTP projects in MISO North/Central as Multi-Value Projects (“MVPs”) with some revisions to the tariff to permit MVP sub-regional cost allocation. No new project type for LRTP is proposed. MISO has not yet completed a proposal for cost allocation of LRTP projects in MISO South and at least for now does not plan to address cost allocation for LRTP projects that interconnect MISO North/Central with MISO South.

Feedback:

The Respondents do not support the proposal to allocate the costs of all LRTP projects under the MVP cost allocation category with modifications.

The assumption that everyone benefits equally from all LRTP projects and that a sub-regional postage stamp is appropriate is not justified. Some LRTP projects might be like MVPs, and others might be like Market Efficiency Projects (“MEPs”) for which the economic benefits can be determined by zone.

Since no new “LRTP” project type is required, MISO should permit projects developed through the LRTP study to be categorized as MEPs or MVPs depending on individual project characteristics, instead of categorizing all LRTP projects as MVPs.

We oppose the use of the postage stamp in general and in particular for LRTP projects that would otherwise qualify as MEPs. When information about benefitting zones is available for an LRTP project, MISO should not ignore that information and treat the project like an MVP; MISO should treat the project like an MEP. This will permit MISO to allocate costs at least roughly commensurate with estimated benefits where possible, as FERC Order 1000 requires.

Accordingly, if LRTP projects can be categorized as either MVP or MEP, then no portfolio requirement would apply to LRTP projects categorized as MEPs. This is appropriate because the portfolio requirement could reduce transparency and erect a barrier to the approval of effective standalone projects.

Similarly, the current B/C ratio requirement is 1.0 for MVPs and 1.25 for MEPs. Because the LRTP studies can yield both reliability and economic projects, the Respondents do not support the use of the B/C ratio of 1.0 for all LRTP projects. We prefer a higher B/C ratio in general, particularly given the assumptions in the current MISO Futures (which we also do not support) in the LRTP analyses. At the very least, the B/C ratio of 1.25 should be applied to any LRTP project which qualifies as a MEP.

The minimum voltage and the minimum cost threshold are not required if the cost allocation is done properly. If MISO treats all LRTP projects as MVPs and maintains a full postage stamp, with no MEP cost allocation for any LRTP projects, then the Respondents support the proposed cost threshold of $20 million, as a protection against the improper allocation of the costs of numerous small projects via postage stamp to distant parties deriving no benefits from LRTP projects.

MISO should not include estimates for benefits over the 40-year planning horizon in its calculations because that duration is highly speculative. Most utilities and state regulators consider the “out years” for even 15- or 20-year Integrated Resource Plans to be sufficiently uncertain as to not authorize utility spending on such projects based solely on those IRPs. Even the 20 years in current studies is speculative and expanding that to include estimated benefits over a 40-year planning horizon is unreasonable.

Regarding MISO North/Central and MISO South, there is no technical basis for proposing different LRTP cost allocation methods for the two subregions. Both subregions are diverse from the standpoint of electric connectivity, usage, and public policy. The reason for delay on MISO South is obviously the concern over lack of key stakeholder support in the south. MISO should resolve this quickly and either (a) bite the bullet and propose the same treatment for LRTP costs in MISO South that applies to MISO North/Central, or (b) offer another proposal for MISO South that is then also equally open for consideration for MISO North/Central. Either way, the LRTP cost allocation in the two subregions should be the same.

Finally, it is now August and much of the work needed to permit review and approval of LRTP projects in MTEP21 is unfinished. The development of a broadly beneficial portfolio for inclusion in MTEP21 Appendix A within the traditional timeline appears implausible, and MISO must not cut corners or curtail the stakeholder process in order to get LRTP projects approved in MTEP21 Appendix A. It is far more important to do it right than to do it fast, particularly since MISO has stated publicly that the LRTP could cost $30 billion dollars. The MVPs cost a fraction of that amount and took much longer to develop, model, justify and approve. The oft-quoted “urgency” for transmission expansion does not relieve MISO of the obligation to develop a strong business case for recommended LRTP projects, nor does it justify any abbreviation of the study process or stakeholder review. LRTP could be the most significant and costly transmission planning effort ever undertaken in MISO and should be treated as such in every stage of the process. MISO must be mindful of the impact of LRTP on customer bills. We caution MISO against moving too quickly, taking shortcuts on study development, or curtailing stakeholder feedback in a rush to include LRTP projects in MTEP21 Appendix A. The projected costs and consequences of LRTP are far too great to perform anything less than MISO’s most complete and best work on transmission planning and stakeholder review & approval.

Summary of Recommendations:

1. Do not automatically treat all LRTP projects as MVPs. If an LRTP project qualifies as a MEP, and information about LRTP project benefits by zone is available, then categorize that project as an MEP; do not ignore that information and categorize the project as MVP with postage stamp cost allocation to the entire subregional footprint. In other words, allow LRTP projects that qualify as MEPs to use MEP cost allocation instead of using MVP cost allocation.
2. The B/C ratio of 1.25 should be applied to LRTP projects categorized as MEPs.
3. No portfolio requirement should apply to LRTP projects categorized as MEPs.
4. Do not expand the planning horizon for benefit calculations from 20 years to 40 years.
5. Allocate LRTP project costs in MISO North/Central and MISO South in the same manner.
6. Do not cut corners on study development or curtail stakeholder review/feedback in order to rush projects for approval for MTEP21 Appendix A. Producing sound business cases for LRTP projects is more important than securing fast approval for LRTP projects in MTEP21 Appendix A.

Thank you in advance for considering this feedback.

Feedback regarding the July 28^th RECB Stakeholder Meeting

Submitted by: DTE Energy and Consumers Energy – Michigan Transmission Dependent Utilities (TDUs)

The Michigan Transmission Dependent Utilities (TDUs) support long-term transmission planning to prepare for the resource mix changes that are underway across the MISO footprint. However, the Michigan TDUs are concerned that the rushed timeline for the LRTP studies and project cost allocation determination will result in suboptimal decisions that lack stakeholder involvement, input, and buy-in.  

During the July 28^th RECB meeting, MISO proposed that projects developed through the LRTP study process should be allocated under the Multi-Value Project (MVP) category with some modifications that would pave the way for broad postage stamp allocation. The Michigan TDUs believe the proposal represents a significant step backward away from the beneficiary pay and cost causation principles that have been well developed through multiple rounds of stakeholder conversations over the last several years. Also, the MISO proposal casts aside many of the OMS-developed LRTP cost allocation principles. It is not clear why MISO would seek to advance such a proposal other than potentially to simplify the cost allocation process and to expedite tariff changes allowing for the rapid advancement of the LRTP projects currently under early review. If true, such an action around cost allocation is not based on sound policy nor based on any technical analysis demonstrating how the LRTP projects will benefit all network customers equally proportional to load.

The Michigan TDUs propose that LRTP costs be allocated in a similar manner to Market Efficiency Projects today. Specifically,  we recommend that the Adjusted Production Cost (APC) metric of Section 7.4.1.1 of MISO Business Practice Manual (BPM) 20 and a modified version of the Avoided Reliability Project (ARP) savings metric described in Section 7.4.1.2 of BPM 20 be used to allocate costs to the beneficiaries of LRTP projects. Finally, the Michigan TDUs continue to advocate for LRTP to focus on mitigation of high overloads (e.g. over 125% of rated capacity) or multiple overloads on parallel facilities. Small overloads (e.g. 105% of rated capacity) are less certain to occur in the future and can be addressed through the normal planning process, and single-issue overloads should be outside of the scope of LRTP per the “common issue” criteria. Because LRTP is meant to construct backbone projects to facilitate large-scale power transmission, we suggest a minimum line voltage threshold of  200 kV and a minimum cost threshold of $100 million for LRTP projects. 

AES Indiana appreciates the opportunity to provide feedback on this item and recognizes that MISO is seeking a solution that fits expeditiously into the existing cost allocation framework. We disagree with proposal on two fronts: the relatively low BC ratio and the postage stamp. LRTP projects should be able demonstrate high benefits relative to the costs and the postage stamp cost allocation methodology is a broad brush that paints our company into a corner.  

WPPI Energy reiterates its comments provided prior to the last RECB meeting, reproduced below, which do not appear to be reflected in MISO’s current proposal.  In addition, we note the following: 

1. Based on discussion at Friday’s LRTP, it appears improbable that a well-planned set of LRTP projects could come to the MISO Board for approval in December (and even less likely that we could find such a project set that would appear to provide roughly comparable benefits across the sub-region).  Accordingly, the urgency that MISO has placed on filing a new transmission cost-allocation proposal in September appears misplaced, and we should now take more time and care to craft a cost-allocation proposal.
2. If MISO does choose to proceed with the current proposal this fall, RECBWG should nonetheless continue to consider improvements that might implemented in the future, as suggested by numerous stakeholders.
3. As noted in our July 23 comments, we support allocating costs to identified beneficiaries to the extent benefits can be quantified.  We expand upon two categories of potentially significant benefits below:
1. We see significant potential for rebuilding existing rights-of-way for higher voltage, lower impedance and higher capacity.  This raises the prospect of avoiding like-for-like reconstruction of existing facilities as they reach the end of their useful lives.  Accordingly, we would explicitly note that this situation should lead to avoided-reliability-project-cost savings, that we believe should be quantified and assigned to the transmission pricing zone that otherwise would be expected to bear these costs.
2. We expect that a significant economic benefit that LRTP projects may provide will be increasing transfer capability across the region, which should allow for limiting the increase in Planning Reserve Margins that we would otherwise expect to occur in a system with increasing levels of intermittent generation.  This benefit may well apply in a similar manner to Load-Serving Entities over a broad region, potentially meriting a broad cost allocation.  We suggest that an effort to estimate this value would be useful.
4. In discussion at the July 30 LRTP Workshop, MISO appeared unable to explain what purpose is served by a minimum cost threshold.  Given the negative impacts of such a threshold that we have described, inclusion this element should be reconsidered.
5. We agree with the comments made by other stakeholders that a 1.25 B/C ratio would be appropriate for LRTP projects, and that MISO should strive to identify project sets that maximize Net Present Value.

From: Steve Leovy
Sent: Friday, July 23, 2021 5:00 PM
To: Jeremiah Doner <JDoner@misoenergy.org>
Cc: *Stakeholder Relations <StakeholderRelations@misoenergy.org>; Todd Komplin <tkomplin@wppienergy.org>
Subject: WPPI Comments on LRTP Project Cost-Allocation

Jeremiah-

This is to provide WPPI Energy’s comments on potential cost-allocation methodologies for projects that may be identified in the LRTP study process, as discussed at the July 15 RECBWG meeting.  I ask MISO to post these comments to the meeting page for the July 28 RECBWG meeting.

To begin, I note that WPPI wholeheartedly supports comprehensive long-term transmission planning to accommodate the significant load and resource changes that are underway and that are expected to continue.  It is important for MISO, as the Planning Coordinator, to develop a long-term plan, in consultation with stakeholders.  In this process, it is incumbent upon MISO to focus on two elements of cost-effectiveness in developing an LRTP roadmap:

• cost-effective solutions to specific transmission issues; and
• providing a transmission-planning framework that promotes development of a generation mix that is least-cost when considering both generation and associated transmission costs.

The issue of long-term transmission planning merits MISO and stakeholder attention now, and WPPI Energy both has been the primary advocate for timely action to address existing MISO congestion resulting from resource-mix changes and has previously supported the possibility of LRTP projects in MTEP21 under existing tariff provisions.  However, we never endorsed a five-month timeline for developing significant new cost-allocation provisions, and we have significant concern about trying to develop a new project type definition and associated cost allocation in the next two months.

This is the most significant transmission-planning effort ever undertaken in MISO, which will be substantially affected by the corresponding cost-allocation provisions, and MISO should focus on getting this effort done right rather than quickly.  In the planning realm, MISO should focus on developing a roadmap first, and only propose MTEP Appendix A projects from an established roadmap.  In the cost-allocation realm, MISO should focus on developing a mechanism that strives to allocate costs to beneficiaries and cost-causers to the extent practicable.

Despite the previous comments of WPPI and others calling for new mechanisms to allocate costs to new generation as part of a division of costs between Transmission Customers and Generator Interconnection Customers, it appears from the July 15 RECBWG meeting that MISO intends to rely heavily on existing tariff mechanisms with little consideration of new methodologies.  Accordingly, we focus this feedback on the “Detailed Proposals” that MISO discusses in its July 15 presentation, based on comments submitted in response to the last formal RECBWG feedback request.

Certain TOs Proposal

The Certain TOs proposal, which essentially adopts the MVP framework, includes the following elements:

a)      LRTP project costs would be allocated uniformly within a sub-region on the basis of Actual Energy Withdrawals (+ export & through schedules)

b)     This broad, uniform cost allocation is justified on the basis of projects being approved as part of a portfolio “whose benefits are spread broadly across the sub-region”

c)      Projects would be required to meet a minimum cost threshold of $20M

d)     The new LRTP project category would be placed between MEP and MVP in the MTEP project category hierarchy

Environmental Sector Proposal

The Environmental Sector proposal is largely similar to the Certain TOs proposal, with the following differences of note:

e)     Projects would be required to meet a minimum cost threshold of $5M, rather than $20M

f)       Economic benefits would be evaluated over 40 years rather than 20

g)      As an alternative to a pure “postage stamp” uniform sub-regional cost allocation, as described under Option 2, costs could first be allocated on the basis of calculated economic benefits, with only remaining costs subject to a uniform cost allocation

These proposals appear to us to have several shortcomings:

                                                 i.          While a portfolio “whose benefits are spread broadly across the sub-region” is a necessary prerequisite for a broad allocation of costs, we are skeptical of MISO’s ability to develop such a portfolio for each of multiple MTEP years, beginning with MTEP 21, and we have some concerns that attempts to satisfy this criterion risk distorting project advancement decisions in a way that is inconsistent with least-cost planning;

                                               ii.          Cost-effective system development requires that generation interconnection customers be exposed to price signals indicative of the incremental transmission costs entailed by their generation siting decisions, an element that appears completely absent from both proposals;

                                              iii.          The LRTP study appears poised to identify upgrades that will not only benefit the entire system as higher penetration of intermittent generation increases the need for transfer capability across the MISO system, but also individual MISO LSEs making specific decisions on resource retirement and construction, yet the Certain TOs’ proposal declines to consider allocating any costs on the basis of calculated economic benefits to specific zones;

                                              iv.          The proposal to place LRTP projects above MEPs (and BRPs) in the MTEP transmission project hierarchy appears likely to transform some projects of these latter types into LRTP projects, thus reducing the degree to which costs are allocated in a manner roughly commensurate with project benefits;

                                               v.          The Certain TOs’ proposed cost threshold of $20M virtually ensures that many projects that are part of a cost-effective set of transmission upgrades will have no identified path to MTEP approval, increasing the likelihood that MISO will propose to address the corresponding issues via projects that are more expensive and less cost-effective;  the Environmental Sector proposal is superior in that it reduces this cost threshold, but still omits a clear pathway to approval of the low-cost projects that are likely to be among the most cost-effective upgrades;

                                              vi.          The bias towards more-expensive projects, described above, can be expected to have the effect of substituting projects with long lead times for projects that can be implemented relatively quickly, resulting in significant near-term economic losses;

                                             vii.          We note that we don’t believe a 40-year benefit calculation is practical at present, given the scope and scale of change that could occur over that period.

Based on all of the above, we would propose that MISO adopt an approach that extends on Option 2 of the Environmental Sector’s proposal, to encompass the elements described below.  This proposal builds on ideas submitted in the previous round of feedback by Alliant Energy, WEC Energy Group, the Michigan Public Service Commission and Montana-Dakota Utilities.

1. As in the Environmental Sector proposal, costs should first be allocated to identified economic beneficiaries, considering all those benefits included in the MEP and MVP tariff language, to the extent quantifiable, with only remaining costs allocated more broadly;
2. Economic benefits should be calculated over 20 years, as this is the longest period for which such estimates presently appear practical;
3. To the extent that project need is driven by modeled new generation that is not yet interconnected, MISO should define areas containing this generation and should estimate, for each such area and set of transmission projects, the share of project costs that is driven by new generator siting;  project costs not assignable to specific beneficiaries under 1, above, may initially be subject to a broad cost allocation, to be offset by reimbursement from future interconnecting generators of their share of the costs;
4. Similarly, to the extent that project need is driven by modeled future generation retirement, MISO should estimate the share of project costs that is driven by each such retirement so that these costs, which may initially be subject to a broad cost allocation, can be re-allocated upon actual generation retirement to the transmission pricing zone that would otherwise bear the costs of Baseline Reliability Projects needed to mitigate adverse effects of such retirement;
5. A 100 kV threshold appears reasonable to allow identification of all cost-effective projects;  we are open to considering allocation of lower-voltage projects less broadly than higher-voltage projects, something stakeholders have proposed in the past;
6. No cost threshold should be applied, so as to allow development of a comprehensive least-cost transmission roadmap and candidate Appendix A project set;  unlike the case of facility voltage, discussed above, we don’t see a basis for allocating the costs of low-cost projects less broadly than high-cost projects;  we note that such projects are likely to be upgrades to existing facilities that are not eligible for competitive development, which should alleviate some concerns about absence of a cost threshold.
7. To the extent that some costs are allocated via a broad mechanism not based on specific identified benefits, a portfolio approach appears reasonable.

We recognize that the above represents a substantial undertaking that will not realistically allow for FERC approval by December 2021.  Accordingly, we recommend that, for MTEP21, MISO rely on existing tariff provisions, or perhaps consider less far-reaching changes to existing project categories and cost allocations.

Please don’t hesitate to call should you want to discuss further.

Thanks very much,

Steve Leovy

Transmission Engineer

WPPI Energy

1425 Corporate Center Dr.
Sun Prairie, WI 53590
608-834-4564

www.wppienergy.org

MDU appreciates the opportunity to comment on the MISO RECB LRTP cost allocation proposal presented on July 28.

The MVP cost allocation principles and tariff language were developed under a different set of circumstances than we find ourselves today. The MVP cost allocation principles were developed to meet the RPS goals and objectives that the MISO states and members were facing back in 2011.

Today we find ourselves in a different set of circumstances which requires a different set of cost allocation principles than the MVP projects. The MISO system is seeing a significant amount of thermal generation forecasted to be retired and replaced by non-dispatchable sources of generation driven by various state goals and utility IRP plans. This requires a different and more granular cost allocation than MVPs.

Additional time should be taken by MISO and its stakeholders to identify what are the cost causers and who are beneficiaries of LRTP projects and to develop appropriate costs allocation principles and allocation hierarchy versus relying on a postage stamp cost allocation method which assumes everyone benefits the same. If an LRTP project has quantifiable economic benefits, then those beneficiaries should be assigned cost allocation.  If generators receive benefits than those benefits should be assigned to future generation and load which owns or contracts with them. If there are types of energy supply resources which improve system reliability and avoid LRTP projects, then the load that pays for those resources should be assigned benefits. If there are other beneficiaries to LRTP projects, then those beneficiaries should also be identified along with appropriate cost allocation methods developed.

MDU appreciates the opportunity to comment on the MISO RECB LRTP cost allocation proposal presented on July 28.

The MVP cost allocation principles and tariff language were developed under a different set of circumstances than we find ourselves today. The MVP cost allocation principles were developed to meet the RPS goals and objectives that the MISO states and members were facing back in 2011.

Today we find ourselves in a different set of circumstances which requires a different set of cost allocation principles than the MVP projects. The MISO system is seeing a significant amount of thermal generation forecasted to be retired and replaced by non-dispatchable sources of generation driven by various state goals and utility IRP plans. This requires a different and more granular cost allocation than MVPs.

Additional time should be taken by MISO and its stakeholders to identify what are the cost causers and who are beneficiaries of LRTP projects and to develop appropriate costs allocation principles and allocation hierarchy versus relying on a postage stamp cost allocation method which assumes everyone benefits the same. If an LRTP project has quantifiable economic benefits, then those beneficiaries should be assigned cost allocation.  If generators receive benefits than those benefits should be assigned to future generation. If there are types of energy supply resources which improve system reliability and avoid LRTP projects, then the load that pays for those resources should be assigned benefits. If there are other beneficiaries to LRTP projects than those beneficiaries should also be identified along with appropriate cost allocation methods.