Louisiana energy officials threaten to withdraw from interstate power grid

Note: On Tuesday, the Public Service Commission announced that the motion regarding a notice to withdraw from the MISO power grid would be deferred until the commission’s next regular meeting on Dec. 14.

The Louisiana Public Service Commission may take a step toward withdrawing from the interstate power grid that has, for the last decade, allowed power companies besides Entergy and Cleco to provide electricity to Louisiana. 

District 1 Commissioner Eric Skrmetta, who represents the southeastern areas of the state around New Orleans, initially placed the motion on the agenda of the commission’s Nov. 17 meeting but deferred it to the Dec. 14 meeting. It proposes to “provide written notice of withdrawal from membership to MISO.” 

MISO stands for Midcontinent Independent System Operator and is a nonprofit association that manages the power grid across 15 states and the Canadian province of Manitoba, providing electricity to 42 million people. 

Skrmetta first proposed the idea to withdraw at the commission’s last meeting on Oct. 20 after hearing a report from two consultants who expressed concern about wind turbine projects that MISO is considering approving in some northern states.

Membership in the MISO grid provides many benefits such as allowing Louisiana to borrow electricity from other states during times of emergencies. Part of the reason why the February winter storm power blackout in Texas lasted several days was because much of Texas is not connected to an interstate power grid such as MISO, said Simon Mahan, executive director of the Southern Renewable Energy Association.

Membership also allows power companies to buy and sell electricity from other states at wholesale prices, which creates competition in areas such as Louisiana that are serviced by only one or two power companies, Mahan said. A 2020 market analysis conducted by Entergy found that Louisiana’s MISO membership saved customers an estimated $63 million last year and a total of $698 million from 2014 to 2020. 

“Now what we see is a tremendous amount of wind assets that are built up in MISO North, and were built on production tax credits through the Internal Revenue Code, and they were effectively pretty close to free to build these wind turbines, which are great, but they didn’t provide the transmission,” Skrmetta said at that time. “They’ve gotten free windmill assets. Now they want the ratepayers to pay for the transmission for these stranded wind assets that are going to cost $130 billion to bring into the marketplace.”

MISO divides projects between its southern and northern members, so that members don’t have to pay for distant projects that they receive little benefit from, Mahan said. However, the consultants told the commissioners that MISO could change this in the future and start charging its southern members for projects in the north. 

Consultant Lane Sisung told the commissioners that MISO assured him that the costs of the northern wind projects would be allocated only to the northern states, but Sisung expressed concern about a “five-year look-back period” that MISO could later use to justify charging its southern members.

In an email to the Illuminator on Thursday, MISO spokesman Brandon Morris said the southern states would not be paying for the projects: “MISO is currently proposing a cost allocation methodology which would not allocate costs from northern MISO into southern MISO.”

But consultant Noel Darce told the commissioners that some future projects would involve long-range transmission of wind energy from northern states to southern states and expressed concern that MISO’s estimate of cost-savings is “overstated.” 

Skrmetta voiced other gripes about MISO at last month’s meeting, calling the organization “inconsistent” and saying wind power is “unreliable.” He said he wants to look at joining other interstate grids but didn’t say which ones. Wednesday’s motion would provide a one-year advanced notice of withdrawal, allowing the commission time to join a new grid, he said. 

District 3 Commissioner Lambert Boissiere, who represents Orleans and several River Parishes, responded to Skrmetta’s comments, saying he doesn’t disagree with the cause for concern but would like to take a more “tempered approach.”

When Boissiere asked the consultants if Louisiana would benefit from any of MISO’s proposed long-range transmission projects, Sisung said: “There will be benefits. The question is we don’t know what they are right now (and) we don’t know who’s receiving them.”

Boissiere told the consultants they should get a good measurement of all the possible benefits before taking such an oppositional position towards the projects. 

“Right now I know we’re at a big point that we need to pay attention to,” Boissiere said. “MISO has become a part of Louisiana power — how we receive and send power. This is not to be taken very lightly without very very careful consideration.”

Mahan said federal regulators would not allow MISO to suddenly start billing the southern states for projects that they do not benefit from.

“It’s really kind of surprising that such an extreme position would be voiced at a commission meeting without any supporting analysis,” Mahan said of Skrmetta’s proposal to withdraw from MISO.

Although most people in Louisiana pay an Entergy bill every month, the actual electricity sometimes comes from other states because the member utility companies and power generators sell their electricity on the MISO marketplace each day, and customers automatically get the cheapest electricity available, Mahan said.

Louisiana has been on the MISO grid since Entergy joined in 2013, a move that halted a federal antitrust investigation into the utility company. Mahan said the U.S. Department of Justice had alleged Entergy held a monopoly on the electricity market in Louisiana and surrounding states, but then the Justice Department announced the company had satisfied those concerns by joining MISO and “restoring competition” in the market.

“Louisiana being a part of a market is important and we shouldn’t take any steps to no longer be a part of a market,” Commission Chairman Craig Greene said in a phone call Wednesday.