posted on Saturday, September 29, 2007 5:44 PM
by
Jennifer Rinker
Generation-Friendly Transmission Companies to Reimburse for Network Upgrades
Independent electric transmission owners International Transmission Company (ITC) and Michigan Electric Transmission Company (METC), effective July 11, 2007, will reimburse qualifying interconnecting customers ― primarily new power generating units ― 100 % of the cost of transmission system upgrades for which interconnecting customers advance payment. In a September 7 order the Federal Energy Regulatory Commission (FERC) approved amendments to the Midwest ISO tariff authorizing the two independent transmission companies to make these complete reimbursements to interconnecting customers who are qualified by reason of contractually committing to provide service for at least one year to Midwest ISO network customers or obtaining network resource designation at the time commercial operation begins. Notably, the only opposition came from the former owners of ITC and METC, Detroit Edison and Consumers Energy, respectively, and the Michigan Public Power Agency.
The approach of ITC and METC was once FERC's standard practice; while the interconnecting customer could be required to advance full funding for the upgrades to the network needed to interconnect its new generator or transmission line, the customer would be reimbursed over time from transmission revenues. That was because system upgrades generally benefit everyone connected to the grid and those beneficiaries should all contribute to upgrades in proportion to their use of the gird. Only when evidence to the contrary was introduced would there be less than complete reimbursement.
Under pressure from vertically integrated transmission owners, FERC strayed from this approach to cost allocation, grounded in the realities of a synchronously interconnected electric transmission system. The approach of these truly independent transmission companies is refreshing.