Washington (Platts)--24Feb2014/211 pm EST/1911 GMT

In a decision that could help boost renewable energy projects, the US Supreme Court on Monday refused to hear a challenge to a Federal Energy Regulatory Commission decision that allowed an independent system operator to spread among its members the cost of building long-line electric transmission projects.

The high court's decision leaves in place a lower court's ruling that held the commission properly considered and approved a tariff scheme devised by Midcontinent Independent System Operator.

The 7th US Circuit Court of Appeals in June upheld FERC's reading of the basic premise of broad cost allocation in the tariff that also lies at the heart of FERC's Order 1000, a landmark rulemaking that addresses cost allocation and regional planning for electric transmission facilities.

Rejecting core objections raised by parties in Michigan and Illinois, the circuit court judges maintained that the reasoning behind the so-called "multi-value projects" tariff approved by FERC for use by MISO was sound and that the tariff scheme figures to provide the entire market region with benefits that are at least commensurate with costs.

Proposed in 2010, the MVP tariff "is mainly intended to finance the construction of transmission lines for electricity generated by remote wind farms" mostly in the Great Plains, the lower court said. MISO had estimated that the cost of the lines will be more than offset by the lower cost of electricity produced by the wind farms.

Under the approved tariff, the cost of the MVPs would be "allocated among utilities drawing power from MISO's grid in proportion to each utility's share of the region's total wholesale consumption of electricity," thus placing most of the costs on urban centers where demand for power is greatest, the appellate court said.

A group of petitioners led by the Illinois Commerce Commission had argued that the criteria for determining which projects are eligible to be treated as MVPs were not narrowly and properly defined.

As is customary when the high court denies cert, it gave no reason for the decision.

--Chris Newkumet, chris.newkumet@platts.com
--Edited by Jeff Barber, jeff.barber@platts.com

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