FERC has issued a decision on the Midcontinent Independent System Operator (MISO)’s second compliance filing related to Order 2222. In its January 16th decision, seven months after MISO submitted on May 10, 2024, FERC rejected MISO’s transition model that would have allowed 2222 implementation in 2026/27. MISO proposed the existing Demand Response Resource Type I model as a transition model because it allowed MISO to comply with the multi-nodal aggregation requirement.
FERC has also accepted MISO’s explanation for the $60,000 per substation DER study deposit. This has implications for all DER interconnections because developers are currently paying this study deposit under MISO’s DER Affected Systems Study process, and FERC’s decision to approve MISO’s study deposits leaves developers in a difficult situation. It remains to be seen who submits rehearing request(s) and if they are successful.
FERC rejects the Demand Response Resource (DRR) Type I model
MISO had proposed the DRR Type I model to comply with FERC’s Order 2222 requirement that multi-nodal aggregation should be allowed where technically feasible. In the first compliance filing, MISO proposed a model called Distributed Energy Aggregated Resource (DEAR) that allowed multi-nodal aggregation, but MISO is not implementing DEAR until 2030. So MISO proposed DRR Type I as a transition model to comply with another FERC requirement to not only allow multi-nodal aggregation but to implement earlier than 2030.
FERC rejected MISO’s DRR Type I model because it did not comply with Order 2222 minimum size requirement of 0.1 MW. DRR Type I model has a 1 MW minimum size requirement, ten times as large. There are other issues with the DRR Type I model that multiple parties protested at FERC. DRR Type I model does not allow injections from DERs such as solar because DRR Type I allows load curtailments. Still, MISO thought it complied with FERC’s requirements because when the injected MWs are netted against behind the meter load, it will allow injections. However, FERC did not agree with MISO. MISO could ask for a rehearing that FERC erred in its decision on this DRR Type I rejection because, without this avenue, there is no straight path towards an earlier than 2030 implementation date for MISO.
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FERC had agreed earlier in MISO’s first compliance filing that MISO should implement Order 2222 after the Market Systems Enhancement (MSE) project is done. It is unlikely that MISO would engage stakeholders and propose a new model a couple of years before the 2030 date and after the MSE project goes live in 2026. There is no incentive for MISO to put together a transition model with FERC’s rejection of the DRR Type I model.
FERC accepts $60,000 in study deposits per substation
Much to the discomfort of community solar garden developers and other DER aggregators, FERC was satisfied with MISO’s explanation for collecting $60,000 per substation in study deposits from MISO’s transmission owners. Under MISO’s current approach, MISO collects this study deposit from TOs, and they, in turn, collect that study deposit from the developers to study the impacts of DER interconnections on the transmission system. Most developers are already seeing delays in DER Affected Systems Studies at MISO.
FERC was satisfied with MISO’s explanation that this DER Affected Systems Study is an entirely different study. This DER AFS study is not the generator interconnection study that MISO conducts nor the safety and reliability study that a distribution utility conducts in 60 days. FERC was also satisfied with MISO’s explanation that the study deposit would be returned to the developers if no transmission upgrades were found and that this study deposit applies equally to all DER interconnection requests.
This FERC decision could result in a rehearing request at FERC since developers must pay upfront large sums of money which could tie up capital (e.g.., $600,000 for 10 projects) under this MISO DER AFS study process, and the distribution utilities also conduct their internal study for DER impacts on the distribution system. So, a DER interconnection is potentially studied twice – once for implications on the transmission system and once for impacts on the distribution system. Is that warranted for a potential 1 MW net injection DER? Are these multiple studies essential even if the DER does not wish to participate in the MISO market? FERC’s decision did not address these questions.
FERC accepts MISO’s explanation for the 2030 implementation date
The most bizarre verdict in FERC’s decision on MISO’s second compliance filing is related to the 2030 implementation date. In the first compliance filing, FERC explicitly called out MISO for its 2030 implementation date and asked MISO to justify why it was prioritizing a market improvement called Multiple Configuration Resources (MCR) before the 2222 implementation. MISO had sequenced the MSE first, MCR next and finally 2222.
But in deciding on MISO’s second compliance filing, the new cohort of FERC Commissioners completely discounted the findings of earlier FERC Commissioners on this 2030 date. In the January 16 decision, FERC Commissioners were satisfied that MISO had provided enough justification for its 2030 implementation date without acknowledging that by rejecting MISO’s DRR Type I model, there is no visible alternative for MISO to implement 2222 before 2030.
FERC’s January 2025 decision on implementation date is at odds with its October 2023 decision. The Organization of MISO States protested vehemently after MISO’s first compliance filing, but there was no significant protest after the second filing from OMS. The FERC decision on the implementation date could be a cause for the rehearing request.
