A recent Federal Energy Regulatory Commission (FERC) ruling shifts virtually the entire responsibility of paying for transmission network upgrades to wind developers in the footprint of the Midwest ISO (Carmel, Indiana, U.S.).

The FERC ruling requires that Midwest ISO wind generators pay 90% of the cost of transmission upgrades for projects rated 345 kV and higher. For projects rated lower than 345 kV, generators are required to pay the entire cost.

The ruling comes as some wind developers struggle to finance projects under the traditional 50/50 cost-allocation arrangement. Jack Levi, president of developer National Wind (www.nationalwind.com), said the ruling “runs contrary to other rulings handed down by FERC in other parts of the country, such as California and the Southwest Power Pool [coverage areas],” adding that the decision will add 5% to 20% to National Wind's project costs.

The one-year measure is designed to alleviate concerns until a permanent solution can be reached. “We recognize that the cost-allocation issue is one of the most difficult and contentious issues facing the Midwest ISO region at this time,” the FERC ruling states. “We find that the filing parties have proposed a reasonable interim approach to resolve the significant impacts resulting from the current cost allocation and have developed a reasonable plan to implement a longer-term solution.”

While wind energy's potential in the Dakotas and Minnesota grabbed the headlines last year, local utilities such as Otter Tail Power and Montana-Dakota Utilities informed the Midwest ISO of their intent to leave the operator's territory last December. The Midwest ISO subsequently filed a request with FERC to modify the cost-allocation methodology. According to the FERC filing, there are 12.7 MW requesting interconnection for every 1 MW of load in the Otter Tail service area. For Montana-Dakota Utilities, the ratio is 4.7 MW for each 1 MW of load. The two utilities have stated that their customers would see sizable cost increases with little benefit.