On April 29, 2022, the Federal Energy Regulatory Commission (FERC) voted 4-1 to reject the Midcontinent Independent System Operator’s (MISO) proposal to allow incumbent transmission owners in the region to pay for and profit on grid updates needed for merchant high-voltage direct current (HVDC) lines.[1] The proposal, filed in November 2021, centered around upgrades needed for merchant HVDC lines, which are paid for by entities using the line rather than utility customers. The proposal built on a similar FERC decision in 2019 that restored transmission owners’ option to self-fund network upgrades before interconnection customers are offered the chance to finance it. MISO argued that merchant HVDC line-related upgrades should be treated similarly to interconnection-related network upgrades because both types of projects require upgrades that would not be needed if not for the projects.

In its decision to reject MISO’s proposed self-fund rule, FERC said that MISO failed to show how the expansion of the self-fund rule to merchant HCDV line upgrades wasn’t discriminatory. According to FERC, the upgrades are not identical because MISO would not offer all available funding options to merchant HVDC developers when they haven’t secured injection rights[2]. Commissioner James Danly (R) dissented, saying that the other commissioners’ decision “denies the transmission owners’ right to receive a return on and of the capital costs of network upgrades, necessary upgrades, and transmission owner system protection facilities.”

[1] https://elibrary.ferc.gov/eLibrary/filedownload?fileid=2b8979ce-11e6-cb9e-856b-8077d7500000

[2] Injection rights are rights to inject capacity at a specified point on the transmission system.