States Must Pay Tariff to Help Build|$5.2 Billion Wind Power Energy Grid

CHICAGO (CN) - State utilities must pay a tariff to help finance a $5.2 billion project to build power lines connecting Great Plains wind farms to Midwestern cities, the 7th Circuit ruled.

The Federal Energy Regulatory Commission in 2011 approved a $5.2 billion plan from Midwest Independent Transmission System Operator (MISO), an association of 130 utilities, to build power lines to carry clean energy from wind farms in the Great Plains to urban centers across the Midwest.

The cost-sharing plan imposes a tariff on members, based on the percentage of the utility's share of the entire Midwest power grid.

Quoting a 2008 article of The New York Times, the decision says: "The dirty secret of clean energy is that while generating it is getting easier, moving it to market is not."

"MISO aims to overcome these limitations," Judge Richard Posner wrote for the three-judge panel.

MISO members that challenged the plan, including the Illinois Commerce Commission, said the plan would charge customers millions to subsidize new power lines, without any reduction in electricity costs.

But "the promotion of wind power by the MVP [multi-value project] program deserves emphasis," Posner wrote.

"The use of wind power in lieu of power generated by burning fossil fuels reduces both the nation's dependence on foreign oil and emissions of carbon dioxide," Posner added. "And its cost is falling as technology improves. No one can know how fast wind power will grow. But the best guess is that it will grow fast and confer substantial benefits on the region served by MISO by replacing more expensive local wind power, and power plants that burn oil or coal, with western wind power."

Every state in the Midwest except Kentucky encourages or requires utilities to get 10 percent to 25 percent of their power supply from renewable sources by 2025, according to the 26-page opinion.

Posner criticized the plaintiffs for not presenting any evidence to back up their claims that the plan will cost more than it is worth.

"When we pointed this out at oral argument, Illinois's lawyer responded that he could not obtain the necessary evidence without pretrial discovery and that FERC had refused to grant his request for an evidentiary hearing even though the commission's rules make the grant of such a hearing a precondition to discovery," Posner wrote. "FERC refused because it already had voluminous evidentiary materials, including MISO's elaborate quantifications of costs and benefits - and these were materials to which the petitioners had access as well; they are, after all, members of MISO."

Asking for additional discovery after the commission's detailed review would cause "unconscionable regulatory delay," the decision continues.

Posner added that "MISO members who think they're being mistreated by the MVP tariff can vote with their feet," leave the organization and join an adjacent power transmission organization.

Since no utility has sought to do so, it appears they are "objecting to the MVP program only in the hope of getting better terms," the decision states.

FERC has not yet decided whether two utilities that left MISO before the MVP plan was announced must bear any costs for it, so their appeal is moot, Posner said.

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