Missouri Public Service Commission Cases: Grain Belt Express-Denied, Mark Twain Project-Approved

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Image courtesy of UCSU

Ameren Transmission Company of Illinois (Ameren) plans to have its Mark Twain Transmission Project (MTP) carrying wind-generated electricity through Northeastern Missouri by 20181.  Meanwhile, Clean Line Energy Partners’ (Clean Line) Grain Belt Express (GBE) transmission line is set to undergo a second round of scrutiny before Missouri’s Public Service Commission (PSC) to determine if its transmission lines will carry electricity from wind farms in Kansas through the heart of Missouri2.  Unlike Ameren’s multi-state transmission project, Clean Line’s project was denied approval3 for a certificate of convenience & necessity (CCN), required for public utilities to utilize eminent domain for the construction of transmission lines and substations.

Several pieces have been written focused on the basic differences between the companies and the possible implications of the PSC’s rejection of GBE4.  As Clean Line prepares to once again seek approval for the GBE5, it’s a good time to take a moment to compare and contrast Missouri PSC commissioners’ and support staff’s use and application of specific criteria to make final determinations in each case.

The Missouri PSC currently examines CCN applications through the lens of five categories of criteria distilled from past cases, which were first applied in the 1994 case of Tartan Energy. These criteria include:
● Whether there is a need for the facilities and service
● Whether the applicant is qualified to own, operate, control, and manage the facilities and provide the service
● Whether the applicant has the financial ability for the undertaking
● Whether the proposal is economically feasible
● Whether the facilities and service promote the public interest

According to the PSC staff’s official opinion in the case6, Clean Line’s GBE application fell short of adequately showing need, economic feasibility, and promotion of the public interest, while Ameren’s MTP adequately met each of the five “Tartan criteria”.  Without straying too far into the weeds, the following is a summary of the arguments made by PSC staff against approval of the GBE based on Need, Economic Feasibility, and Public Interest, contrasted with arguments for approval of the MTP.


CLEAN LINE’S GRAIN BELT EXPRESS

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Image courtesy of Clean Line Energy Partners

Need:

PSC staff focused on the inadequacy of Clean Line’s reliance on the Missouri Renewable Energy Standard (RES) to establish need, providing utilities in Missouri with an option to meet the requirements. The staff found that “that reliance is questionable”, since it was unknown whether electricity generated from this project would be utilized by Ameren (the only utility at the time without a plan to reach 15% renewables by 2021) to meet the requirements of RES.  Staff also mentioned that Missouri customer demand for wind energy may be low and since the project did not originate from a regional planning authority, need was questionable.

Economic Feasibility:

While the PSC staff report mentioned that the Federal Energy Regulatory Commission (FERC)-approved process by which GBE would solicit customers for the project could provide evidence of economic feasibility, it was not recommended that the commission rely on that process.  The staff expressed concern that the project had not yet undergone scrutiny under all of the regional planning authorities, especially the Midcontinent Independent System Operator (MISO)7, which would allow for a full accounting of project expenditures.  The report found that the economic feasibility was unknown since a regional planning authority had not determined what, if any upgrades would be required to current transmission infrastructure, which could result in additional costs to ratepayers in the future.  The report also questioned Clean Line’s analysis of regional energy markets, stating, “the generic, off-the-shelf data package that GBE relied on to perform its modeling is inadequate”.

Public Interest:

In staff’s final rebuttal of Clean Line’s arguments for approval, the MISO planning process was once again mentioned.  While Clean Line argued that the project would provide low-cost wind energy to customers with limited access to wind-generated power, PSC staff pointed to MISO’s regional project approval process to ensure that projects do not have “adverse economic effects on MISO member’s rate payers”.  During discussion of the public interest, staff again made the case that Clean Line had not adequately modeled regional energy markets to establish cost savings, nor shown that energy from the project would be used by utilities to meet the requirements of RES.  The case was also made once again that the costs of the project may be higher due to possible infrastructure improvements needed to account for the increased load.  Finally, Clean Line’s argument that electricity generated from GBE would provide a replacement for power generated from coal-fired plants in the face of increasing environmental regulations was disregarded.  As stated by staff, “How future environmental regulation […] will impact the need for for wind energy in Missouri is too speculative at this time to rely on as a basis for granting Grain Belt Express a certificate of convenience and necessity”.


AMEREN’S MARK TWAIN PROJECT

zachary-state-line-mapmaywood-zachary-map

Images courtesy of Ameren Corporation

Need:

The Missouri PSC staff’s opinion8 found that the project application showed need, due to the origination of the project from MISO’s transmission expansion planning.  This plan and associated studies provide evidence of grid reliability expectations and impact on regional energy markets.  Staff’s opinion of the MTP differed from GBE in terms of the potential impact on both RES requirements and future environmental regulations, as staff called attention to the wind-generated electricity that would be made available to Ameren in order to meet the RES requirements, as well as providing a source of renewable energy to meet the requirements associated with future environmental regulations, such as EPA’s Clean Power Plan (CPP)9.

Economic Feasibility:

PSC staff relied on MISO’s planning studies as evidence of feasibility, stating “the Mark Twain Project is economically feasible because the project was developed through MISO’s MVP study process”.

Public Interest:

As staff mentioned in their report, if the four other criteria are found to be adequate (Need, Qualified, Financial Ability, Economic Feasibility), the application will typically be approved.  In addition to this line of reasoning, PSC staff relied on the balanced cost-benefit ratio for the project as determined by the MISO studies.  The public interest criteria was approved despite Ameren’s previous attempt to bypass the Missouri PSC’s application process by arguing that the project was originating from an Illinois corporation and wouldn’t be directly selling any of the electricity to Missouri customers.


Stepping aside from the details of the case, the primary contrast between the two cases relates to the different business models employed by the two companies.  As an investor-owned public utility, Ameren raises funds for infrastructure projects through rate increases, which must be approved by the PSC.  Clean Line’s GBE was the first company to come before Missouri’s PSC seeking approval for a CCN with authority from FERC to solicit customers and negotiate transmission rates.  Funding for the project would rely entirely on Clean Line’s ability to obtain the necessary customers and set the appropriate rate to make a profit.

Clean Line’s business model eliminates the financial risk to consumers that exists when a typical investor-owned public utility invests in infrastructure improvements or energy generation facilities using a consumer rate increase.  If the GBE project were to fail, ratepayers wouldn’t be on the hook for the costs.  On the other hand, this alternative business model is completely new to Missouri’s PSC and public utility commissions around the country are grappling with new energy developments outside of the traditional utility infrastructure model based on building out infrastructure through corresponding rate increases.  While Illinois, Indiana, and Kansas approved the project, Missouri’s PSC denied the application due in large part to the uncertainties associated with this alternative business model and the negative impacts that would be borne by some Missouri landowners.

Both projects would bring a low-cost source of renewable energy into sections of Missouri’s electric grid, providing a potential option for utilities to meet the requirements of the RES.  Both projects would align Missouri’s electric grid development with the national trend of energy source diversification and increasing demand for renewable energy sources, both based on changing consumer norms and a regulatory environment increasingly imposing restrictions on emissions.  Yet, only one project is associated with a third-party regional planning authority (MISO), which takes a big picture approach to transmission development.

Missouri PSC commissioners and staff rely a great deal on the studies and determinations of regional planning authorities, including MISO, to prove need.  While Clean Line may still gain approval following new evidence of economic feasibility, economic benefits specific to Missourians, and protections for landowners, the “need” piece of the puzzle may be the deciding factor.  It remains to be seen if the Missouri PSC will approve a transmission project generated outside of the “best practice” associated with MISO’s reliability and competitive market regional planning process.  As studies have shown, utility regulators (including commissioners and their expert staff) as a group, share information by developing and following “best practices”, which may work to portray professionalism and limit criticism of commission decisions.  Best practices are born from policy experimentation, but the adoption of these practices can result in stagnation and a lack of policy innovation10.

In addition to the possible need to reevaluate regulatory norms in the face of energy source diversification, the results of each of these cases points to the importance of public input.  As mentioned in the final report and order issued by the commission majority in their denial of the CCN11, the GBE case generated the greatest number of public comments ever received by the PSC, with the majority of them opposing the project.  The GBE case also attracted more intervening parties to the case (19) than did the MTP case (4).  While most of the commission’s arguments for denying the GBE application were in lockstep with the staff’s initial brief, the commission appeared to place more weight on the opposition posed by the landowners who feared the project’s impact on home values, cropland, and quality of life.  Ultimately, the commission found the benefits to Missourians were either too few or too uncertain to outweigh the potential costs to landowners.

While both projects would require the use of eminent domain to construct transmission lines, the GBE project generated more vocal opposition and lacked the approval of a regional planning authority to share the burden of any potential criticism surrounding the decision.  There is a discussion to be had concerning how the PSC currently solicits public comments and how outreach could be improved to better represent the general population. The impact of public opposition appeared to carry greater weight in the GBE case than it did in the MTP case, according to the final commission report and orders.  Ultimately, Missouri’s PSC and their staff, which provide advice and advocate for approval or denial, must determine through which lens it will view future renewable energy projects.  Through a narrow lens, focused on best practices associated with traditional energy development projects and the opinions of a vocal segment of the population or through a wider lens, accounting for the increased demand for alternative energy sources and determining Missouri’s ability to compete in an evolving energy landscape born of a changing consumer culture and new regulatory pressures.


  1.  Maps detailing the project’s final route can be found here.  The transmission line will run from Palmyra, Mo to Kirksville, MO and then north into Iowa. 
  2.  Maps detailing the Missouri portion of the project’s proposed route, which includes, Kansas, Illinois, and Indiana can be found here
  3.  The CCN application was denied by a vote of 3-2 against the project.  The final commission report can be viewed here.  The dissenting opinion of Chairman (who has since stepped down from the commission) Robert S. Kenney can be viewed here and the dissenting opinion of Commissioner Daniel Y. Hall (now Chairman) can be viewed here
  4.  Jacob Barker of the St. Louis Post-Dispatch has reported extensively on these cases, including a primer on some of the general differences between the cases, and an examination of some of the implications on the state of renewables in Missouri going forward. 
  5.  The new application for the GBE can be accessed here.  Clean Line ran into a new hurdle in the regulatory process by failing to file the required 60-day notice prior to official filing of the application.  With a backdated (6/30) 60 day filing requirement, the new application can’t be filed until 8/29/16. 
  6.  In addition to the above link to the PSC staff’s initial brief of the case, all other documents can be access on the general page for the GBE case here
  7.  MISO is an independent, non-profit regional transmission planning authority, which plans projects across 15 states, from the border of Indiana and Ohio, into eastern Montana, and south into New Orleans. 
  8.  In addition to the above link to staff’s case brief, all other documents associated with the MTP case can be accessed here.  The Missouri PSC voted unanimously to approve Ameren’s MTP application for a certificate of convenience and necessity. 
  9.  While the staff opinion in the GBE case referenced speculative nature of future environmental regulations, including the CPP which is currently locked in court proceedings, no such qualifier was discussed in the MTP case. 
  10.  Dr. Janice Beecher of Michigan State’s Institute of Public Utilities, examined the policy network among utility regulators in her paper titled “NARUC as network: a perspective on the U.S. regulatory policy community”
  11.  The commission’s majority opinion (report and order) can be accessed here

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