Citizens League
Electrical Energy: Affordability and
Competitive Pricing Working Team
Electric Transmission
Why this presenation?
• At prior meeting, several transmission or
MISO specific questions were brought up
• Request was made to learn more about MISO
and transmission current events
Agenda
• Introduce Midwest Independent System
Operator - MISO
• ransmission and electricity prices
• Current transmission topics
– Renewable integration
– Cost allocation
– Generator retirements
Disclaimers
• I work at MISO. But this presentation
represents my own ramblings, and should in
no way be construed as an official MISO
presentation.
• Disclaimer disclaimer. I wrote the above
disclaimer. I am not an attorney. I assume no
responsibility or liability for any inaccuracies,
intended or unintended, contained in the
above noted disclaimer.
MISO – Plan and Operate the Transmission
Grid for most of the Midwest
• Oversee the flow of power over the high voltage wholesale transmission system in all
or parts of 13 states and the province of Manitoba
• Provide independent wholesale transmission system access
• Provide Reliability coordination
• Operate a day ahead and real time energy market
• Manage congestion on the grid
• Set reserve margin requirements for load serving entities
• Plan Regional transmission expansion
• Serve as independent market monitor
MISO Fast Facts
• Non-profit organization
• Voluntary membership
• Regulated by the Federal Energy Regulatory
Commission (FERC)
• $41 billion energy market
• 1,896 pricing nodes
• Governed by independent eight member board
• About 750 employees
• Main office in Indianapolis, branch office in St. Paul.
6
MISO, Entergy, PJM and SPP Footprints
7
Real Time Prices – MISO Runs an Energy Market
8
June 2011 Generator Interconnection Queue Map
Transmission – the Great Enabler
• Like an interstate highway system, transmission
can enable access to lower cost electricity
• New transmission generally reduces wholesale
prices by reducing congestion, improving access
to lower cost energy. In aggregate, net benefits
increase, but it can create winners and losers
• There are other benefits beyond lower
production costs
• See simplified example on next slide
Apples and electricity *
• Imagine 2 valleys, separated by a mountain range. The
apples on the west side cost $5/bushel, while the
apples on the east side cost $10/bushel.
• A new highway goes through the mountain, allowing
people on the east to buy western apples. The new
market price of apples for everyone is $7.
• Western growers and eastern consumers are happy.
Western consumers and eastern producers, not so
much.
• Now substitute the word electricity for apples, and
transmission for highway.
* At this point please refer to disclaimer on slide 3
Costs and Benefits
• Of course building that highway or
transmission lines is not free
• If you spend $50 million dollars to build a
transmission line that isn’t needed, you don’t
produce net benefits, only costs
• MISO engineers conduct detailed studies of
transmission costs and benefits in order to
justify whether a line should be built, and
optimize location, size, etc
Current Events
• Integrating renewables into the Grid
– Transmission expansion
– Integration challenges
• Cost Allocation (who pays)
• Generator retirements (EPA, cheap natural
gas, aging plants) and its effect on reliability
and prices
Transmission Expansion to Integrate
Renewable Energy
• Most states in the MISO footprint have
Renewable Portfolio Standards (RPS’s) requiring a
certain percentage of renewable energy
• MISO conducted 2 major studies to determine
the amount of transmission needed to meet
RPS’s.
– Regional Generation Outlet Study (RGOS) – Regional
15 year plan to meet state RPS’s - $15 to $20 billion.
– Candidate MVP Study - $5 billion. An in progress,
more detailed plan to justify the first phase of new
transmission projects to meet RPS standards - $5
billion.
RGOS Study
Candidate MVP Study
Integrating Renewables
• Renewable Energy Sources (wind, solar) are
variable or intermittent
• To integrate renewables:
– Dispatchable Intermittent Resource (DIR)
– Improved Forecasting
– Benefits of Scale to Smooth Level of Variation
– Energy Storage
– Manitoba Hydro
Cost Allocation
• How to pay for regional transmission?
• Traditionally local area paid for local
transmission, or shared with immediate neighbor
• Hard to make traditional model work for longdistance renewable generation
• In response, MISO developed the concept of
regional Multi-Value Projects (MVP’s)
• Costs of MVP’s shared across entire MISO
footprint
MISO studies more than just transmission
• As Reliability Coordinator, MISO helps ensure
the region has adequate supply of electricity
• For example, recently, MISO conducted an EPA
Regulation Study to determine potential level
of generator retirements likely under different
EPA regulatory scenarios
• Summary – New Federal EPA Regulations will
not have a dramatic impact on MISO supply,
reliability, or prices