On November 13, 2024, the Federal Energy Regulatory Commission (FERC) unanimously accepted a first-of-its-kind solution to optimize generator interconnections at the Southwest Power Pool, Inc. (SPP) and Midcontinent Independent System Operator, Inc. (MISO) border. The solution, known as the Joint Transmission Interconnection Queue (JTIQ) framework, enables the construction of five high-voltage, backbone network upgrades spanning from North Dakota to Kansas and valued at $1.7 billion, while also laying the groundwork for future, similar collaborations. 

The first JTIQ portfolio of five projects, which is expected to unlock 28 to 53 gigawatts of transmission capacity at the SPP-MISO border, is part of a concerted effort by SPP and MISO to relieve the significant strain both have experienced in their interconnection queues in recent years.  The JTIQ framework is a product of an unprecedented, multi-year collaboration between the regional transmission organizations (RTO) and a diverse group of stakeholders, including state commissions, transmission owners, and customers.  The JTIQ effort garnered the attention of the United States Department of Energy (DOE), which awarded the first JTIQ Portfolio a Grid Resilience and Innovative Partnerships (GRIP) Program grant of up to $464.5 million in funding, the equivalent of approximately 25% of the total transmission upgrade costs.    

The JTIQ framework streamlines and increases the efficiency of the RTOs’ respective generator interconnection study and affected system study processes by reducing the amount of time and potential upgrade costs associated with interconnection at the SPP-MISO border.  FERC accepted the JTIQ proposal, finding it consistent with FERC’s policies governing generator interconnection, “by helping to ensure that interconnection customers are able to interconnection to the transmission system in a reliable, efficient, transparent, and timely manner.” 

A few key insights into FERC’s findings are highlighted, below. 

Cost Allocation of 100% of Capital Costs to Interconnection Customers with Backstop to Load Consistent with Beneficiary Pays

FERC found that the overall balance of costs and benefits among interconnection customers and load satisfied the “beneficiary pays” principle.

The JTIQ framework combines the forward-looking planning of regional transmission projects and the assignment of 100% of capital costs to interconnection customer beneficiaries typical of interconnection-related network upgrades.  The JTIQ framework also relies on a backstop funding mechanism, under which some of the capital costs associated with JTIQ projects may be paid by load in the event of a temporary or permanent shortfall in project funding. 

At bottom, the JTIQ portfolio was designed to enable interconnection customers to interconnect to the transmission system.  Thus, FERC reasoned, allocating 100% of capital costs to interconnection customers, who are the primary beneficiaries of the JTIQ projects, is just and reasonable.  

Nonetheless, FERC threaded the needle by also accepting the proposed backstop funding mechanism, which assigns some potential cost responsibility to load.  FERC based its decision on two key points.  First, FERC recognized that the JTIQ portfolio is likely to achieve full subscription quickly in light of SPP and MISO’s interconnection queue sizes and the demand for transmission capacity at the SPP-MISO border.  Second, FERC recognized that load, while not the primary beneficiary, will also benefit from the JTIQ projects.

The JTIQ Funding Mechanism Is Distinct from Transmission Owner Initial Funding

The Commission found the proposal requiring JTIQ Transmission Owners to fund the construction of JTIQ projects upfront and subsequently earn a rate of return on and of its investment over a 20-year period to be just and reasonable and not unduly discriminatory or preferential.

Under the JTIQ framework, transmission projects are identified before all of the interconnection customers are known, and interconnection customers who are found to benefit from the JTIQ projects are subsequently identified and allocated costs on a per-megawatt basis using a portfolio subscription methodology.  Thus, FERC observed, “[t]he JTIQ portfolio structure works only if the JTIQ transmission owners, who are obligated to design, engineer, and construct the JTIQ upgrades, provide upfront funding for the capital costs of the JTIQ Upgrades.”  Indeed, it would simply not be workable for interconnection customers, who may not be identified when construction begins, to fund the construction costs up front.  In this regard, FERC found that the JTIQ funding mechanism is distinct from other generator interconnection funding mechanisms that are the subject of a recent FERC show cause order.

DOE GRIP Funding

The award of up to $464.5 million in DOE GRIP funding significantly offsets the construction cost of the JTIQ projects, and was an important consideration in the compromise reached to develop the cost allocation mechanism of the first JTIQ portfolio.  Commissioner Mark Christie noted in a separate concurrence that he found allocating backstop funding responsibility to load is only just and reasonable because of the offset provided by the GRIP funding.

The DOE GRIP funding was conditioned on, among other things, SPP and MISO obtaining FERC approval of the proposal.  Thus, FERC’s recent acceptance of the JTIQ framework is a major milestone.  Next, SPP and MISO will formally present the first JTIQ portfolio to their respective boards in the coming months, and, assuming approval, construction on the JTIQ projects will begin shortly thereafter. 

Future JTIQ Portfolios

The JTIQ framework, which includes a general process by which potential network upgrades are studied and considered, is reusable, although the specific cost allocation methodology is intended to apply only to the inaugural JTIQ portfolio.  Future JTIQ portfolios will require the RTOs to make additional filings with FERC to address cost allocation.  The approval of the JTIQ framework demonstrates FERC’s openness to proactive and collaborative approaches to addressing the interconnection queue backlogs currently facing most of the country.