A proposal to fast-track new power plants across 15 states in the central U.S. to meet surging electricity demand could get federal approval within the next two weeks.
New Orleans-based Entergy confirmed to POLITICO’s E&E News that it plans to take advantage of the process to get plants hooked up faster to the regional grid managed by the Midcontinent Independent System Operator (MISO). Entergy has proposed three gas plants in Louisiana — a need driven by proposed data centers.
MISO proposed the Expedited Resource Adequacy Study (ERAS) process in March for the region stretching from Canada and the Upper Midwest to the Gulf Coast. For projects that make the cut, the express lane is meant to drop the time it takes to get a grid interconnection agreement to months from years. MISO asked the Federal Energy Regulatory Commission to rule on the plan by May 15.
“Entergy intends to use the ERAS process for certain projects, including load additions associated with major economic development projects that are critical to the states that we serve,” a company spokesperson said in an email response to questions.
St. Louis-based Ameren Missouri, too, suggests it could seek to take advantage of the accelerated interconnection process for a 2,100-megawatt gas plant.
The MISO plan aims to address a similar dilemma of tighter supply and rising demand as one approved in neighboring grid PJM Interconnection. On Friday, PJM announced more than 11,000 megawatts of “shovel-ready” projects that will get faster access to the transmission grid to help keep the lights on during peak periods of demand.
Like elsewhere, the addition of new generation in the MISO region, mostly wind and solar, hasn’t kept pace with the rate of retirement of aging coal plants. And now utilities are seeing staggering demand projections from the development of large-scale data centers for artificial intelligence — some AI-driven projects with power needs equivalent to medium-sized cities.
Entergy’s home state of Louisiana is one such example, and it’s emblematic of the dilemma facing utilities, regulators and grid operators across the country. Entergy last year proposed to build three combined-cycle gas plants totaling 2,262 megawatts of capacity to meet demand principally from a $10 billion Meta data center in rural Richland Parish, Louisiana. It will be Meta’s largest data center of 20 worldwide.
Entergy highlighted in comments to FERC the challenges it sees bringing the Louisiana gas plants online by 2028 and 2029 if it relies on MISO’s existing queue process. The company said it has gone to significant lengths to accelerate development. It has ordered long-lead-time equipment, secured a site and chosen a contractor for the first two plants.
MISO has acknowledged the need to reform the interconnection queue process to keep projects better on track. But that will take three to six years. That’s time, according to Entergy and other utilities, that they don’t have.
“Current interconnection queue backlogs unreasonably impede the ability of new generation to come online and serve growing customer needs … which in turn threatens economic development projects important to the economies of the states in MISO,” the Entergy spokesperson said.
MISO’s proposal has strong backing from utilities, the data center industry, most state regulators and two GOP governors. But not everyone is on board. Independent power producers like Florida-based NextEra Energy have pushed back, calling the proposal discriminatory. And a group of eight former FERC members, both Democrats and Republicans, joined in the protest.
For its part, Carmel, Indiana-based MISO contests the claims that its ERAS proposal disadvantages independent power producers and casts the plan as a one-time fix to address an urgent need for new generation. MISO paints the proposal as a stopgap measure to an unprecedented problem — one unforeseen only a few years ago, before power-hungry data centers swarmed the region looking for electricity.
The fast-track process would require generation developers to make bigger deposits. Projects would need to fund network upgrades. To qualify, developers need a project site, have a signed agreement with a power customer and get the blessing from their state regulatory body.
MISO has argued that making state utility regulators the gatekeepers for which projects get to pursue a faster hookup is appropriate. Ultimately, states are responsible for ensuring enough power generation is developed to serve households and businesses.
Fairness, not fuel type
Independent power producers and clean energy groups are more critical. Incumbent utilities with access to capital and relationships with regulators are better able to meet MISO’s requirements to enter the faster lane.
Competitive power companies in the region are mostly wind, solar and battery storage. But critics of the MISO plan say it is fairness not fuel type that’s at the core of their protests. They cite a laundry list of shortcomings with ERAS, but a central complaint is that the process favors incumbent utilities.
Independent power producers say they’d be excluded from MISO’s express lane because the ERAS process requires companies to have a signed power purchase agreement with an electricity buyer before they can qualify for expedited treatment. Typically, competitive power developers don’t contract with customers until later in MISO’s grid study process to better gauge a project’s ultimate cost and timeline.
By limiting participation from competitive developers, the ERAS proposal, by definition, gives incumbent utilities an edge — a point made by the former federal regulators who submitted a letter to FERC last month. The former federal regulators said MISO’s proposal “presents the opportunity for self-dealing by utilities to advance their affiliated generation.”
The commissioners said the MISO proposal “runs counter to everything FERC has tried to do to preserve open access” to the grid in its landmark Order 888 in 1996, which required incumbent utilities to provide equal grid access to third parties. The order paved the way for today’s competitive power markets to the benefit of consumers.
Independent power producers such as NextEra argue the proposal would “establish an interconnection fast lane for MISO’s vertically integrated utilities to self-build their own generation solutions, bypassing gigawatts of independent generation stranded in MISO’s legacy interconnection queue.”
What’s more, those projects left behind will face higher costs to be passed along to customers after ERAS projects absorb the transmission the transmission system’s remaining headroom.”
Not only is the ERAS proposal flawed, it’s unnecessary, NextEra said. To prove its point, the power giant commissioned consultants at Brattle Group to conduct an analysis to demonstrate that generation capacity already under study by MISO through existing processes are “likely to be sufficient … if processed on a timely basis.”
Is there an emergency?
Other clean energy groups cast MISO’s proposal as a solution in search of a problem.
The groups, which include the American Clean Power Association and Solar Energy Industries Association, said MISO has yet to identify any reliability emergency that warrants such a significant departure from its standard interconnection process.
The clean energy groups note that states including Arkansas, Mississippi and Indiana have recently enacted and are considering laws that erode consumer protections for the sake of getting new power plants online for the purpose of economic development. And in Louisiana, Entergy is asking to be exempted from a competitive solicitation requirement for the same gas plants that the company and state regulators say require a speedier grid connection.
The clean energy groups said getting projects already in MISO’s interconnection queue online more quickly is a more equitable and cheaper solution to any urgent need for new generation. Even if just a fraction of that comes online, they say it could help ease many of the demand-growth concerns.
It’s a point underscored by the Clean Energy Buyers Association, a group of more than 400 businesses that include data centers and manufacturers. The group said MISO’s proposal is overly broad and threatens to further delay interconnection of carbon-free electricity that’s bogged down in the queue.
It’s a point repeated by other parties including the Clean Grid Alliance, a St. Paul, Minnesota-based group that advocates for policies to advance renewable energy in MISO. Not only does MISO’s proposal discriminate against non-utility power developers, the group told FERC, it will use transmission capacity that other projects already waiting in the connection queue are counting on.
“Not only is this discriminatory,” said David Sapper, vice president of transmission and markets for Clean Grid Alliance. “But it won’t necessarily work and might perversely make matters worse.”
