U.S. power companies reach transmission usage agreement

MISO-SPP Capacity Sharing Settlement aligns FERC-approved transmission use, capacity factor-based compensation above the 1,000 MW contract path, new operating committee governance, and hurdle rate removal to improve cross-regional grid reliability, market efficiency, and consumer savings.

A settlement agreement has been filed at the Federal Energy Regulatory Commission FERC around capacity usage and associated compensation to be paid for use of as-available, non-firm transmission capacity on neighboring transmission systems among MISO, Southwest Power Pool, Inc. SPP, and Joint Parties.

These joint parties include Southern Company, Tennessee Valley Authority (TVA) and Associated Electric Cooperative AECI, Louisville Gas and Electric LG&E, Kentucky Utilities Company KU and PowerSouth Energy Cooperative.

This settlement was reached through collaboration and compromise on behalf of all parties. Resolving these issues provides greater certainty for market participants across the regions. If approved by FERC, the agreement provides the governance for continued shared use of the transmission system where it enables more economical delivery of energy, while also providing compensation for that use.

"As the SPP region grows and we continue to modernize the electric grid, cooperation with our neighboring regions has never been more important," said Nick Brown, president and CEO of SPP. "I am pleased we were able to reach this agreement with MISO to ensure that our member companies and their customers are compensated for the use of the SPP transmission system. We also appreciate the work and support of the Joint Parties in helping us resolve this challenging and complex issue."

"We are pleased to have reached a resolution that provides electricity savings to consumers across the MISO region and brings clarity to our members and all stakeholders," said John R. Bear, president and CEO of MISO. "With the issue of capacity sharing behind us, we can now collectively return our full attention to the significant challenges facing the industry. Additionally, I would like to thank our stakeholders for their hard work in helping us reach a settlement."

The recent filing at FERC details several key provisions of agreement to consider:

- Specifically creates a mechanism where MISO will compensate SPP and the Joint Parties for use of their systems. The level of compensation will be determined by the application of a capacity factor for flows above MISO's existing 1,000 megawatts MWs of contract path

- Generally retains the capacity usage provision between MISO and SPP under their Joint Operating Agreement Section 5.2 and establishes new provisions for certain usage going forward

- Provides certainty for express operational transfer limits

- Establishes an Operating Committee for all parties to manage issues that arise under the agreement

- Upon the Settlement Agreement becoming effective, MISO's hurdle rate is removed

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