The joint application of the Midwest ISO and its transmission owners to revise the cost allocation strategy for large-scale upgrades to the transmission system was approved yesterday by the Federal Energy Regulatory Commission. The approval clears a path for the reliable and economic delivery of renewable energy required by many states.

Multi Value Projects (MVPs), transmission projects that have a regional impact and are part of a regional plan, will now have a 100% regional allocation of costs, ensuring that the cost to upgrade the transmission system is distributed fairly to all involved.

"We were pleased to see our filing upheld by the FERC," said Midwest ISO President and Chief Executive Officer John R. Bear. "Months of hard work and collaboration with stakeholders, regulatory agencies and others went into developing a fair methodology that helps us maintain the electric grid's reliability while meeting our nation's future energy needs."

The approved proposal creates a new category of transmission projects called Multi Value Projects, which are evaluated based on their benefits to the public. It offers a functional approach to identifying which projects should be classified as MVPs as those that have broad benefits to the membership. It outlines three specific criteria that will be the basis of those evaluations, and sets forth a specific process that will lead to the development of a robust transmission system.

The two existing cost allocation methods for reliability and market efficiency transmission upgrades, also known as RECB I and RECB II, remain largely in their current form. New generation interconnection projects will continue to pay the cost of their individual network upgrades, as they do under the current tariff.

"Cost allocation reform is one of the most difficult issues facing transmission service providers and regional market operators," FERC Chairman Jon Wellinghoff said. "This bottom-up proposal was developed to help support the region's electricity needs, and it came to FERC through a 19-month stakeholder process within the Midwest ISO. I commend the hard work of all the stakeholders, and in particular all the state commissioners, in the region."

As a next step, the Midwest ISO plans to submit to the FERC two additional compliance filings relating to Multi Value Projects and congestion rights as conditions to the approval of the proposal.