Wind developers won a victory Tuesday when the operators of the Midwest's largest regional electrical grid abandoned a proposal to make them pay up to 20 percent of the cost of new high-voltage transmission projects to deliver renewable energy.
The Midwest Independent Transmission System Operator on Tuesday unveiled to a large group of utilities, developers, energy generators and transmission line owners its latest proposal to share the costs of expensive high-voltage lines that renewable energy advocates hope will be built to deliver wind-generated energy from the windy Plains to the eastern United States.
An initial proposal called on energy generators in the system's 13-state territory and Manitoba to shoulder up to 20 percent of the cost of such projects, with 80 percent paid by all utilities buying the power in the territory. The territory stretches from Ohio to the Dakotas and includes Minnesota, Wisconsin and Iowa.
The 20 percent share would have been carried by all energy generators in the transmission system, whether they used wind, coal or natural gas to produce their power.
But wind developers complained the share would have made their projects uneconomical compared with projects outside of the Midwest system. Wind farm developers said they would give up working in states like Minnesota, the Dakotas and Iowa and move projects to states like Kansas with more favorable cost-sharing plans.
After hearing complaints from the generators, system officials hinted last week that they might steeply reduce the generators' share.
They did just that, cutting the generators' cost share to zero by spreading out the cost across all the utilities that pull power off the grid.
The earlier proposal was a way to target the charges for large transmission projects that cost hundreds of millions of dollars to generators that benefit from the system, said Jennifer Curran, executive director of transmission infrastructure strategy for the transmission system operator.
But the 20 percent charge would have put the system at a pricing disadvantage to neighboring grids that don't impose such a charge on their generators, according to Curran. That kind of inequity at the borders where power moves back and forth outweighed the benefit of charging the generators, she said.
The proposal announced Tuesday better aligns the Midwest system with other regional grids, agreed Beth Soholt, executive director of St. Paul-based Wind on the Wires, a regional wind industry association for Minnesota.
Wind developers still will have to pay 90 percent of the cost for smaller transmission lines needed to connect to the major lines, which has been true for years, she said.
Now the wind industry wants to see what specific projects qualify for the new cost-sharing arrangement. In particular, the industry is anxious to see if a $700 million to $725 million line proposed from Brookings, S.D., to Hampton — called the Brooking Line — qualifies. That process may take up to a year.
In the meantime, system officials expects to submit the new cost-sharing proposal to the Federal Energy Regulatory Commission on July 15 for approval. It could then take up to a year to approve the new rates.
Leslie Brooks Suzukamo can be reached at 651-228-5475.