MISO benefit-cost analysis of $10.3B transmission plan offers framework for national model: ACORE report

Dive Brief:

The Midcontinent Independent System Operator’s benefit-cost analysis of a set of $10.3 billion transmission projects, approved last month, offers a framework for a national model in measuring transmission benefits, according to a report released Tuesday by the American Council on Renewable Energy.
MISO’s methodology for determining the benefits transmission projects can provide was developed with stakeholders, which helped build confidence in the results, panelists said during a webinar on the report.
“This MISO effort really helped move the ball forward, not just in MISO, but elsewhere as a model,” said Rob Gramlich, Grid Strategies president and the report’s author.

Dive Insight:

The ACORE report comes as the Federal Energy Regulatory Commission is proposing to revise its rules for transmission planning, including by possibly requiring grid planners to use certain metrics to measure a project’s benefits.

FERC proposed a dozen categories of metrics planners should consider, such as reduced loss of load probability and production cost savings. Currently, there isn’t a standard process for assessing benefits, and some grid planners don’t do it at all, according to Gramlich.

“When the benefits of proposed transmission lines are fully calculated, the advantages of new lines are made clear to regional planners,” Gregory Wetstone, ACORE president and CEO, said in a statement. “Building off MISO’s forward-leaning process, our analysis offers a roadmap for FERC and other planning entities that, if adopted, will result in a cleaner, lower-cost electric grid.”

When MISO assessed the benefits of Tranche 1 of its long-range transmission plan, or LRTP, the grid operator used six benefit metrics, including congestion and fuel cost savings, avoided cost of local generation projects and decarbonization.

MISO found that its $10.3 billion transmission plan would produce benefits totaling $37.3 billion, providing the seven zones in its northern and central footprint with benefits exceeding costs by at least 2.2 times.

A showing of benefits across its footprint helped secure broad political support from all states, Gramlich said in the report. “That support is essential for overcoming the hardest obstacle to building transmission – securing buy-in from each state to broadly allocate the cost of the transmission across the region,” Gramlich said.

The Organization of MISO States, which represents state utility regulators, supports the principle that benefit-cost analysis should use metrics that are quantifiable, can be replicated, are not duplicative and are forward looking, Dan Scripps, Michigan Public Service Commission chair, said.

Also, it is important the public has input into how the benefits are calculated to help make sure excess transmission isn’t built and to bolster public confidence in the benefit analysis, Scripps said.

MISO’s LRTP process should be a model for the nation, especially with a climate bill that appears poised to pass Congress, according to Devin McMackin, ITC Holdings federal policy specialist.

MISO’s benefits metrics are a “good starting point” for setting national requirements, McMackin said, noting that a common set of standards will be needed to support interregional transmission planning.

“We think it makes sense to require a minimum set of benefit metrics, while leaving some flexibility for regions,” McMackin said.

It is important to have flexibility in deciding which categories of benefits to assess, partly to reflect the different drivers for proposed projects, Jeremiah Doner, MISO director of cost allocation and competitive transmission, said during the webinar.

MISO operates the grid across 15 Midcontinent states and the Canadian province of Manitoba.