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in both RTOs. 71 As the figure shows, that includes only 3 out of 16 different types of
interregional projects.
The selection criteria for interregional and regional projects also impose different qualification
requirements by applying differing minimum capital investment and project voltage thresholds.
For example, the joint criteria require a minimum project size of $20 million to qualify a
potential CBMEP, while the two regions’ individual requirements have lower capital thresholds:
$5 million within MISO and none within PJM. This means that a $15 million interregional
market efficiency project that would qualify under both MISO and PJM regional planning
criteria would fail the joint qualification criteria. In fact, the most recent MISO-PJM planning
effort has rejected interregional projects based on this size threshold, despite the fact that
analyses had estimated the projects’ benefit-cost ratio to range from 5.0 to 36. 72
Differing voltage threshold requirements for each of the three sets of criteria additionally create
a similar potential barrier for enhancing interregional transmission investments across the MISO-
PJM seam. As currently proposed, MISO’s criteria for interregional projects require projects to
be rated at 345 kV or higher, 73 while the PJM criteria and the joint qualification criteria would
accommodate projects with a rated voltage as low as 100 kV. This effectively means that
interregional projects operating at less than 345kV that would qualify under PJM and the joint
criteria, will simply fail to qualify because it does not meet MISO’s voltage threshold.
Additional hurdles are created by the benefit-cost thresholds that apply to economically-justified
interregional projects that qualify for evaluation as cross-border market efficiency projects. To
be approved as a CBMEP, a proposed project must: (1) pass the joint benefit-to-cost test based on
a single benefit metric (adjusted production costs) prescribed in the JOA (which considers only
10 years of benefits); (2) pass MISO’s benefit-to-cost test based on the adjusted production cost
metric for MEPs specified in MISO’s MTEP process (which considers 20 years of benefits); and,
additionally, (3) also pass PJM’s benefit-to-cost test based on the different benefit metric (a blend
between adjusted production costs and load LMP payments) specified in PJM’s RTEP process
(which considers 15 years of benefits).
71
MISO proposed in its Order 1000 filing to consider only projects that address market-efficiency needs
in both RTOs. PJM proposed to consider interregional projects that address either reliability needs in
both RTOs or market efficiency needs in both RTOs. As noted earlier, in response to these
compliance filings, FERC has ordered that the RTOs’ interregional planning process needs to be
expanded to also consider public policy needs.
72
MISO and PJM (2014a).
73
Lower voltage facilities of 100kV or above that collectively constitute less than 50% of the combined
estimated project costs are acceptable. See MISO-PJM (2014c), p. 21.
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