DRAFT LRTP Tranche 1 Portfolio Report - Addendum to MTEP21 Report

TDU Sector Comments on April 12 draft LRTP Tranche 1 Report – May 11, 2022 (typo corrected 5/16/22)

1.       The TDU Sector recognizes the need for substantial improvements to the MISO transmission system to accommodate the very significant changes in the resource mix that MISO is experiencing now, and that we expect to continue.  It is important that MISO and stakeholders plan upgrades to cost-effectively address this need, and we support the LRTP effort.

2.       The Tranche 1 portfolio appears to be a reasonable first step at addressing the need.  We expect that these projects will provide benefits in excess of costs, consistent with the findings of the consultant for the Organization of MISO States (OMS) as reported at the OMS Board of Directors meeting in April.

3.       We do not, however, find MISO’s own benefit estimates reasonable.  MISO’s methodology suffers from flaws that render its benefit estimates unreliable.  While the TDU Sector and its members have concerns about many elements of MISO’s analysis we believe it suffices to focus on the most significant one: that MISO fails to use consistent reference cases in its evaluation of different benefits.  The primary example of this involves the two largest benefit categories that MISO identifies: i) Avoided Capital Cost of Local Resource Investments; and ii) Congestion and Fuel Savings.  For the purpose of calculating resource-investment savings, MISO assumes that nearly 40 GW more wind, solar and solar-storage-hybrid generation would be constructed without the Tranche 1 projects relative to the case with Tranche 1 projects.  In contrast, for the purpose of calculating production-cost savings (as well as decarbonization benefits), MISO assumes 20 GW less wind, solar and solar-storage-hybrid generation would be constructed without the Tranche 1 projects than with these projects.  Thus, logically, there appears to be no plausible non-Tranche 1 future relative to which Tranche 1 would provide the benefits MISO calculates for both of these categories together.  The TDU Sector believes that these benefits should be evaluated with respect to consistent reference cases, and that development of appropriate consistent reference cases is required to produce valid benefit estimates.

4.       A related issue concerns robustness testing of the Tranche 1 portfolio.  During the Tranche 1 study process, stakeholders including members of the TDU Sector requested that MISO perform robustness testing to assess the sensitivity of MISO’s results to different inputs.  The primary input of interest is the assumed future generation mix, and stakeholders are interested in evaluating an alternative generation mix that involves generation sited closer to load and—consistent with requests in MISO’s interconnection queue—including increased levels of energy-storage resources, relative to Future 1.  MISO did not perform such an analysis in the Tranche 1 study process.  We continue to believe that such an evaluation is an important part of a complete study, and request more attention to this in future tranches.  We note that development and analysis of a well-defined more-local resource siting scenario would also be useful in establishing a reference case for the benefit analysis that is central to MISO’s business case.

5.       We note that, at the time these comments were developed for a May 12 submittal deadline, MISO has clearly described one set of Tranche 1 projects.  MISO has not, however, described all the projects that will need to be part of Tranche 1, including the rebuilding of lower-voltage circuits where the existing tower lines or rights-of-way are expected to be used to accommodate the primary Tranche 1 projects.  In addition we note that the draft report refers at p. 32 to possible “rebuild” or “uprate[]” of the existing Crandall-Wilmarth 345 kV line, something that we are not aware that MISO has previously described.  Information on such projects is not expected to be available until shortly before the May 27 PAC meeting, making it impossible to comment on such projects at this time.  Any projects to be included in Tranche 1 need to be fully described, their connection to the Tranche 1 objectives fully explained, and potential alternatives fully explored before PAC can meaningfully pass judgement on them.  Accordingly, we urge MISO to make this information available as soon as possible.

6.       MISO should consider near-term congestion as well as post-2030 congestion in determining projects to include in Tranche 1.  This includes the scope of lower-voltage or underbuild projects required as part of the primary 345 kV projects in Tranche 1.  For example, MISO should consider whether rebuild of some segments of the Wabaco-Alma 161 kV line—required to allow re-use of the line position for a new 345 kV circuit—should extend to other segments of this line that could pose significant market constraints prior to 2030.

7.       Beyond selection of projects in the portfolio, MISO has further work to do in scheduling these projects.  In addition, the sequence in which they are constructed may have a significant impact on the congestion experienced in the MISO market over the next several years.  We ask that MISO focus on these sequencing issues to avoid adverse congestion impacts during Tranche 1 construction to the extent reasonably achievable. 

8.       The report would benefit from more context around the cost of the Tranche 1 portfolio.  MISO should include an estimate of the incremental MVP usage rate for the North-Central Subregion, and an estimate of the expected annual revenue requirement once all projects are in service, e.g. in 2030, along with the estimated revenue requirement for the remainder of the North-Central Subregion transmission revenue requirement in that year.

9.       At p. 10 MISO says the following:

While not having to make a single emergency declaration in the two years preceding 2016, 41 such emergency declarations have been required since 2016. This has been driven predominantly by the combination of increased variable generation coupled with a decline in number of controllable and flexible resources in the footprint, and generation performance has degraded as plants have aged.

In order to address the problem of increasing emergency events that MISO describes, it will be important to understand the causes.  We find MISO’s proposed explanation deficient.  In particular, neither the increase in variable generation, nor displacement of dispatchable capacity with intermittent capacity, appears to be a plausible significant factor in increasing incidence of capacity emergencies.  Consider that a disproportionate share of capacity emergencies has occurred in the MISO South region, which has relatively little intermittent generation.  Intermittent generation remains, even today, a very small share of MISO capacity—too small to account for an appreciable share of recent increases in Max Gen events.  Moreover, it appears that intermittent generation is reasonably accredited to account for its load-carrying capability, and we are not aware that MISO has suggested otherwise.  It appears to us that the primary development responsible for an increase in Max Gen occurrences is the retirement of large amounts of conventional generation that provided a large capacity surplus for most of MISO’s history, including a significant amount of coal-fired generation that retired by early 2016.  Indeed, given the pace of recent retirements, it is not clear to us that the age of generators in aggregate is increasing, which casts some doubt on MISO’s description of degraded performance.  In addition, the net reduction in capacity provided by Capacity Resources has been accompanied by an increase in the quantity of cleared Load-Modifying Resources—which can only be dispatched in emergencies—a trend that would appear to provide at least a partial further explanation for increasing incidence of capacity emergencies.  We suggest that MISO reconsider its description and provide documentation for trends that it identifies as significant causes.

10.     At p. 21 the draft report describes that the Tranche 1 evaluation process iterated between reliability and economic analysis in refining the recommended project set.  Members of the TDU Sector are not familiar with such an effort or of significant economic analysis for project alternatives.  If such analysis was performed we would request that MISO identify where the results are posted and provide more detail in the report.

11.     At p. 52 MISO describes the calculation of Benefit B—Avoided Capital Costs of Local Resource Investments—and makes the following statement about the calculation adopted by MISO:

After evaluating several different options to link the LRTP Tranche 1 Portfolio to the regional and local expansion, MISO and stakeholders ultimately decided on the calculations shown in equation (1) and (2) below.

Members of the TDU Sector are not aware that stakeholders on the whole provided significant feedback on the proposed calculation or endorsed it.  Accordingly, MISO should remove “and stakeholders” from the statement above.

12.     We stress the importance of accounting for upgrades that may be anticipated in adjacent regions, including the northern Illinois portion of PJM that lies near the center of MISO’s North-Central Subregion.  We recognize the timing considerations that MISO believed posed constraints on the scope of the Tranche 1 study, and that these made it challenging to consider approaches that involved significant modifications to non-MISO facilities, as well as alternative solutions such as flow control.  We believe such consideration will be critical to cost-effective upgrades in future tranches, however, and ask that MISO work to integrate this into future study phases.

13.     We encourage MISO to carefully consider both the current broad inflation environment and changes in the cost of transmission-line construction in its economic assessments.

In the April 13, 2022 meeting of the Planning Advisory Committee (PAC) Special Meeting, stakeholders were invited to submit feedback on the DRAFT LRTP Tranche 1 Portfolio Report, as an addendum to the MTEP21 Report posted with the meeting materials.  National Grid Renewables submits the following feedback for MISO's consideration.

MISO should reconsider including the Hazel Creek to Blue Lake 345 kV corridor line in the LRTP Tranche #1 portfolio. Based on all the conducted analyses and all the results that have been released for MISO DPP-2017 WEST through MISO DPP-2019 WEST, the Hazel Creek - Blue Lake 345 kV line would provide the required reliability and would assist in relieving the power flow congestions from Brookings, SD towards the Twin Cities, MN area.

Ameren supports MISO’s proposal to append MTEP21 to include the Tranche 1 portfolio of eighteen transmission projects. These projects are critical to address the immediate reliability needs evident in the MISO Midwest Subregion and are critically needed to enhance connectivity and maintain adequate reliability. The changing energy landscape,, as evidenced by the recent Planning Resource Auction results, and extreme weather conditions, along with tight operating conditions are further evidence that the Long-Range Transmission Planning (LRTP) projects are crucial to the customers in the Midwest Subregion.

MISO’s 2016 Resource Availability and Need (RAN) initiative led to MISO’s groundbreaking Renewable Integration Impact Assessment (RIIA) study, which identified challenges to the continued safe and reliable operation of MISO’s system resulting from the rapidly increasing proportion of renewable generation powering MISO’s grid.  These efforts combined with the forward-looking future scenarios utilized in the LRTP and the business case analysis have resulted in the Tranche 1 portfolio.

MISO’s LRTP effort will not only enable new resources to be installed, but also mitigate uncertainty as to retirement decisions as the energy transition accelerates. Tranche 1 is an urgently needed first step. Tranche 2 will need to review the additional scenarios contemplated by Future 2 so that MISO stays ahead of transmission and system reliability issues. Additional stressors to the system have occurred since the completion of the future scenario work and exhibits the need for these projects to be approved and assigned quickly.  Ameren supports MISO’s comprehensive efforts and the sense of urgency for Tranche 1.

MISO’s April 12, 2022 MTEP Report Addendum: Long Range Transmission Planning Tranche 1 Portfolio Report provides sufficient support to enable the LRTP Tranche 1 Portfolio to receive required authorizations from relevant MISO entities pursuant to the timeline to ensure that the LRTP Tranche 1 Portfolio may be appended to MISO’s MTEP21 regional transmission plan on a timely basis. The foundational LRTP Tranche 1 Portfolio is urgently needed to address the immediate reliability benefits identified in the MISO Tranche 1 report and should be approved without delay.

WPPI is part of the Muni/Co-op/TDU Sector and joins that sector’s comments on the April 12 draft of MISO’s LRTP Tranche 1 Report.

In addition we note that at p. 32 the draft report describes “an approximate increase of 250 MW in the” LRZ2 import level from the west that can be sustained within voltage-stability limits with the addition of the Tranche 1 projects.  This appears to be a rather low number, given the scale of the projects at issue, indicating that a MISO review of that analysis may be appropriate.  Additionally, we suggest that the new Tremval 345 kV switching station might be a good location for future installation of fast dynamic reactive-power injection to make better use of the new circuits in alleviating voltage-stability limits, that the station be designed to accommodate such a future addition, and that future study phases consider the impact of such a system addition.

Comments of MidAmerican Energy Company in Support of MISO’s April 12, 2022 MTEP21 Report Addendum: Long Range Transmission Planning Tranche 1 Portfolio Report

The benefit-cost analyses completed by MISO reasonably includes appropriate benefit metrics. MidAmerican commends staff for considering additional benefits beyond those identified for the initial Multi Value Projects (MVPs) in 2011. MidAmerican also commends MISO for being proactive by identifying the urgent need for additional transmission in the MISO Midwest subregion several years ago, beginning with the Renewable Integration Impact Assessment to identify risks associated with the energy transition, and following that with the Reliability Imperative where additional regional transmission was identified as a key component to the region’s reliability strategy. The following comments pertain to the benefit / cost analysis MISO has presented in stakeholder meetings. These comments can be posted for public review.

Central Iowa Facilities (LRTP 7, 8) - The MISO MTEP report identifies Iowa as a gateway to connecting the western MISO and eastern MISO systems. MidAmerican supports this identification in the interest of the broader benefits for the reasons stated in the Reliability Imperative, but also agrees with the more local benefits for Iowa as also noted by MISO in the MTEP21 Addendum.

Iowa to Michigan (LRTP 12 through 18) and Iowa to Missouri to Illinois (LRTP 9,10,11) –MidAmerican supports these new facilities that contain portions in/near Iowa and bring benefits to both Iowa and the MISO region. The line segments will be key to improving MISO interconnectivity in support of capacity and energy markets and overall reliability of the MISO Midwest system. The lines will also provide local reliability benefits in terms of additional sources of supply to several substations and lines. Adding two additional Mississippi River crossings to link the western and eastern systems within MISO will improve subregional MISO Midwest interconnectivity.

Congestion and Fuel Savings – While there will always be debate as to forecasts of the future, MISO has presented reasonable valuation methods and provided a reasonable set of results with various future outcome sensitivities (e.g. time period for the valuation, emissions and natural gas prices). The use of a distribution factor cutoff is representative of the issues in the generation queue where significant withdrawals are occurring now due to prohibitive network upgrade costs. The natural gas sensitivity shows the change in valuation that could occur with a higher fuel cost. MidAmerican believes the production cost models used for this analysis provide conservative values for the congestion benefits because the transmission system is, for nearly all periods of time, in a state with more outages than the N-1 conditions assumed in MISO’s models (i.e., there is nearly always multiple planned and forced outages at any given point in time which can have significant impacts on congestion).

Avoided capital costs and reduced resource adequacy requirements – Assuming that new Future 1 generation will be enabled by the LRTPs provides a reasonable estimation of LRTP value. Separately identifying local clearing requirement benefits and resource adequacy benefits also provides a reasonable approach to Tranche 1 value. The assessments are only on Future 1 models, and do not contemplate the value of a more robust transmission system for the energy transition contemplated by the Future 2 and Future 3 which have increased retirement and new resource builds relative to Future 1.

Other Benefits – Importantly, MISO states that the adjusted production cost value is understated because the model begins with a system intact state, which seldom is the case in MISO (i.e., there is nearly always multiple planned and forced outages at any given point in time which can have significant impacts on congestion). 

Load shed risk – The method developed by MISO provides a pragmatic approach to load shed risk through the identification of lost generation and imports from a high level perspective. While there could be other scenarios developed, the approach is reasonable. Comments that new resources will be built to maintain an LOLE of 1 day / 10 years under any number of transmission expansion scenarios miss the mark by not considering that transmission is the enabler of reserve sharing for the MISO pool so that each load serving entity does not need to cover its own reserves but can share those resources when needed most. MidAmerican agrees that other concerns around quantified frequency of events can be addressed by reviewing benefits from various levels of VOLL, which MISO has provided.

The LRTP effort in conjunction with MISO’s resource adequacy and energy market changes currently being reviewed are all important steps for MISO and its members. MISO’s LRTP effort will not only enable new resources to be installed, but also mitigate uncertainty as to retirement decisions as the energy transition accelerates. Tranche 1 is an urgently needed first step. Tranche 2 will need to review the additional scenarios contemplated by Future 2 so that MISO stays ahead of transmission and system reliability issues. MidAmerican supports MISO’s effort and the sense of urgency for Tranche 1.

May 12, 2022 MTEP21 DRAFT Report Addendum Substantive Feedback:

Association of Businesses Advocating Tariff Equity, Coalition of MISO Transmission Customers, Illinois Industrial Energy Consumers, Louisiana Energy Users Group, Midwest Industrial Customers, NIPSCO Large Customer Group and Texas Industrial Energy Consumers Position on LRTP Tranche 1 Portfolio Benefits

The Association of Businesses Advocating Tariff Equity (“ABATE”), Coalition of MISO Transmission Customers (“CMTC”), Illinois Industrial Energy Consumers (“IIEC”), Louisiana Energy Users Group (“LEUG”), Midwest Industrial Customers (“MIC”), NIPSCO Large Customer Group (“NLCG”) and Texas Industrial Energy Consumers (“TIEC”) appreciate this opportunity to provide feedback to the Midcontinent Independent Transmission System Operator, Inc. (“MISO”) with respect to MISO April 12, 2022 Draft MTEP21 Report Addendum (“Draft Addendum”) concerning MISO’s proposed Long Range Transmission Planning (“LRTP”) Tranche 1 transmission projects.  Collectively, our respective member companies have major industrial facilities located in Illinois, Indiana, Louisiana, Michigan, Texas and Wisconsin, as well as elsewhere within the MISO footprint, and are among the largest direct or indirect employers within the MISO footprint.  We are all active participants in the MISO stakeholder process and all of us except NLCG are MISO Members within the MISO End-Use Customer Sector.   Our comments focus on Section 7 of the Draft Addendum, which addresses LRTP Tranche 1 Portfolio Benefits.

Our major concern with MISO’s presentation of LRTP Tranche 1 Portfolio Benefits in the Draft Addendum is that MISO’s methodology contains three serious flaws that we believe overstate the forecasted benefit of the LRTP Tranche 1 transmission projects.

We acknowledge, given MISO’s forecasted 20-year net present value revenue benefit to cost ratio of 2.6 for the overall MISO North/Central Subregion (a/k/a MISO Midwest), full correction of these three flaws may not cause the overall 20-year net present value benefit to cost ratio for LRTP Tranche 1 to fall below 1.0 for the overall MISO North/Central Subregion.  However, failure to correct the flaws in MISO’s benefits methodology could lead to future proposed LRTP Tranches, such as LRTP Tranches 2, 3 and/or 4, being represented as providing a forecasted benefit to cost ratio in excess of 1.0 even though in fact they do not.

Furthermore, the overstatement of forecasted benefits makes gaining those state regulatory approvals that will be necessary to move forward with the construction of the proposed LRTP Tranche 1 transmission projects unnecessarily vulnerable to complication and delay given the litigious nature of the process to gain such approvals.

Finally, the overstatement of benefits may not be uniformly distributed over the Cost Allocation Zones (“zones”) within the MISO North/Central Subregion. As a result, when the flaws causing the overstatement are fully corrected it may further aggravate concerns with respect to the forecasted zonal distribution of the benefits of LRTP Tranche 1 not being roughly commensurate with the zonal distribution of the costs of LRTP Tranche 1 that will occur if all of the LRTP Tranche 1 projects are approved as a single subregional Multi-Value Project “(MVP”) portfolio.  Potentially, this aggravation could be severe enough such that certain zones have a forecasted benefit to cost ratio that is less than 1.0 for the LRTP Tranche 1 projects as whole.  In other words, it could result in a forecasted net cost for some zones rather than a forecasted net benefit for those zones.   It should be noted that such a revelation would not necessarily mean that a subset of the LRTP Tranche 1 transmission projects could not be approved as part of a subregional MVP portfolio or that the projects that were not included in that subset could not be approved outside that subset.  For example, the portion of the transmission projects within LRTP Tranche 1 that were not approved as part of a subregional MVP portfolio could still conceivably be approved as Baseline Reliability Projects (“BRPs”), Market Efficiency Projects (“MEPs”) and/or “Other” Projects in order to ensure the forecasted zonal distribution of the benefits for the LRTP Tranche 1 transmission projects as a whole is roughly commensurate with the forecasted zonal allocation of the costs for the LRTP Tranche 1 transmission projects as a whole.  

The three specific serious flaws we have identified in MISO’s proposed LRTP Tranche 1 Portfolio Benefits methodology are as follows:

1. MISO did not use a consistent reference case for forecasting Congestion and Fuel Savings, Decarbonization and Avoided Capital Cost of Local Resources;
2. MISO’s calculation of forecasted Resource Adequacy Savings overstates the expected cost difference between capacity resources located within a local zone versus those located elsewhere in the MISO North/Central Subregion; and
3. MISO’s calculation of the forecasted Avoided Risk of Load Shedding is greatly overstated by assuming the MISO North/Central Subregion will experience a firm loss of load event every three years and that the LRTP Tranche 1 transmission projects will allow a complete avoidance of such events.

Also, we would caution against putting any significant weight on MISO’s informational calculations that either use a 3.0% discount rate, examine benefits and costs out to 40 years or utilize an assumed carbon emissions price in excess of a $12.55 per metric ton starting point with a 2.5% escalation. 

Attachment FF of the MISO Tariff requires the benefit to cost ratio to be calculated on a 20-year net present value basis using a discount rate based on the Weighted Average Cost of Capital (“WACC”) for transmission owners.  As such, the economic analysis MISO has performed using a 20-year net present value revenue requirement with a discount rate of 6.9% is what is relevant.

It should also be noted that the WACC for transmission owners, which MISO has assumed as 6.9%, is the cost of capital that transmission customers, and ultimately, ratepayers, will pay for the proposed transmission investments. It is not what ratepayers would typically receive on a risk-adjusted investment, which MISO has assumed as 3.0%.  Use of a discount rate of 3.0% overstates the value to ratepayers of the investment in the proposed transmission projects as it is less than the assumed 6.9% cost for capital they will incur in rates for those projects and is inconsistent with the common use of utility WACC as the discount rate in economic analysis in state regulatory proceedings.

With respect to using a 40-year study period, while transmission facilities have a long operational life, forecasted benefits 21 to 40 years out into the future are much more speculative than those forecast for the first 20 years and this is not captured in the discount rate, which only accounts for the cost of capital for the transmission investments.

Finally, with respect to decarbonization, while we are not objecting to the inclusion of a limited carbon tax assumption in MISO’s benefits analysis, such as $12.55 per metric ton escalating at 2.5% per year, to reflect that there is some probability of a carbon tax or carbon cap and trade regulation being introduced at some point in the study period, it is important to recognize that currently there is no such tax or cap and trade regulation in place for carbon emissions.  As such, at this time very little if any weight should be placed on the net present value calculations that used MISO’s high-end $47.80 per metric ton escalating at 2.5% per year carbon emissions price.

The balance of our comments provides more detail on each of the three specific flaws we have enumerated above along with recommendations to resolve each of them.

MISO did not use a Consistent Reference Case for Forecasting Congestion and Fuel Savings, Decarbonization and Avoided Capital Cost of Local Resources

For Congestion and Fuel Savings and Decarbonization, the resource change between the reference case and the case with LRTP Tranche 1 added is the addition of the Future Renewable RRF Resources that have greater than or equal to 5% impact on the reliability constraints addressed by LRTP Tranche 1 (“Enabled Regional Renewable RRF Resources”).

For Avoided Capital Cost of Local Resources, the resource change between the reference case and the case with LRTP Tranche 1 added is the addition of the Enabled Regional Renewable Resources and the removal of the Local RRF Resources (both renewable and non-renewable) that would be avoided by the addition of the Enabled Renewable RRF Resources (“Avoided Local RRF Resources”).

The difference between the changes from the reference case to the LRTP Tranche 1 case above is caused by the reference case for Congestion and Fuel Savings and Decarbonization not including the Avoided Local RRF Resources.

The failure to include the Avoided Local RRF Resources in the reference case for Congestion and Fuel Savings will cause the congestion and fuel costs in the Congestion and Fuel Savings reference case to be overstated.  As a result, the difference between the congestion and fuel costs in the Congestion and Fuel Savings reference case and the congestion and fuel costs in the case with LRTP Tranche 1 added will also be overstated.  MISO should have included the Avoided Local RRF Resources in its Congestion and Fuel Savings reference case.

This same issue exists in MISO’s Decarbonization forecast.  Failing to include the Avoided Local RRF Resources in the reference case for Decarbonization will cause the carbon emission cost savings in the Decarbonization reference case to be overstated.  As a result, the difference between the carbon emission costs in the Decarbonization reference case and the carbon emission costs in the case with LRTP Tranche 1 added will also be overstated.  MISO should have included the Avoided Local RRF Resources in its Decarbonization reference case.

MISO suggested in its April 29, 2022 LRTP Workshop response to this concern that different reference cases can be used for metrics that are quantifying different types of benefits.  We agree that can be true if the different types of benefits are fully decoupled from one another.   However, that is not the case here.  If the Avoided Local RRF Resources have to be constructed because the Enabled Regional Renewable RRF Resources cannot be constructed (due to LRTP Tranche 1 not being constructed), the addition of the Avoided Local RRF Resources will still provide some level of congestion and fuel cost savings and carbon emission savings even if it is not the same level of such savings that would be provided if the Enabled Regional Renewable RRF Resources were instead pursued.  As a result, Congestion and Fuel Savings, Decarbonization and Avoided Capital Cost of Local Resources are not full decoupled from each other.  Therefore, the reference cases for all three of these benefit analyses need to have the same resources in them and the cases for all three benefit analyses with LRTP Tranche 1 added need to have the same resources in them.

We would also note that we believe this issue would have been entirely avoided if MISO used a software tool for the analysis for all three benefit metrics that includes both resource build out optimization and detailed production cost modeling (e.g., Aurora XMP, EnCompass, PLEXOS, etc.).  If MISO had done so, it would have been able to compare, in an integrated fashion, the capital, fuel and congestion costs and carbon emission costs for a single common reference case (with the Avoided Local RRF Resources included) to the capital, fuel and congestion costs and carbon emission costs for the case with LRTP Tranche 1 added (with the Avoided Local RRF Resources removed and the Enabled Regional Renewable RRF Resources added in their place).

To address the foregoing, MISO should rerun its LRTP Tranche 1 production cost analyses for Congestion and Fuel Savings and Decarbonization such that it includes the Avoided Local RRF Resources in the reference case for each of those analyses. This would bring those reference cases in line with MISO’s reference case for its Avoided Capital Cost of Local Resources analysis and eliminate the overstatement of forecasted Congestion and Fuel Savings and Decarbonization that is present in MISO’s current calculations.

In addition, on a going forward basis, MISO should explore migrating to a software tool for the analysis of all three benefit metrics that includes both resource build out optimization and a detailed production cost modeling such that the analyses for Avoided Capital Cost of Local Resources, Congestion and Fuel Savings, and Decarbonization for a LRTP Tranche can be performed in an integrated fashion using common reference and change cases.

MISO’s Calculation of Forecasted Resource Adequacy Savings Overstates the Expected Cost Difference between Capacity Resources Located within a Local Zone versus those Located Elsewhere in the MISO North/Central Subregion

Under MISO’s calculation of forecasted Resource Adequacy Savings, MISO is assuming the local cost for capacity is the MISO Cost of New Entry (“CONE”) price for a new frame combustion turbine generation facility.  As a result, under its calculation, MISO assumes each MW of local capacity shortfall in its buildout that can be cured with a decrease of the Local Clearing Requirement (“LCR”) for the local zone as a result of LRTP Tranche 1 will save the local zone the CONE price.  This greatly overstates the potential savings from LRTP Tranche 1 under this metric.

Specifically, the long run marginal cost for capacity both within the local zone and elsewhere in MISO is roughly the same – CONE.  The long run marginal cost savings, if any, that occurs between locating capacity in the local zone versus importing it from elsewhere in MISO is the difference between the CONE prices for the two locations less any difference in the offsetting energy and operating reserve margins that can be earned (from the new capacity resource) between the two locations.  The long run marginal cost savings is not the CONE price itself.  Furthermore, even if there are some years where there is surplus capacity elsewhere in MISO, it would not necessarily occur in each and every year following the completion of construction of the LRTP Tranche 1 transmission projects.  There could be some years where the market price for capacity elsewhere in MISO is at the CONE price.  In addition, the market price for capacity elsewhere in MISO during those times when surpluses occur would not necessarily be zero as historical experience in MISO shows.  Finally, it is not a given that the market price for capacity in the local zone will always be at the CONE price during every year following the completion of the LRTP Tranche 1 transmission projects.  

Given the foregoing, the magnitude of MISO’s forecasted savings from this benefit needs to be moderated.  To that end, as a minimum, we recommend that two adjustments be made.  First, we recommend the unconstrained capacity market price for the MISO North/Central Subregion be assumed to be $15 per MW-day (close to the seven year average of the price from 2015/2016 through 2021/2022) rather than $0 per MW-day.  Second, we recommend that Zone 7 (Lower Michigan), the only zone forecasted by MISO receive a benefit under this metric, only be assumed to clear at the MISO CONE price for 25% of the years following the date all of the LRTP Tranche 1 transmission projects enter service.  During those years where there is assumed price separation between Zone 7 and the rest of the MISO North/Central Subregion, the savings would be based on the cost difference between the MISO CONE price for Zone 7 and $15 per MW-day.  In the other years, the cost difference (and, thus, the savings) would be zero (0) since there would be no cost separation between Zone 7 and the rest of the MISO North/Central Subregion. We still believe this will overstate the cost savings under this metric since the long run marginal cost difference between local capacity and capacity located elsewhere is, as we have noted, the locational difference in CONE price offset by the locational difference in the energy and operating reserve margins that can be earned.  However, our two recommended adjustments would make a significant correction in the right direction.

MISO’s Calculation of the Forecasted Avoided Risk of Load Shedding is Greatly Overstated by Assuming the MISO North/Central Subregion will Experience a Firm Loss of Load Event every Three Years and that the LRTP Tranche 1 Transmission Projects will allow a Complete Avoidance of such Events

We understand MISO’s proposed Avoided Risk of Load Shedding metric to be an attempt at quantifying the resiliency benefit provided by the LRTP Tranche 1 transmission projects with respect to severe weather events such as Winter Storm Uri in 2021.  We support MISO’s efforts toward developing such a metric.  However, MISO’s specifically proposed metric at this time greatly overstates the magnitude of the benefit that would be provided by LRTP Tranche 1 with respect to resiliency.  It does so because it assumes that there is an expectation of one loss of load event in the MISO North/Central Subregion related to severe winter weather every three years and that the LRTP Tranche 1 project would completely avoid those events.

MISO’s resource adequacy provisions are specifically designed to produce a loss of load expectation of no more than one firm load curtailment within ten years anywhere within the MISO footprint.  Furthermore, as of the date of the submission these substantive comments, MISO has pending before FERC in Docket No. ER22-495-000 a proposal to move to a seasonal resource adequacy construct and availability-based capacity accreditation for resources.  MISO also has further plans to improve its modeling, capacity accreditation and market rules as part of the Resource Availability and Need portion of its Reliability Imperative.  We fully expect the increased frequency of severe weather events will be addressed by MISO in the aforementioned reforms to maintain a loss of load expectation of no more than one firm load curtailment in ten years particularly given the little tolerance that will exist from stakeholders and policymakers with respect to any significant slippage from that historic resource adequacy target.  Given this, it is unreasonable to assume that the MISO North/Central Subregion will experience a loss of load event every three years without the construction of the LRTP Tranche 1 projects.

It is also important to note that a loss of load expectation of no more than one firm load curtailment in ten years does not mean the loss of load expectation during the winter period is one day in ten years.  At best case, given the current historic summer peaking nature of the MISO system, no more than half of the loss of load events would be expected to occur during winter months.  As a result, it is not reasonable to assume there would be a loss of load event in winter months at a frequency greater than one day in 20 years.  Even then, MISO has not shown that LRTP Tranche 1 transmission projects would alone be sufficient to avoid that one winter loss of load event in 20 years.

In response to the above concerns, MISO has suggested that the proposed Avoided Risk of Load Shedding benefit metric is trying to capture a cost risk.  In addition, MISO has indicated that its $3,500 per MWh Value of Lost Load (“VOLL”) estimate used in its calculation of savings under this proposed metric may be greatly understated.  However, neither these responses justify the overstatement that is currently within MISO’s current calculation for this benefit.

First, the benefit to cost analysis for LRTP Tranche 1 is required to be performed on an expected value basis, not a cost risk basis.  To the extent there are cost risks incorporated into the analysis, they need to be reflected on a probabilistic basis such that the analysis reflects expected values.  Probabilistically, for the reasons discussed above, it is not reasonable to assume that more than one winter loss of load event in 20 years can be avoided by the LRTP Tranche 1 projects.

With respect to the VOLL price, there is not consensus at this time to support a higher VOLL price than $3,500 per MWh.  As such, it should not necessarily be assumed that the $3,500 per MWh price is greatly understated.  Furthermore, even if there was overwhelming evidence indicating it was overstated, it would not justify overstating the expected frequency of the winter loss of load events that could be avoided with the addition of the LRTP Tranche 1 transmission projects.

To address the above concerns with respect to MISO’s Avoided Risk of Load Shedding calculation for LRTP Tranche 1, as a minimum, MISO’s calculation should be adjusted to change the frequency of the winter loss of load events that are assumed to be avoided by LRTP Tranche 1 transmission projects from one in three years to one in 20 years.

Thank you for the opportunity to provide this feedback.  We look forward to continuing to work with MISO and other stakeholders with respect to the above issues.

Our silence with respect to other aspects of Draft Addendum should not be interpreted as a tacit endorsement of any position being taken, or recommendation being made, by MISO in the Draft Addendum.

If you have any questions concerning our comments, please do not hesitate to contact:

Jim Dauphinais

Brubaker & Associates, Inc.

(Consultants to ABATE, IIEC, LEUG, NLCG and TIEC)

(636) 898-6725

jdauphinais@consultbai.com

Ali Al-Jabir

Brubaker & Associates, Inc.

(Consultants to ABATE, IIEC, LEUG, NLCG and TIEC)

(361) 994-1767

aaljabir@consultbai.com

Kavita Maini

KM Energy Consulting, LLC (Consultants to MIC)

(262) 646-3981

kmaini@wi.rr.com  

Kevin Murray

McNees Wallace & Nurick LLC (for CMTC)

(614) 719-2844

murraykm@mwncmh.com

Comments of the Environmental Sector on the MTEP21 Addendum

Draft LRTP Tranche 1 Portfolio Report

The Environmental Sector appreciates the opportunity to comment on the Draft LRTP Tranche 1 Portfolio Report (Draft Report). Our Sector has engaged in MISO transmission planning efforts for more than a decade because it is central to a core priority among Sector members: the equitable, affordable and reliable transition to zero emission energy resources. We offer strong support for MISO’s Long-Range Transmission Planning (LRTP) process and the approval of transmission investments to enable the evolution of MISO’s resource fleet. These projects and this effort are long-overdue. The failure of previous efforts like the Regional Transmission Overlay Study (RTOS) that collapsed due to stakeholder concerns has put MISO significantly behind in making sure system needs are addressed as both supply and demand evolve.

Having experienced the past failures of meaningful, forward-looking transmission planning, we are heartened to see this initial portfolio of projects going before the Board of Directors for approval. And while the LRTP Tranche 1 Portfolio represents an historic investment in the MISO system, we must continue to view it in the context of the system-wide transition that we are in the midst of. Tranche 1 represents only the initial, most critical projects necessary to maintain system stability as the next increment of new resources is developed. Multiple iterations of LRTP and additional tranches of transmission system investments will be necessary to enable the ongoing evolution of the resource portfolio being driven by MISO states, member utilities, and consumers.

Even as we stress the urgency with which MISO must move forward with ongoing transmission planning efforts, we want to recognize the remarkable job MISO staff have done to build a strong reliability and business case for Tranche 1 while navigating the diversity of stakeholder positions. From the creation of the LRTP Futures, the identification and articulation of issues, the consideration of solution alternatives, and the exploration of benefit metrics upon which the business case rests, MISO staff have been diligent in their methodology, patient in their approach, and thoughtful in their consideration of stakeholder input. MISO’s due diligence to prioritize issues, identify preferred solutions, and hold them up to robust scrutiny to ensure they provide value to MISO consumers is reflected in the Draft Report. The Draft Report represents a nation-leading transmission planning effort and sets a solid foundation that justifies Board approval and on which future transmission planning efforts can build.

Specific to the Draft LRTP Tranche 1 Portfolio Report, we offer the following comments:

1)    More emphasis should be placed on the need for ongoing LRTP efforts beyond Tranche 1. With its basis in Future 1 of MISO’s 3 planning scenarios (Futures), Tranche 1 projects are based on the most conservative projections of the pace and scale of the generation fleet evolution - projections that are quickly proving overly conservative.^[1] MISO’s 2022 Draft Regional Resource Assessment, presented to the Resource Adequacy Subcommittee on April 20, 2022, demonstrates how the scale and pace of fleet transition continues to accelerate.^[2] While the environmental sector applauds the Tranche 1 portfolio, we urge that the process required to plan for the entirety of Future 1, (including the MISO South territory), along with consideration of the grid expansion needed to support Futures 2 and 3 move forward expeditiously. Member states will need the full complement of LRTP projects to address the challenges that the recent 2022 PRA and Regional Resource Assessment draft results have shown us a glimpse of. To that end, we recommend the LRTP Draft Report:

a)    More specifically present Tranche 1 results in the context of the larger, more comprehensive LRTP process that MISO evisions over the coming years, and

b)    Provide a specific timeframe on the planned additional tranches in this iteration of LRTP and on how frequently MISO will do LRTP planning going forward in recognition of the ongoing transition of the MISO system. 

2)    More emphasis should be placed on the reliability-based benefits of Tranche 1 projects. The Environmental Sector appreciates the expansion of benefits considered for LRTP projects, but MISO should continue to emphasize the reliability contributions of the Tranche 1 projects. First and foremost, LRTP Tranche 1 projects are reliability-based projects intended to maintain system stability under anticipated future conditions. More emphasis should be given to this critical context and to the reliability benefits of the LRTP lines that are not fully captured in the business case analysis.

We appreciate the time taken to provide details on each project proposed and the issues they are intended to address. This will be critically important as projects move to the state and local level for siting and permitting. The project-by-project descriptions get at the heart of the LRTP - to ensure reliability as the resource fleet evolves. However, the Draft Report fails to aggregate and elevate these reliability benefits in a way that fully characterizes the urgency of these investments. We would encourage MISO to place more emphasis on the reliability benefits of LRTP Tranche 1 projects, the urgency of addressing identified reliability issues, the benefits of improved regional reliability throughout the MISO system, and how reliability benefits relate to the overall justification for Tranche 1.

3)    More emphasis should be given to climate change impacts as a driver of MISO system needs. The Environmental Sector is well-aware that MISO is not an advocate for solutions to the climate crisis, but it should not shy away from the impacts that both mitigation (e.g. the shift to zero-carbon resources) and adaptation (e.g. the need to prepare for extreme weather) are having on its planning and operations. The Draft Report, in combination with the Futures White Paper and other Reliability Imperative publications, does a good job of articulating the scale and pace of resource fleet transition that necessitates MISO’s LRTP process. However, MISO has not done a good job articulating the threats posed by extreme weather and other impacts of climate change and how the system must build resilience to those threats.

To that end, we strongly support MISO’s effort to include resilience metrics in its LRTP business case development, currently articulated as the “avoided risk of load shedding” benefit metric. But this metric and the Draft Report’s discussion do not accurately articulate the urgency of building resilience into the MISO system, the myriad of climate risks that the system faces, or how a more robust, better connected, and regionally diverse grid will play a critical role in withstanding the extreme weather events that the scientific community continues to forecast.^[3]

Anecdotal evidence compiled through the National Oceanic and Atmospheric Administration points to a trendline showing an increasing frequency of high impact weather events that reach the billion dollar threshold in damages.^[4] While there is nuance to impacts on the bulk power system related to different events, there should be an accounting for the value of a more resilient system in avoiding load shed events in alignment with this increased frequency. Similarly, the Intergovernmental Panel on Climate Change has linked the increase in extreme weather events to human-induced climate change, showing both a historical record linking increased warming to an increased number of extreme events, and a projected increase in extreme events under a number of warming scenarios. 

MISO should continue to inform stakeholders of its efforts to understand the best available science on climate change and how it will impact the MISO system going forward. This understanding - that MISO’s efforts around resilience are not uninformed reactions to past events, but rather informed preparation for forecasted future events - will be critical to stakeholder support for further resilience-base investments, and we encourage MISO to better articulate its efforts in this regard.

4)    The Draft Report should better articulate MISO’s conservative approach to quantifying identified benefit metrics. The Environmental Sector appreciates and fully supports MISO’s efforts to identify and quantify several benefit metrics associated with the proposed Tranche 1 portfolio of projects. Benefits of transmission system investments such as improved resilience, reduced carbon emissions, and reductions in the overall costs of meeting system needs have long been recognized amongst stakeholders but rarely, if ever, quantified. MISO is truly carving out a leadership role amongst RTOs in its efforts to quantify a range of benefit metrics to inform the business case for Tranche 1.

Throughout the business case development MISO has been clear to stakeholders its approach to quantifying benefit metrics is a conservative one. This is understandable given the need for confidence that Tranche 1 investments will provide net benefits to MISO consumers. While a conservative approach may be warranted, it is also worth articulating so that stakeholders have perspective on the full range and scope of benefits that transmission system investments, in particular LRTP-based investments, can provide. For example:

Avoided Loss of Load: MISO’s methodology for estimating this benefit is limited to extreme winter weather events, both winter storms and extreme cold temperatures. This narrow perspective is a highly-conservative measure of the total LRTP benefits of avoided loss of load. Extreme heat, hurricanes, drought, and flooding are all projected to impact the MISO territory as climate change impacts worsen. Each of these has the potential to impact resource and/or transmission availability - risks that are mitigated with a more robust regional transmission system. Future efforts to quantify the avoided loss of load benefit should consider these additional impacts. At a minimum, the Draft Report should make note of the conservative assumptions currently used to quantify this benefit metric. 

Environmental Benefits: MISO has provided a range of savings related to decarbonization using multiple inputs from state, regional and Federal proposals. However, it should be noted that the Biden administration, and many states have proposed a social cost of carbon as high as $125/metric ton.^[5] It must also be noted that MISO makes no effort to quantify the benefits of reducing emissions of criteria air pollutants such as NOx and particulate matter despite decades of scientific research into the health impact and subsequent economic costs of these emissions.^[6] The Environmental Sector appreciates MISO’s inclusion of a decarbonization metric that accounts for the social burden of greenhouse gas emissions, but MISO’s current approach significantly undervalues the environmental benefits stemming from Tranche 1 projects and the increased reliance on zero-emissions resources that it enables.

Avoided Capital Cost of Local Resources: As numerous studies have shown, a regional and interregional transmission buildout results in a much lower need for local generation and significantly decreases generation expansion needs overall.^[7] Due to the higher cost of a local resource strategy compared to a regional resource strategy enabled by transmission expansion connecting to a greater diversity of resources, the $17B calculated by MISO is likely lower than the economic benefit to load and savings associated with construction costs. This is especially true for areas that are currently constrained in MISO such as “load pockets” that would be forced to site generation locally in lieu of a transmission solution.

Limiting benefit valuations to a 20-year outlook: We applaud MISO’s presentation in the Draft Report of the estimated benefits at both 20 and 40 years out under different discount rate assumptions. This approach provides valuable insights to stakeholders seeking to better understand the value of the proposed Tranche 1 investments. Even though MISO and stakeholders widely recognize a 40-year asset life for transmission system investments, the business case is centered around a 20-year outlook of assumed benefits that is based on depreciation schedules rather than actual expected asset life. While we appreciate the various justifications for this approach, they do not obviate the fact that these investments are expected to (and almost certainly will) provide additional benefits beyond the 20-year timeframe in which benefits are quantified.

These examples, combined with MISO’s explicit recognition of qualitative and indirect benefits and the reduced exposure to natural gas price volatility, provide a compelling case that MISO’s benefit/cost estimates for Tranche 1 projects are conservative. The Draft Report should do a better job of articulating this conservative approach to benefits quantification and emphasizing the confidence stakeholders should have that benefits will likely surpass those estimated in the business case and significantly outweigh the costs of Tranche 1.  

The Environmental Sector offers these comments in the spirit of making the final LRTP Tranche 1 Report as accessible and informative to stakeholders as possible. Broad stakeholder support for MISO’s LRTP efforts will be critical to moving projects forward and the success of ongoing LRTP efforts. The Environmental Sector strongly supports MISO’s LRTP efforts to date, supports approval of Tranche 1 by MISO’s Board of Directors, and looks forward to working with MISO on future LRTP efforts. As mentioned above, the LRTP efforts represent a nation-leading effort to be responsive to the changing landscape of how we produce, distribute, and consume energy. The Environmental Sector applauds MISO for its leadership and supports the analysis and conclusions put forth in the Draft Report.

Respectfully submitted

MISO Environmental Sector

Invenergy Comments on LRTP Tranche 1 MTEP 21 Addendum

May 12, 2022

Invenergy LLC (“Invenergy”) appreciates the opportunity to submit these comments on behalf of Grain Belt Express LLC (“Grain Belt Express” or “GBX”), to address MISO’s proposal to add the Tranche 1 transmission projects identified via its Long Range Transmission Planning (“LRTP”) initiative as an addendum to its MISO Transmission Expansion Plan (“MTEP”) 21.[1] 

Grain Belt Express supports the mission MISO has outlined for its LRTP effort, to take “a long-term view of bulk electric system development to ensure the values of a reliable and efficient grid are achieved…”[2] However, MISO’s failure in the LRTP Tranche 1 Addendum to consider how advanced stage merchant transmission projects interconnecting to MISO and its neighboring systems will be impacted by, and in turn ultimately impact, MISO’s design of the LRTP projects and the resulting cost-benefit analysis was a misstep in delivering on this mission, inconsistent with recent guidance from the Federal Energy Regulatory Commission (“FERC”) that suggests RTOs should focus on the most efficient and cost-effective transmission solutions and at cross-purposes with guidance from the Department of Energy (“DOE”) encouraging the development and construction of high-voltage lines connecting areas with significant renewable energy resources to demand centers and linking together independently operated grid regions. Last month FERC issued its Notice of Proposed Rulemaking (“NOPR”) to reform the Commission’s electric regional transmission planning requirements:

‎“we propose reforms to require public utility transmission providers to conduct long-term ‎regional transmission planning on a sufficiently long-term, forward-looking basis to identify and ‎plan for transmission needs driven by changes in the resource mix and demand…Specifically, ‎without these reforms, we believe that regional transmission planning processes are unlikely to ‎identify the more efficient or cost-effective solutions to transmission needs driven by changes in ‎the resource mix and demand.”‎[3]

Depending on their design and proposed use, regional and interregional merchant transmission projects can provide significant reliability benefits to MISO’s system and can potentially help MISO load avoid paying for duplicative LRTP upgrades that serve the same or similar functions.   Just as MISO works to coordinate its system planning with neighboring RTOs SPP and PJM, so too should MISO coordinate with merchant transmission developers to advance the most optimal system design at the lowest cost to energy consumers.  Transmission planning cannot occur in a vacuum. 

Grain Belt Express is an advanced stage merchant transmission project with construction permits in 3 of 4 states, long-executed interconnection agreements with neighboring systems, over 70% of the ROW in KS and MO acquired and a COD prior to the projects proposed in this LRTP Tranche 1 MTEP 21 Addendum. Given the ostensible advanced stage of Grain Belt Express, this merchant project should have been considered in the LRTP Tranche 1 base case or, at the very least, as a sensitivity in the Tranche 1 analysis from the start.  It is our preference that MISO correct this error by updating its analysis prior to any formal board vote on the portfolio. However, understanding the disruption this may cause to moving this important set of transmission projects forward, Grain Belt Express strongly urges MISO to commit to incorporating GBX into its base case assumptions or conducting a sensitivity including GBX for Tranche 2 to ensure additional LRTP projects are selected based on a more comprehensive and realistic picture of the MISO system in the future, and to present this to the Board for its approval or notification.

I.   Grain Belt Express HVDC Line Will Facilitate Clean Energy Goals and Provide Reliability Benefits During System Emergency Conditions

Grain Belt Express is developing an approximately 800-mile high voltage direct current (“HVDC”) interregional merchant transmission line that will run from an HVDC converter station in Ford County, Kansas to an HVDC converter station in eastern Missouri, and will continue to an HVDC converter station in Clark County, Illinois, continuing approximately 1.6 miles to Indiana where it will interconnect with the AEP 345 kV transmission system (the “GBX Line”). The GBX Line is designed to carry approximately 4,000 MW of electric power. Grain Belt Express will tap into one of the country’s strongest renewable energy resource areas and deliver power to load centers in the Midwest and in Eastern power markets.

By directly linking three of the largest U.S. power markets (SPP—MISO—PJM), GBX will increase electric system reliability for each region through:

• Emergency two-way power flow between regions;
• Black start capability (ability to “jump start” outage-affected regions using power from another region);
• Greater geographic diversity of renewables; and
• Stronger ties to adjacent regions.

However, the benefits of these ties to neighboring regions, how they might impact the need for regional projects in the MISO footprint, and how they might impact the design of MISO’s transmission portfolio to improve reliability in its footprint cannot be assessed unless and until GBX is incorporated into the MISO transmission planning process.

II.          Grain Belt Express Concerns with MISO LRTP Tranche 1 Addendum

A.     Inequitable and unreasonable treatment of merchant transmission

Grain Belt Express appreciates MISO’s position that, in the context of generators, it cannot consider projects that have not yet executed interconnection agreements in the transmission planning base case.   MISO has relied on this position to argue that Grain Belt Express was appropriately excluded from the planning assumptions for Tranche 1 of LRTP.  Respectfully, Grain Belt Express is an advanced-stage interregional transmission line interconnecting to MISO’s system and should not be treated as just another generator in the queue.  While GIA execution may be an appropriate indication of whether a generation project is “real” and will reach COD, the timeline and cost for large scale, linear transmission infrastructure is very different and many of the project milestones that Grain Belt Express has reached are a much stronger indication of “realness” than if a generator executes its GIA and puts 20% of network upgrades at risk.  It is not equitable or reasonable to apply these assumptions to advanced stage merchant transmission projects‎, particularly a project such as the Grain Belt Express that has obtained siting permits in 3 of 4 ‎states, executed long-term interconnection agreements with neighboring systems, and acquired over ‎‎70% of the necessary right-of-way in Kansas and Missouri. These are indicia of a viable merchant transmission project that should be ‎considered by MISO in its long-term transmission planning.

 Furthermore, Attachment FF does not specify that an executed interconnection agreement is required for a project to be incorporated in the MTEP analysis and planning process. Nor does Attachment FF prohibit consideration of known merchant transmission projects such as the GBX Line in MISO’s reliability and economic cost/benefit analyses of multi-value project (“MVP”) projects. Even if an interconnection agreement were a requirement for inclusion in the LRTP analyses, the GBX Line has ‎had an executed interconnection agreement with SPP (a market adjacent to MISO) since October 17, 2016, which, presumably, MISO was aware of and GBX expects to execute its interconnection agreement with MISO as soon as this year.‎

B.     MISO’s Tranche 1 cost-benefit analysis may be flawed

LRTP portfolio design should be comprehensive and complementary to merchant transmission projects in the MISO region so that consumers in MISO end up paying only for the most cost-effective and efficient system upgrades that result in the benefits sought.  The LRTP analysis should account for the fact that GBX Line will be available for use during emergency events and allow MISO access to generation from adjacent markets to which GBX will be interconnected.   At a minimum, the LRTP analysis should examine how flows on the MISO system will change as large injections and withdrawals from the GBX line at its POI occur to make sure that transmission planning in and around the project location is optimized.

As noted above, Grain Belt Express is expected to be in service well before any of the Tranche 1 projects will be operational. Attachment FF Section I.C of MISO’s Tariff requires MISO to “develop the ‎MTEP for expected use patterns and analyze the performance of the Transmission ‎System in meeting both reliability needs and the needs of the competitive bulk ‎power market, under a wide variety of contingency conditions.” ‎Consistent with Attachment FF, MISO’s LRTP process should account for merchant transmission projects that will be in operation before the Tranche I projects are completed.‎ Without taking into account the potential impacts of GBX, it is possible that the LRTP portfolio will not result in the same benefit to MISO’s ‎system that the current models show related to congestion and fuel savings and avoided future transmission investment.

To qualify as an MVP under Attachment FF of the MISO Tariff, and particularly under Criterion 3 in Section II.C.2.c, the LRTP project must address at least one Transmission Issue associated with a projected violation of a reliability standard and at least one economic-based Transmission Issue that provides economic value across pricing zones, with total financially quantifiable benefits exceeding total project costs.[4]  The economic and reliability analysis of the proposed LRTP projects will be incomplete without an eyes-wide-open assessment that includes of all existing and planned transmission on the MISO system, whether that transmission has been planned via the MISO process or by a merchant developer.  The failure to consider planned merchant transmission in MISO’s LRTP analyses is exactly the type of issue that FERC is addressing in its recent ANOPR, which asked “whether the existing regional transmission planning and cost allocation processes…relies on less comprehensive information” and “whether and how to better coordinate between regional and local transmission planning processes to identify more efficient or cost-effective solutions”.[5] Subsequently FERC issued its NOPR to remedy concerns “that the absence of sufficiently long-term, comprehensive transmission planning processes appears to be resulting in piecemeal transmission expansion to address relatively near-term transmission needs.”[6] FERC further stated:

“We are concerned that continuing with the status quo approach may cause public utility transmission providers to undertake relatively inefficient investments in transmission infrastructure, the costs of which are ultimately recovered through Commission-jurisdictional rates. That dynamic may result in transmission customers paying more than necessary to meet their transmission needs, customers foregoing benefits that outweigh their costs, or some combination thereof—either or both of which could potentially render Commission-jurisdictional rates unjust and unreasonable or unduly discriminatory or preferential.”[7]

In particular, LRTP Tranche 1 includes projects intended to relieve loading on transmission elements, increase transfer levels and improve voltage profiles, and address potential voltage instability on the MISO system.[8]  Because Grain Belt Express will be in operation by the time the Tranche 1 projects are brought online but has not been included in the LRTP base case, it is unclear if the expected reliability benefits will be borne out as expected.

In addition, Section II.C.5 of Attachment FF to the MISO Tariff lists five specific types of economic value that an MVP may provide, including production cost savings, which can be realized through reductions in both transmission congestion and transmission energy losses, and capacity savings due to reductions in the overall Planning Reserve Margins resulting from transmission expansion.  Any production cost savings dependent on decreases to transmission congestion should be re-examined accounting for the injection and withdrawal of GBX in the same region.  The LRTP Tranche 1 Portfolio Detailed Business Case quantifies the reliability and economic benefits of the Tranche 1 projects, including $13-19.7 billion for congestion reduction and fuel savings of and $1.4-$2.08 billion for avoided transmission investment, but those economic benefits may be in question because the existence of the GBX Line is not accounted for in the LRTP analysis.[9]

C.      Failure to account for the GBX Line may cause economic harm to GBX

Failure to account for the GBX Line in the current design of LRTP Tranche 1 may result in the inefficient constructionof local upgrades and/or new congestioncreated by LRTP projectsat Grain Belt’s planned MISO points of interconnection. Grain Belt Express has been assigned responsibility for millions of dollars in upgrade costs for its transmission to transmission interconnection which may have appropriately been addressed by LRTP Tranche 1, or in future LRTP Tranches, if the project were included in MISO’s base case.   Moving forward with a suboptimal project design that ignores advanced stage merchant transmission development on MISO’s system, only to fix the issues created by the flawed analysis later,  is not a model of efficiency or cost-effectiveness.  

III.          Recent FERC and DOE policy proceedings support better recognition of MHVDC into RTO transmission and markets policy to enable the cost-effective integration of clean energy

Increasing coordination and transparency in MISO’s LRTP process by engaging in a more collaborative planning process with merchant HVDC transmission projects like GBX is critical, will result in the build out of more economically efficient and cost-effective transmission facilities and is consistent with recently issued FERC and Department of Energy (“DOE”) policies.

The DOE recently released its Building a Better Grid Initiative to Upgrade and Expand the Nation’s Electric Transmission Grid to Support Resilience, Reliability and Decarbonization to implement the Infrastructure Investment and Jobs Act (“IIJA”).[10] With this initiative, DOE will identify critical national transmission needs and support the buildout of long-distance, high voltage transmission facilities that meet those needs through collaborative transmission planning, innovative financing mechanisms, coordinated permitting, and continued transmission related research and development. DOE stated that meeting clean energy goals requires “deploying interstate high-voltage lines connecting areas with significant renewable energy resources to demand centers and linking together independently operated grid regions.” To facilitate its coordinated transmission deployment program, DOE notes that “[e]arly and collaborative engagement is an essential element of building a reliable, resilient, and efficient electric grid.” DOE emphasized that new approaches to transmission planning are necessary to provide “greater certainty to drive investment to the highest-need transmission projects and enable development of the projects with the largest long-term benefit for consumers.”  Grain Belt Express is exactly the kind of project DOE has identified as being critical to meeting clean energy goals in the U.S., and given that MISO and its neighbors do not have the authority today to plan a transmission project that crosses three RTOs, MISO should be doing what it can to facilitate its development rather than working at cross purposes with GBX.

FERC’s NOPR proposed reforms for Long-Term Regional Transmission Planning emphasize the need for better consideration of and coordination with merchant transmission in regional planning. For example, FERC proposes to require that public utility transmission providers include in their OATTs as part of their regional transmission planning process a method to assess generation developers’ commercial interest in developing generation that considers “any merchant or other entity commitments to build (including deposits or payments to secure or fund) transmission facilities that would serve generation.”[11]  Including advanced stage merchant transmission projects like Grain Belt Express in MISO’s LRTP process is consistent with FERC’s proposed reforms aimed at building more regional transmission projects to facilitate clean energy goals.

IV.          Conclusion

Grain Belt Express’ preference is for MISO to perform a sensitivity to determine the true costs and benefits of Tranche 1 under a holistic analysis that considers GBX.  The LRTP initiative is a forward-thinking transmission planning process with laudable goals, and the process to select transmission projects should be done in tandem with planned merchant transmission projects to obtain greater efficiencies and reliability while minimizing costs borne by ratepayers.  Thus, we strongly urge MISO to commit to incorporating GBX into its base case analysis or conducting a sensitivity including GBX for Tranche 2 to ensure additional transmission projects are selected based on comprehensive reliability and economic analyses, and either present that information to the Board for approval or apprise the Board that MISO will be incorporating GBX into its Tranche 2 analyses to ensure additional LRTP projects are selected based on a more comprehensive and realistic picture of the MISO system in the future.

 Respectfully submitted,

Nicole Luckey

SVP, Regulatory Affairs

Invenergy LLC

Iowa Office of Consumer Advocate LRTP Feedback

            The Iowa Office of Consumer Advocate (Iowa OCA), a division of the Iowa Department of Justice, represents Iowa consumers and the public generally in all proceedings before state and federal authorities concerning matters that may impact the rates and services of Iowa public utilities.  Iowa Code §§ 475A.2(2), (5) (2021). The Iowa OCA is a member of the Public Consumer Sector.

            FERC Order 890 and, subsequently, FERC Order 1000, set forth various transmission planning principles that contemplated a coordinated, open, cost-effective, transparent, and non-discriminatory regional transmission planning process. With these principles in mind, OCA continues to note that the current long-rang transmission planning process is not particularly open and transparent for stakeholders like OCA. OCA has struggled to gain access to the transmission planning documentation necessary for comprehending the business case for the proposed Tranche 1 projects, both from MISO and from local transmission owners. And, while MISO staff has extensively explained the various elements of LRTP Tranche 1 at a high-level, OCA lacks the financial resources, technical capabilities, and time to evaluate the data and inputs used by MISO to justify its business case for Tranche 1. For example, OCA lacks the software necessary to review MISO’s power flow models. OCA notes that access to models and data used in transmission planning processes is necessary for stakeholders to understand whether plans are well-founded and propose reasonable solutions to transmission needs. If these models and data are only accessible through expensive software, technology and extensive modeling experience, it is unclear if this transmission planning process is truly open and transparent. With this context, OCA offers the following feedback concerning the benefit cost ratios used in the LRTP Tranche 1 business case and the apparent lack of consideration given for transmission alternatives.

            The benefit cost ratios as currently calculated by MISO for the LRTP Tranche 1 projects are overstated. MISO’s LRTP planning analysis claims economic benefits that should not be included given that the values are based on hypothetical avoided capital costs that have not been shown to be realistic or logical, representing a large share of LRZ 3 benefit metric. Specifically, in the detailed workbook provided by MISO to support the LRTP business case, the calculation of benefits associated with avoided capital costs of local resource investments is actually based on LRTP enabled capacity, not avoided projects. Moreover, MISO’s calculation of the LRZ 3 levelized avoided capital cost of local resources assumes an unreasonable amount of resource deployment (approximately three gigawatts of Solar and/or Solar + Storage) that is not supported or corroborated by the near or midterm goals of LRZ 3 electric utilities. The PV installed capacity cost is not commensurate with known installed cost and MISO gives very little weight to known projects that are being studied in MISO interconnection queue. Further, MISO should not justify the need for additional capital investment by counting economic benefits derived from accomplishing goals and avoiding risks that MISO is not required to nor burdened with achieving, such as decarbonization.

            Based on OCA’s review of LRTP Tranche 1, and the data available to OCA, there appears to be little consideration given to transmission alternatives that could have been used as the first option to forego the construction of additional transmission infrastructure and make more efficient use of existing transmission infrastructure. OCA understands that MISO has made comments in the past against the use of tools like ambient adjusted line ratings and dynamic line ratings for long-range transmission planning. See Comments of MidContinent Independent System Operator, Inc., Implementation of Dynamic Line Rating, FERC Docket No. AD22-5-000 (Apr. 25, 2022). However, a comparison of transmission solutions to non-transmission alternatives is necessary to ensure that all LRTP projects are the most cost-effective and is required by Order 1000. This comparison is important to OCA for two reasons. First, without a comparison to alternatives, it is unclear if the projects in Tranche 1 are cost-effective solutions. This is of particular importance to OCA since its constituents, as transmission customers, will ultimately pay for the projects proposed in Tranche 1. Second, any new transmission will be an additional burden on rural landowners. OCA receives constant feedback from rural landowners during the transmission franchising process and most landowners favor minimizing the construction of additional transmission. Non-transmission alternatives decrease the need for additional construction and the burden on landowners.

1. Is 2030 a realistic in-service dates for all projects? Projects will be competing against each other for materials, labor availability, and regulatory attention. Projects may need to be prioritized on importance.
2. MISO should take a public stance on if lines should be built double circuit capable. States will likely highly scrutinize this decision either way and the transmission owners and MISO need a unified stance. We base these comments on what we understand occurred for the CapX projects as well as one project we were not involved in some years back.
3. There is no mention of reactive support equipment or synchronous condensers previously referred to as under build. Does MISO still intend to have under build as part of Tranche 1?
4. Please add to the footnote in Table 1-1 that cost are subject to change based on feedback from the transmission owners. MRES would also like to remind MISO that we identified that some facilities did not fit in the assumed age/condition benefits section as the facilities were newly built.
5. Section 5: It is noted that thermal screening is done against 80% of rating. We feel the reason for doing so and any significance of 80% vs. 100% should be explained in the same section as it may otherwise be an easy target question to be raised as this report is leveraged when projects are before state commissions for permitting.
6. Page 56, “Reduced Resource Adequacy Needs” section. 2^nd paragraph starts with “the local serving entities”. Is the intended term is “load serving entities”?

DTE appreciates the opportunity to provide feedback to MISO on the Long Range Transmission Plan (LRTP) Tranche 1 Report.  DTE acknowledges that generation fleets, severe weather patterns, federal and state decarbonization goals, and electrification will bring a new set of challenges to the transmission system that will require more involved coordination and collaboration between MISO and its Stakeholders to explore transmission solutions that protect customer vulnerabilities to reliability and cost concerns.

While DTE supports the LRTP purpose, we have serious concerns.  DTE’s concerns are as follows:

1. The proposed postage stamp cost allocation should be re-evaluated in its application to the Tranche 1 projects as the current distribution of costs are inconsistent with the cost allocation principles outlined in FERC Order 1000. 
2. The assumptions that are included in the MISO Futures are outdated and should be reassessed regularly to determine if the scope included in the LRTP projects still align with utility build plans and load forecasts. 
3. The transparency in the LRTP modeling has failed and must be restored to provide stakeholder faith in project selection as information sharing throughout this process has lacked what’s needed for Stakeholder to thoroughly vet LRTP projects to ensure that the transmission build is cost efficient.

 I.  The proposed postage stamp cost allocation should be re-evaluated in its application to the Tranche 1 projects as the current distribution of costs are inconsistent with the cost allocation principles outlined in FERC Order 1000. 

As part of the transmission planning process, the cost associated with the LRTP projects should be allocated in a manner that is roughly commensurate with the estimated benefits as required in FERC Order 1000.  Application of a postage stamp cost allocation assumes that energy usage is highly correlated to project beneficiaries which may or may not be the case depending on the key drivers behind transmission expansion. 

In the case of the current portfolio of LRTP projects, the key drivers are changes within the generation fleet, severe weather patterns, federal and state decarbonization goals, and electrification.  Because these drivers are not inherently correlated to energy usage the postage stamp cost allocation is vulnerable to misalignment of cost and beneficiaries. 

An example of this can be seen when comparing the economic benefits that MISO has estimated for Zone 7 to the costs that have been allocated to Zone 7 and then comparing these results to other Zones within MISO.  Zone 7 has a benefit to cost ratio of 2.1 which is the lowest of all seven zones within the MISO Midwest Subregion and is one of two Zones that have a benefit to cost ratio below the total average (Zone 2 also has a B/C ratio below the average).  This suggests that Zone 7 has been allocated a proportionately greater share of the costs relative to the benefits when compared to other Zones.

 Under MISO’s current proposal, Michigan customers will get assigned $2.8B of LRTP costs. This is an additional $0.5B cost burden on Michigan customers compared to a beneficiary-based cost allocation using a pro-rata share of MISO calculated benefits to Local Resource Zones.

This example illustrates the disconnect between energy usage and beneficiaries.  Adoption of a “beneficiary pay” based methodology using a common set of benefits would align more with FERC’s cost allocation principles and minimize the risk of free ridership.  With the timeline of Tranche 2 approval tentatively scheduled for early 2023, MISO must aggressively work with Stakeholders to develop a “beneficiary pay” based cost allocation using a subset of common benefits that can be easily quantified.

II.  The assumptions that are included in the MISO Futures are outdated and should be reassessed regularly to determine if the scope included in the LRTP projects still align with utility build plans and load forecasts. 

MISO must establish a process in which it re-evaluates the assumptions that go into the MISO Futures.  The current set of assumptions within the MISO Future 1 scenario are driving the scope of the LRTP Tranche 1 projects.  The MISO Futures were finalized back in December of 2020 which suggests that any IRP related information would be predicated on IRP’s submitted prior to December of 2020.  Since that time there have been revisions to utility build plans, some of which could have material impacts to the assumptions built into the MISO Futures.  This increases the risk of an over or under built transmission system which creates sub-optimal results for customers. 

MISO should develop a cadence in which the assumptions that underlay the Futures are updated frequent enough to capture the most recent utility plans.  The annual Regional Resource Assessment that MISO publishes could be used as a reference to address changes to utility IRPs.

III.  The transparency in the LRTP modeling has failed and must be restored to provide stakeholder faith in project selection as information sharing throughout this process has lacked what’s needed for Stakeholder to thoroughly vet LRTP projects to ensure that the transmission build is cost efficient. 

As we appreciate the opportunity in shaping the electrical system of the future, we strive to ensure that our input is heard and incorporated into the studies and eventual outcome of the proposed plans. During this LRTP process, MISO shared the information when requested, however, data provided was fragmented and it has given the Stakeholders a puzzle to solve in order to create a customized process to insert the data into the PROMOD database model.

With respect to the starting point given to us, more time is needed to re-use the pieces of data provided to re-create the reference case vs change case comparison and step through all of the benefit metrics to gain understanding and provide valuable feedback, including potential alternatives.

The observed timeline below never met the ability for DTE to effectively validate models and propose alternatives.

• Aug-Nov/2021 - MISO’s deadline for providing alternatives by the Stakeholders on the LRTP projects
• August 2021 – February 2022 – DTE and many stakeholders repeatedly asked MISO for LRTP transmission models and associated criteria
• 2/11/2022 - Michigan LRTP Discussion between MISO and CMS/DTE/ITC
• 3/4/2022 – LRTP Tranche 1 transfer analysis results released
  
• 3/9/2022 - Tech meeting held at DTE request to discus PROMOD database structure and any other inputs necessary to perform the run of the reference case and the change case
• 3/14/2022 - MISO provided some partial information on the database build process for the transmission elements and committed to update the reference case databases and the RRFs csv
• 3/16/2022 - LRTP Reference database provided/updated for the y2030, y2035 and y2040
• 3/23/2022 - DTE asked for some more clarification and received additional pointers from MISO on how to establish a process for the transmission element import into the PROMOD change case runs
• 3/23/2022 – LRTP Tranche 1 voltage stability results released
  
• 4/5/2022 - Additional PROMOD inputs provided including the new event file for the y2030 and the csv file containing RRFs >= 5% dfax
• 4/13/2022 – 5/12/2022 - Substantive Feedback window
• 4/24/2022 – MISO LRTP Tranche 1 powerflow final models released
  

Throughout the LRTP planning process MISO has provided its modeling data to Stakeholders late and in a format that is very fragmented and difficult to analyze.  Working around these issues has been very time consuming and has impacted Stakeholder’s ability to conduct a thorough analysis of alternatives.   MISO’s reluctance to provide data to Stakeholders in a useable format limits the collaborative support that Stakeholders can provide throughout the process to ensure the most optimized transmission solutions are selected.  To improve this process, MISO should work more transparently and collaboratively with Stakeholders throughout the modeling process.  Specifically, MISO should conduct a series of technical meetings with Stakeholders with the intent of taking an in depth look into the LRTP modeling so that the inputs and methodologies of reliability and economic analysis are clear and easily replicable.

MISO must ensure that the scope of the alternative selection analysis is provided clearly to the Stakeholders. MISO must provide change case data inside the PROMOD specific database as a case and detailed direction for reusing the associated simulation files and results so that stakeholders can replicate them and provide effective feedback. Another recommendation is to have MISO provide all the inputs that go into benefit metric “X” and all the outputs that MISO generated; generating these metrics should also be easily repeatable by the Stakeholder.

Going forward for future tranches, there must be an overall process change so that the necessary materials are provided to the Stakeholders and a 90-day window given to provide alternatives feedback after MISO provides all models. MISO should consider adding another iteration in the timeline for the analysis/feedback of the alternatives as they are implemented from the various Stakeholders in the base case vs change case data.

IV.  Conclusion

In summary, there are several steps that MISO must take to allow the process to support the purpose behind long range transmission planning. 

First MISO must remove the postage stamp cost allocation from LRTP projects and immediately begin working with Stakeholders on developing a “beneficiary pay” based cost allocation predicated on a common set of benefits.  Easy to quantify benefits that are widespread across the MISO footprint should be targeted as the basis for cost allocation.  MISO and Stakeholders could then work to expand the list of benefits if needed and revise the cost allocation. 

Second, MISO must establish an annual cadence in which the MISO Futures are updated to reflect the most recent information.  The scope of LRTP projects that have not started construction should be revised to reflect the latest assumptions.

And last, MISO must work more openly and collaboratively with Stakeholders throughout the modeling process.  As mentioned, MISO should host a series of technical meetings with Stakeholders to review the LRTP modeling methodology along with the detail that supports the transmission expansion plan.

Otter Tail Power Company appreciates the opportunity to comment on MISO’s April 12, 2022, MTEP Report Addendum: Long Range Transmission Planning Tranche 1 Portfolio Report.  We have also submitted comments as one of the Certain MISO TOs but wanted to provide some additional commentary from our company’s perspective.

We strongly support MISO’s Long Range Transmission Planning effort and the portfolio of projects identified in Tranche 1.  These projects are urgently needed to maintain a reliable system during the ongoing resource transformation.  Furthermore, these transmission projects will also enhance the reliability of the grid to be better able to withstand more frequent extreme weather events in the future. 

Long-term planning necessarily involves uncertainty.  However, we view that the Tranche 1 portfolio represents a set of no-regrets transmission projects that have been developed through MISO’s proven long range transmission planning process that successfully produced the MTEP11 MVP portfolio. This process is held up by the industry as the premier model for long-range transmission planning. 

MISO has completed a robust analysis of the Tranche 1 projects confirming that the benefits will far exceed the costs of the projects.  Our customers, and customers throughout the MISO Midwest region, will benefit from the Tranche 1 projects providing a continued reliable system, enabling increased regional delivery of lower cost energy, and mitigating the risks of increasing severe weather events.  Based on our knowledge of the system and past studies that have been performed in our region, we feel confident the Tranche 1 projects will alleviate the short-term congestion that OTP has observed on our system and represent a portfolio of long-term, no regrets projects.  In conclusion, we support MISO's business case and recommendations for the LRTP Tranche 1 Portfolio.

The Entergy Operating Companies (Entergy Arkansas, LLC, Entergy Louisiana, LLC, Entergy Mississippi, LLC, Entergy New Orleans, LLC, and Entergy Texas, Inc) have jointly submitted feedback on the  DRAFT LRTP Tranche 1 Portfolio Report - Addendum to MTEP21 Report with Arkansas Electric Cooperative Corporation, Cleco Power, LLC, and Cooperative Energy via email to LRTP@misoenergy.org.