Order 1920 Is Moving Forward — It’s Time to Choose a Durable Framework
For more than a decade, regulators, utilities, and stakeholders in MISO South have debated how to allocate the costs of large regional transmission investments. The conversations have been thoughtful, technical, and often productive, but with the implementation of FERC Order 1920, the region has reached a different phase — one where continued discussion must ultimately lead to decisions.
The planning timelines are now real, the compliance deadlines are approaching, and the question is no longer whether to establish a durable cost allocation framework.
The big question now is which framework to use moving forward.
Order 1920 Sets the Clock
Order 1920 requires long-term planning and cost allocation rules to be established on a defined timeline, with compliance filings due in 2026 and state engagement processes already underway.
And while states have a window of time where they can influence the framework, that window is not indefinite. If states do not reach agreement on an alternative approach, existing tariff structures will likely function as the default ex-ante cost allocation method.
In practical terms, that means the region risks drifting into a solution by default rather than by design.
That outcome would not reflect the years of careful work that state regulators have invested in understanding the issue.
We Have Studied This Problem Thoroughly
Over the past several years, CAPCOM and OMS have examined a wide range of cost allocation concepts — granular benefit formulas, generator-pay structures, hybrid approaches, and portfolio-specific methods. Those efforts were valuable. They clarified trade-offs and highlighted what states consider most important: transparency, fairness, and durability.
But they also revealed a hard truth: Increasing precision does not always produce greater consensus.
In OMS screening discussions, more complex approaches often raised concerns about modeling assumptions, administrative complexity, and long-term stability. Meanwhile, more simple frameworks consistently scored well on understandability and repeatability — two qualities regulators repeatedly identified as essential.
MISO South does not lack options around cost allocation. It just needs alignment.
A Practical Option Already Exists
SPP’s highway/byway framework offers a structure that is familiar to utilities and regulators in Arkansas, Louisiana, and Texas, grounded in engineering realities and transparent enough to explain to stakeholders, while remaining durable enough to guide decades of investment.
In short, highway/byway recognizes that large backbone transmission lines function as shared infrastructure, smaller facilities serve local needs, and mid-level projects often fall somewhere in between. This logic aligns closely with CAPCOM’s long-standing principles that costs should be tied to beneficiaries and fixed at the time of project approval. In other words, highway/byway is not a theoretical model imported from elsewhere; it is a framework already operating successfully in the same states now considering how to proceed under Order 1920.
Why Waiting Carries Its Own Risk
The natural instinct in the regulatory processes is to keep refining options, and that instinct has served the region well.
But Order 1920 changes the calculus.
A framework will be in place by the end of 2026. The question is will it be one that states actively shape, or one that simply results from existing tariff defaults?
There’s certainly room for continued debate without convergence risks, including uncertainty for long-range planning portfolios; inconsistent expectations for utilities and developers; greater difficulty coordinating with neighboring regions; and ultimately, less state influence over the final outcome.
At some point, pencils need to be put down and choices need to be made.
A Reasonable Path Forward
Adopting a highway/byway-style framework in MISO South would not foreclose future refinement or state agreement processes. Instead, it would:
- provide a clear ex-ante structure for Order 1920 planning
- align with regional practice already familiar to states
- reduce administrative complexity
- and allow regulators to focus on evaluating projects rather than debating allocation formulas
But perhaps of greatest importance, it would represent a decision made deliberately by states — not one inherited by default.
The Bottom Line
Cost allocation debates are often fraught with the perfect being the enemy of the good. MISO South, and all regions working on Order 1920 cost allocation, are faced with a deadline on ex ante cost allocation. After nearly a decade of arguing over cost allocation, with no real end in sight, it’s time to put the pencils down. The highway/byway model offers a practical, understandable, and regionally tested option, and we should seriously consider prioritizing it as an ex ante cost allocation in MISO South, and potentially beyond.
