LRTP Informal Feedback: Business Case Benefit Metrics (20230310)

In 2022 the TDU Sector provided comments on MISO’s LRTP Tranche 1 Business Case, as part of our Tranche 1 feedback that is included in the LRTP Tranche 1 Addendum to MTEP21 Appendix F (feedback summary, posted at https://cdn.misoenergy.org/MTEP21%20LRTP%20Tranche%201%20Portfolio626133.zip).  Our third comment noted our view that “MISO’s [benefit-estimation] methodology suffers from flaws that render its benefit estimates unreliable” and that our sector “believes that these benefits [that were considered in the Tranche 1 Business Case] should be evaluated with respect to consistent reference cases, and that development of appropriate consistent reference cases is required to produce valid benefit estimates.”  Based on the information presented at the March 10 LRTP workshop, we are concerned that MISO does not plan to address this issue for Tranche 2, and thus that Tranche 2 benefit calculations will be similarly flawed.

Comments from Midwest Industrial Customers (MIC)

Regarding LRTP Business Case Metrics

MIC appreciates the opportunity to provide feedback regarding MISO’s (a) preliminary proposed set of eleven benefit metrics as well as (b) proposed methodology for four metrics.  Once finalized, these metrics will be used to evaluate the business case for a Tranche 2 portfolio of projects. Specifically, MISO is seeking feedback regarding the following questions:

1. Is the set of eleven benefit metrics sufficient in scope to capture the value of regional transmission provided to MISO Midwest subregion? If not, what other metrics should be considered?

1. Do the analysis methods for the four benefit metrics discussed at the March 10^th workshop reflect distinct streams of value that are additive?

MIC provides feedback to these questions below.

1. Is the set of eleven benefit metrics sufficient in scope to capture the value of regional transmission provided to MISO Midwest subregion? If not, what other metrics should be considered?

MIC does not believe it is necessary to add more metrics.  Rather, it is critically important to ensure that there is no double counting or overlapping of benefits between the proposed metrics that have been identified in the first instance. As MISO provides the methodology for the various metrics, it should also incorporate the pertinent information to validate and ensure that benefits are not being double counted.  For instance, at present, it is not clear whether MISO is using a common reference case across all the metrics.  Failure to use a common reference case makes the analysis susceptible to double counting and over estimating benefits. Stakeholders including the End Use and Transmission Dependent Utilities Sectors expressed concerns about the use of inconsistent reference cases in the Tranche 1 benefit metrics in the May 12,2022 comments.[1]

1. Do the analysis methods for the four benefit metrics discussed at the March 10^th workshop reflect distinct streams of value that are additive?

This question is better answered after MISO has provided the information necessary to evaluate the methodology associated with all the benefit metrics -- this information is necessary to ensure that a consistent reference case is being utilized and benefits are not overlapping or double counted.  MIC would also appreciate MISO addressing the following:

1. With regards to the avoided risk of load shedding for extreme weather events, what about the risk that the transmission system itself may not be operational during an extreme weather event? Is it valid to just prescribe value for the avoided risk by utilizing expected unserved energy related indicators but assuming that the transmission system would withstand hurricanes and other extreme weather events? Also, since MISO is also considering another metric that contemplates resource adequacy savings, aren’t there overlapping of benefits? If there was a preference to cover more risks, wouldn’t resource adequacy requirements and related impacts cover this benefit?

1. With regards to capital costs savings associated with reduced losses, the reference case matters because without the long range transmission solution, utilities maybe building generation closer to load which would imply lesser losses compared to losses associated with connecting generation which is farther away from load.  Please explain MISO’s reference case.

1. With regards to decarbonization, once again, the reference case matters.  For instance, without the long range transmission, utilities would still be implementing their goals of reducing carbon.  So, the question is whether it is more cost effective to construct renewable generation or solutions to fulfill the carbon reduction goals closer to load (same reference case as identified in #2) or through the LRTP tranche 2 portfolio. Please explain MISO’s reference case.

While the above mentioned feedback focuses on the benefit metrics, MIC requests that MISO also investigate any unintended consequences or risks associated with building the LRTP portfolio.

Thank you for the opportunity to submit feedback. If you have any concerns, please do not hesitate to contact me either via email or the phone.  Contact information is listed below.

Kavita Maini

KM Energy Consulting, LLC (Consultant to MIC)

(262) 646-3981

kmaini@wi.rr.com

Is the set of eleven benefit metrics sufficient in scope to capture the transmission value proposed to the MISO Midwest subregion? 

Alliant Energy appreciates the opportunity to provide comments on MISO’s benefit metrics and thanks MISO for addressing this topic at the start of the LRTP tranche 2 process.  It is important for MISO to have robust and reasonable benefit metrics which are supported by stakeholders, in particular, by those representing the interests of customers who will ultimately incur LRTP costs.  As a threshold matter, Alliant Energy believes the 11 benefit metrics identified by MISO are sufficient in scope to capture the value from regional transmission development in the MISO North/Central region.  As a result, we do not see the need to add any additional benefit metrics.  Each proposed metric should be reviewed in detail with stakeholders and MISO should implement improvements to ensure the calculations are reasonable and do not result in double counting.  The TDU Sector has submitted comments regarding issues with the benefit metrics used with LRTP tranche 1 which MISO is also looking to use with tranche 2.  A good starting place for improving metrics would be for MISO to review the feedback from the TDU Sector (and others) on tranche 1 metrics and incorporate changes that address previous concerns raised.

If not, what other metrics should be considered? 

As noted above, Alliant Energy does not see a need to consider additional metrics and concerns have been raised by the TDU Sector regarding the accuracy and reasonableness of proposed metrics.

Do the analysis methods for the four benefit metrics discussed at the March 10 workshop reflect distinct streams of value that are additive?  

Based on the information which MISO has provided so far, the benefit metrics do not appear to reflect distinct streams of value that are additive.  As noted in the feedback submitted by the TDU Sector, a fundamental issue with MISO’s approach with benefit metrics is the lack of a consistent reference case to measure the impact and benefits of proposed projects.  Addressing this issue should be one of the first concerns addressed by MISO.  To do this, MISO should explore with stakeholders what is a reasonable reference case to measure the benefits of tranche 2 projects.  For example, MISO should consider with stakeholders the location, mix and timing of resources considered to be part of a reference case as well as the role alternatives could have in helping to address system needs.  Resolving this issue will be critical to ensuring the final set of benefit metrics and their calculations are reasonable.

Entergy Operating Company Informal Feedback on Tranche 2 LRTP Business Case Benefit Metrics

March 31, 2023

In the March 10, 2023, Long Range Transmission Planning (LRTP) Workshop, MISO continued discussion of proposed methods for calculating benefits for Tranche 2 transmission and invited stakeholders to submit informal feedback on the overall set of benefit metrics and the methodologies proposed for the four metrics discussed. 

The feedback request is specifically related to proposed methods for calculating benefits for Tranche 2 transmission projects, which will be located and cost-allocated exclusively in the MISO North and Central areas.  Because these projects will not affect MISO South, the Entergy Operating Companies[1] (Entergy) defer to MISO North and Central regulators and stakeholders with respect to the benefit metrics they may deem appropriate for Tranche 2 projects sited in and cost allocated to their region.  However, to the extent that these principles are considered for application beyond Tranche 2, the views set forth in the comments submitted by MISO South Transmission Owners[2] when MISO kicked off discussion on LRTP Benefits Determination and Cost allocation at the RECB WG in March 2022 continue to reflect Entergy’s positions on the questions recently posed by MISO relating to LRTP metrics.   

The Transmission Owners (TOs) appreciate MISO’s presentation at the 3/10/23 Long Range Transmission Planning (LRTP) Workshop about the benefit metrics that will be used in the Tranche 2 study and the opportunity to provide feedback. The metrics are a key part of the analysis of the portfolio and, as reflected in MISO’s tariff related to Multi-Value Projects (MVP), MISO has the ability to consider a broad set of benefits. The TOs support MISO expanding the set of metrics that will be used in Tranche 2 relative to Tranche 1 and exploring the various benefits that these sorts of projects will provide.

The TOs offer these comments in response to MISO’s questions.

Is the set of eleven benefit metrics sufficient in scope to capture the transmission value proposed to the MISO Midwest subregion? 

The MVP project classification in MISO tariff Attachment FF was drafted to provide future-proofed flexibility for subsequent MISO MVPs.  Among other benefits, the tariff specifies that MISO will quantify economic value from all MVP portfolios as provided by production costs, capacity loss savings, capacity savings from reduced PRM margins, long-term transmission savings resulting from displaced short-term transmission projects, and “[a]ny other financially quantifiable benefit to Transmission Customers resulting from an enhancement to the Transmission System and related to the provisions of Transmission Service.”

For LRTP Tranche 1, MISO calculated sub-regional benefits associated with six benefit metrics. MISO repeatedly emphasized to stakeholders that its choice of benefit metrics for Tranche 1, as well as its calculation of sub-regional benefits under each of such benefit metrics, were intentionally conservative. 

LRTP Tranche 2 will build upon the foundational, “no regrets” Tranche 1 portfolio with a more expansive portfolio of MVP projects that could include 765kV and HVDC – technologies that are not common currently in MISO. Given this, the TOs encourage MISO to explore metrics beyond those used for Tranche 1. The TOs stress the importance of continuing to ensure that the metrics used reasonably capture discrete benefits.   

Thus, the TOs believe the set of eleven benefits initially proposed by MISO appear appropriate to use in Tranche 2 and we encourage MISO to further consider what additional benefits these projects are likely to provide.

If not, what other metrics should be considered? 

The TOs suggest a couple of areas to explore for identifying additional metrics:

• Given the types of projects contemplated for Tranche 2 and operational conditions MISO has been experiencing (including extreme weather events), the TOs encourage MISO to explore developing metrics to measure the benefit of inter-regional transfer capability with SPP, PJM and other regions.
• In the 3/8/23 Planning Advisory Committee meeting, MISO spoke of the benefit of HVDC and 765 kV related to land-use per mile for a given amount of transfer capability compared to lower voltages. Given the importance of limiting the impact of transmission facilities to stakeholders, the TOs encourage MISO to develop a metric that captures the benefit of efficient use of right-of-way.

Do the analysis methods for the four benefit metrics discussed at the March 10 workshop reflect distinct streams of value that are additive?

The TOs believe that the four metrics discussed in the 3/10/23 LRTP workshop – avoided risk of load shedding for extreme weather events, avoided transmission investment, capital cost savings from reduced losses, and decarbonization – reflect distinct streams of value that are likely to be provided by Tranche 2 projects. Note that three of these metrics were used in the Tranche 1 study and they identified substantial value from the portfolio.

It is important that MISO attempt to capture all meaningful benefits that the Tranche 2 projects are expected to provide so that MISO stakeholders are able to gauge their true value. No part of the MISO footprint is insulated from the risks posed to the grid by resource fleet change, load growth through electrification, and increasingly frequent and severe weather events. And the TOs believe the expanded set of metrics MISO is developing reflect those conditions and the types of benefits Tranche 2 is likely to provide.

The Entergy Operating Companies (Entergy Arkansas, LLC, Entergy Louisiana, LLC, Entergy Mississippi, LLC, Entergy New Orleans, LLC, and Entergy Texas, Inc.) and Cleco do not join the TOs in these comments, as the information presented at the 3/10/23, Long Range Transmission Planning (LRTP) Workshop related to the methods that would be used to calculate the benefits of Tranche 2 transmission projects, which will be located and cost-allocated exclusively in the MISO North and Central areas, and will therefore not affect MISO South. To the extent that these principles are considered for application beyond Tranche 2, the views set forth in the comments submitted by the MISO South Transmission Owners when this effort was kicked off for discussion on LRTP Benefits Determination and Cost allocation at the RECB WG in March of 2022 continue to reflect of our positions on these questions.  (See:  https://cdn.misoenergy.org/2022028%20RECBWG%20Granular%20Benefits%20Identification%20and%20Cost%20Allocation%20-%20MISO%20South%20TOs623771.pdf)

            The Iowa Office of Consumer Advocate (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). 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. OCA looks for opportunities to work with the incumbent utilities in Iowa to better understand how changes implemented by MISO impact their operations and planning efforts. However, OCA believes that the current long-range transmission planning process would be improved and provide more open and transparent participation if the transmission owners (TOs) would provide or identify support for some of the categories of benefits included in the LRTP business case, particularly as relates to avoided local CapEx and transmission investment. OCA commends MISO for providing the opportunity up front to comment on and impact the development of the benefit metrics that will ultimately be used in the Tranche 2 transmission planning process. Regarding the set of eleven benefit metrics proposed by MISO, OCA advocates for the development of new benefits metrics for each new Tranche of LRTP projects given the concerns that have been raised by numerous stakeholders and the fact that the benefits used to justify the Tranche 1 LRTP projects, the same benefits used as a starting point to justify the Tranche 2 LRTP projects, have not been proven to be prudent, which would not happen until after all projects are put in-service. Additionally, OCA agrees with other stakeholders that it is imperative that MISO establish consistent reference case assumptions to evaluate each metrics and produce valid benefit estimates. With this context, OCA offers the following feedback concerning the benefit cost ratios used in the LRTP Tranche 2 business case and the continued lack of consideration given for transmission alternatives.

            OCA is concerned that the benefit cost ratios for the LRTP Tranche 2 projects will be overstated just as was the case for Tranche 1. MISO’s LRTP planning analysis claims economic benefits from avoided local resource investment that should not be included given that the benefits would be based on hypothetical avoided capital costs that have not been shown to be realistic or logical. This category of benefits has represented a large share of LRZ 3 benefit metric in the LRTP Tranche 1 business case analysis. LRTP Tranche 1 benefits analysis showed the benefits associated with avoided capital costs of local resource investments was actually based on LRTP enabled capacity, not avoided projects. Moreover, MISO’s calculation of the LRZ 3 levelized avoided capital cost of local resources assumed an unreasonable amount of resource deployment (approximately three gigawatts of Solar and/or Solar + Storage) that was not supported or corroborated by the near or midterm goals of LRZ 3 electric utilities. The PV installed capacity cost was also not commensurate with known installed cost and MISO gave very little weight to known projects that are being studied in the MISO interconnection queue, thus demonstrating the inconsistencies in the assumptions used for Tranche 1 benefits. MISO should not be justifying the need for additional capital investments by counting economic benefits derived from accomplishing goals and avoiding risks that MISO is not required to nor burdened with achieving, such as decarbonization.

            OCA also has a concern with counting cost savings benefits associated with re-using existing right-of-way for LRTP projects. MISO calculates this benefit based on LRTP projects offsetting the costs of age and condition replacement of aging facilities that would not be required because of the construction of LRTP projects that use the same right-of-way. Transmission investment is actually not being avoided since a known issue will need to be addressed, whether it is for age and condition, reliability, congestion or load growth. MISO attempted to justify this benefit through an example showing facility selection for calculation of avoided transmission investment, but the total calculated avoided transmission investment still included costs that will be incurred by the LRTP projects that re-use the existing right-of-way, thus again over-stating a presumed benefit.

            Finally, there appears to still be little, if any, 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. LRTP Tranche 2 business case benefits include capacity costs savings from reduced losses as a result of transmission expansion that completely ignores transmission alternatives that should have been explored first. MISO has expressed opposition to 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 required by Order 1000. With the ever-increasing number of costly transmission projects, the value of such a comparison is growing for two reasons. First, without a comparison to alternatives, it is unclear if the projects in Tranche 2, as was also the case in Tranche 1, will be 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 2. 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.

WPPI provides responses to MISO's questions as follows:

Is the set of eleven benefit metrics sufficient in scope to capture the value of regional transmission provided to MISO Midwest subregion? If not, what other metrics should be considered?

• We do not see the need to add any specific benefit metrics.
• We suspect there is significant overlap between some of the metrics MISO proposes, given the specific methodologies MISO proposes to employ.
• We do not understand all of the Future Discussion metrics MISO refers to in its March 10 presentation, but we look forward to future clarification.

 Do the analysis methods for the four benefit metrics discussed at the March 10^th workshop reflect distinct streams of value that are additive?

• Based on the information presented to date, No
• What is necessary to ensure distinct streams of value that are additive is to measure all benefits with respect to a common reference.  It appears MISO is not planning to use a consistent, common reference for all metrics.  Specifically, as described in the March 10 LRTP Workshop presentations, it appears that MISO plans to assess Avoided Risk of Load Shedding by assuming identical resource mixes.  In contrast, MISO proposes (it appears) to consider very different resource mixes for the purpose of calculating Decarbonization benefits. 
• This will not yield valid results for the total benefit.
• Moreover, neither of the resource mixes described above will be consistent with what we expect MISO to use (based on Tranche 1 analysis) to calculate either the Avoided Capital Cost of Local Resource Investment or Congestion and Fuel Cost Savings.  It is not valid to add together benefits calculated on the basis of very different reference cases.
• MISO proposes a metric to assess Avoided Risk of Load Shedding for Extreme Weather Events.  MISO’s description of the methodology appears to assume that generator-outage correlations are not considered in MISO’s Resource Adequacy process.  Our understanding, in contrast, is that MISO has incorporated correlated temperature-related thermal-resource outage modeling in its PRPR calculations.  This causes us to question the appropriateness of MISO’s proposed benefit calculation.
• We have no material concerns around the Avoided Transmission Investment metric as it was applied for Tranche 1, which we expect to be substantially similar to the Tranche 2 approach.

ENVIRONMENTAL SECTOR’S INFORMAL FEEDBACK ON LRTP TRANCHE 2 BUSINESS CASE BENEFIT METRICS

A.  Is the set of eleven benefit metrics sufficient in scope to capture the transmission value provided to MISO Midwest subregion?

MISO identified the following 11 benefit metrics at its March 10, 2023 LRTP Workshop 

1. Avoided risk of load shedding for extreme weather events 

2. Avoided transmission investment

3. Capital cost savings from reduced losses

4. Decarbonization

5. Resource adequacy savings

6. Avoided capital cost of local resource investment

7. Congestion and fuel savings

8. Production cost savings due to reduced energy losses

9. Production cost savings from facility outage impacts

10. Ramping flexibility for variability of renewables

11. Reliability benefits

We applaud MISO’s continuing efforts to capture all of the benefits provided by transmission and especially applaud the addition of new metrics.  

The Environmental Sector historically has provided additional metrics to those identified by MISO and list those metrics here:  

1. Wheeling out revenues, which capture some transmission upgrades, will increase transfer capabilities to neighboring regions and this increases wheeling revenues that pay for some of the project’s costs

2. Market-to-Market Payment Cost Savings

3. Environmental justice considerations

4. Public health benefits including air pollution emissions

5. Increases in competition

We recognize that some of these benefits are difficult to monetize, and therefore, may not be appropriate for calculating the benefit-to-cost ratios.  Nevertheless, they are benefits brought by transmission that should be somehow recognized in MISO’s business case analysis.  

We also note that FERC released a list of benefit metrics in its April 21, 2022 Notice of Proposed Rulemaking on Transmission Planning and Cost Allocation.  Docket No. RM21-17-000 (NOPR).  FERC noted that not considering, among other things, a broader set of benefits could result in unjust and unreasonable and unduly discriminatory and preferential rates. NOPR ¶¶ 35, 53-55.  FERC’s list of proposed metrics are as follows: 

1. avoided or deferred reliability transmission projects and aging infrastructure replacement; 

2. either reduced loss of load probability or reduced planning reserve margin; 

3. production cost savings; 

4. reduced transmission energy losses; 

5. reduced congestion due to transmission outages; 

6. mitigation of extreme events and system contingencies; 

7. mitigation of weather and load uncertainty; 

8. capacity cost benefits from reduced peak energy losses; 

9. deferred generation capacity investments; 

10. access to lower-cost generation; 

11. increased competition; and

12. increased market liquidity.  

NOPR ¶ 184.  The NOPR then proceeds to describe how each of these metrics can be calculated.  We urge MISO to add any metrics that are included in FERC’s list that are not already captured by MISO’s metrics.  

B.  If not, what other metrics should be considered?

1. Air Pollution (NOx, SO2, and PM2.5) Reduction 

MISO’s inclusion of decarbonization as a benefit metric in evaluating Tranche 1 was a watershed moment and the Environmental Sector applauds MISO’s valuation of carbon reductions. Decarbonization not only yields benefits by reducing greenhouse gas emissions, but it also results in immediate and local reductions of criteria air pollutants. Pollutants that can be reduced from decarbonization of electricity generation include NOx, SO2, and PM2.5, which are federally regulated due to their impact on human health. The concrete and quantifiable benefits to public health of air pollution in the MISO region should be included as a metric when calculating benefits for Tranche 2 transmission. 

Exposure to fine particulate matter (PM2.5) causes cardiovascular and respiratory health impacts, including 100,000-200,000 premature deaths in the U.S. every year and is a top environmental risk factor for disease. But the burden of breathing polluted air does not fall equally. People of color are exposed to higher PM2.5 concentrations from non-coal electric generation and Black communities are exposed to higher pollution levels from both coal and non-coal electric generation.

Epidemiological studies have found no evidence of a threshold below which PM2.5 does not pose a health risk. Recent studies even suggest that the relationship between cardiovascular mortality and PM2.5 exposure is supralinear at lower concentrations, indicating that exposure reductions could potentially have outsized health benefits at lower exposure levels.Even as the U.S.’s air becomes cleaner, every MWh of decarbonized electricity generation will have lasting benefits for public health. 

Decarbonized electricity also results in the reduction of NOx and SO2 emissions, both of which have human health impacts and can form secondary PM2.5. Researchers have found that some of the largest potential health benefits could occur in the Upper Midwest (a region that encapsulates much of MISO North) with renewable energy deployment due to the reduction in SO2 emissions that form secondary PM2.5.

Integrating emissions output from production cost models with air quality models is a method already used to quantify air quality and health co-benefits of decarbonization. For the decarbonization metric, MISO estimates avoided CO2 emissions from production cost models, and a similar first step could be taken for this avoided air pollution metric. We propose that MISO follow the air quality model integration approach to quantify the air quality and health benefits from reducing air pollution. We offer a variety of methodologies to quantify ambient air pollution concentrations changes and resulting public health benefits. 

a.     Chemical transport model (CTM)

CTMs are state-of-the-science air quality models that simulate atmospheric conditions and chemical reactions given emissions and meteorological data inputs. The Community Multiscale Air Quality Modeling System (CMAQ) and the Comprehensive Air Quality Model with Extensions (CAMx) are examples of these gold standard models that are used in a regulatory context in the U.S. To quantify the monetized public health co-benefits would require pairing the CTM’s outputs with U.S EPA’s Environmental Benefits Mapping and Analysis Program (BenMAP), which calculates health effects resulting from changes in ambient PM2.5 and ozone concentrations.

CTMs are computationally expensive, require extensive expertise, and take time to set up and run. If MISO does not already have air quality modeling expertise, we recommend MISO adopt one of the other two air pollution co-benefits quantification methods proposed. 

b.     Reduced-form models (RFM)

RFMs are air quality models that incorporate atmospheric chemistry and transport in estimating ambient pollution concentrations, however they often use source-receptor matrixes and simplified atmospheric chemistry. Most RFMs only quantify ambient PM2.5 concentrations, which reduces computational complexity and associated costs while still capturing most of the health impacts from reduced air pollution. Furthermore, a report for the U.S. EPA found that RFMs and CTMs have best agreement on point source scenarios with non-ground level emissions, essentially EGUs. As such, we support the use of RFMs in quantifying the air quality reduction benefits from Tranche 2 transmission.

Examples of RFMs include the Intervention Model for Air Pollution (InMAP), the Estimating Air pollution Social Impact Using Regression (EASIUR) model, the Air Pollution Emission Experiments and Policy analysis (APEEP) model, and the EPA’s CO-Benefits Risk Assessment (COBRA) screening tool. These models have differences in resolution, model performance, and pre-/post- processing requirements, which MISO could evaluate.  

c.     Apply a benefit-per-ton estimate

This method is the most simplistic of the three proposed, but it most aligns with MISO’s previous and proposed methodology of quantifying decarbonization benefits from reducing CO2 emissions. The U.S. EPA has calculated sector-based PM2.5 reduction benefit per ton estimates that would be appropriate for MISO to use (Table 1).

 Table 1. Benefit per ton of reducing PM2.5 or Ozone Precursors in 2025 per U.S EPA

For EGUs, the EPA has also developed benefit-per-ton and incidence-per-ton estimates for each of the 48 contiguous states. These updated estimates would allow MISO to incorporate the regional and state-specific differences in air pollution health impacts without deploying air quality models.

2. Increased Competitiveness in Power Markets

At least one transmission owner, FERC and the IMM use the Herfindahl-Hirschman Index (HHI) to evaluate how a transmission line may increase competition in power markets in its applications before its state commission. (In its NOPR, FERC recommended that “increased competition” be a metric and explained potential calculations. NOPR ¶¶ 184, 219-225.)  According to the TO, the HHI is a commonly accepted measure of market concentration. It is calculated by squaring the market share of each supplier competing in the market and then summing the resulting numbers. The HHI takes into account the relative size and distribution of the suppliers in a market and approaches zero when a market consists of a large number of suppliers of relatively equal size. The HHI increases both as the number of suppliers in the market decreases and as the disparity in size among those suppliers increases.   FERC’s NOPR provides suggested methods to quantify competitiveness.  NOPR ¶¶ 221-224.

C. Do the analysis methods for the four benefit metrics discussed at the March 10th workshop reflect distinct streams of value that are additive?

MISO discussed the following four benefit metrics in depth at its March 10th LRTP Workshop:  

1. Avoided risk of load shedding for extreme weather events 

2. Avoided transmission investment

3. Capital cost savings from reduced losses

4. Decarbonization

Yes, the Environmental Sector believes these four benefit metrics reflect distinct streams of value, are additive, and are not duplicative of each other. However, there are several outstanding questions that stakeholders will need clarity on to fully understand MISO’s proposed methodology and to fully support MISO’s approach. 

Avoided Risk of Load Shedding

With respect to MISO’s proposed methodology for calculating the Avoided Risk of Load Shedding for Extreme Weather Events, it is noteworthy that MISO is proposing the transition to a methodology that leverages “probabilistic methods”. While we generally support and encourage MISO to transition to more robust methods for incorporating the risk of extreme weather events, we request a stakeholder workshop on MISO’s proposed probabilistic methodology and how that impacts MISO’s assessment of extreme weather risks. As we have noted in previous comments and presented to MISO stakeholders, the extreme weather risks confronting the MISO system are varied - each with different risk profiles and different probabilities. We are, therefore, deeply curious as to whether, and how, MISO’s probabilistic approach captures the scope of extreme weather events and the variable nature of both intensity and frequency. All MISO stakeholders would benefit from a deeper discussion on the details of MISO’s proposed methodology and we encourage MISO to schedule a stakeholder workshop to present its proposed methodology.

MISO’s March 10th presentation also did not provide clarity on the range of values of lost load that MISO proposes to use in the revised benefit metric. We request that MISO confirm its intent to continue using the range of LOL values it used for Tranche 1 or provide additional details to MISO stakeholders, with an opportunity for comment, on any proposed revisions to this range of values.   

2.  Decarbonization

On slide 13 of the Business Case presentation, MISO indicated that it is using the MN PUC lower-band social cost of carbon valuation as its metric for MISO’s business cases analysis. However, the value of $13.63 per metric ton cited by MISO in this presentation is no longer valid because of a new law enacted in MN earlier this year, which in part repeals the prior social cost of carbon calculations used by the MN PUC and replaces it with the values used in the September 2022 EPA draft report on the social cost of greenhouse gasses, and which will be updated to match the calculations used in the final version of the same report. The lower-band social cost of carbon used in the EPA report started at $120 per metric ton in 2020, increasing to $140 per metric ton by 2030.

As a result, we believe that the value used in MISO’s presentation is no longer valid for its business case analysis, and that MISO will need to determine a new social cost of carbon for use in LRTP tranches. We look forward to working with MISO and other stakeholders to establish a new social cost of carbon to be used portfolio-wide for LRTP.

Mississippi Public Service Commission Feedback Regarding

LRTP Business Case Benefit Metrics (20230310)

MISO Requested Feedback Statement:

In the March 10, 2023, Long Range Transmission Planning (LRTP) Workshop, MISO continued discussion of proposed methods for calculating benefits for Tranche 2 transmission.  Stakeholders may submit informal feedback on the overall set of benefit metrics and the methodologies proposed for the four metrics discussed by March 31.  In your response, please also consider the following questions: 

Is the set of eleven benefit metrics sufficient in scope to capture the transmission value proposed to the MISO Midwest subregion?

If not, what other metrics should be considered?

Do the analysis methods for the four benefit metrics discussed at the March 10 workshop reflect distinct streams of value that are additive? 

MPSC Feedback:

First, as MISO has explicitly stated, the proposed benefit metrics being discussed are exclusively for Tranche 2 LRTP projects.  Since (i) Tranche 2 projects will be located and cost-allocated exclusively in the MISO North and Central areas, and will therefore not affect MISO South, and (ii) MISO South regulators are developing a cost allocation and benefit metrics that will apply specifically to Tranche 3 projects, which will be located and cost allocated exclusively in MISO South, then the MPSC defers to MISO North and Central regulators and stakeholders as to which business metrics they deem appropriate for Tranche 2 projects in their region and jurisdictions.

Second, the MPSC reminds MISO that OMS cost allocation principle No. 2 requires that any metric used to justify and cost-allocate a project must be accurate, granular, quantifiable, capable of replication, non-duplicative, and forward looking.

Comments

of the

Association of Businesses Advocating Tariff Equity (ABATE),

Illinois Industrial Energy Consumers (IIEC),

Louisiana Energy Users Group (LEUG),

Texas Industrial Energy Consumers (TIEC),

Coalition of MISO Transmission Customers (CMTC),

and

NIPSCO Large Customer Group (NLCG)[1]

LRTP Informal Feedback: Business Case Benefit Metrics

(20230310)

March 31, 2023

ABATE, IIEC, LEUG, TIEC and CMTC, as representatives of the End-Use Customers (EUC) Sector, and NLCG appreciate this opportunity to provide comments to MISO.  

We are encouraged by MISO exploring benefit metric issues earlier rather than later in the LRTP Tranche 2 process.  For LRTP Tranche 1, we felt the development of benefit metrics was rushed at the tail end of the stakeholder process.  In addition, as MISO will recall, and as is documented in the May 12, 2022 substantive comments of the Eligible End-Use Customer Sector that were memorialized in Appendix F of the MTEP21 Addendum Report[2], we had a number of concerns with respect to the benefit metrics MISO used for the LRTP Tranche 1 transmission projects overstating the forecasted benefit of those projects.  By starting the conversation with stakeholders earlier for LRTP Tranche 2, a better opportunity will be provided to address stakeholder concerns with respect to the benefit metrics MISO used for Tranche 1 such that those metrics can be modified to address stakeholder concerns before being applied to LRTP Tranche 2.  In addition, we believe further development, refinement and expansion of the benefit metrics is a critical input to the current discussions before the MISO RECBWG and OMS CAPCOM regarding adding more granularity to the cost allocation for LRTP transmission projects.

During the March 10, 2023, Long Range Transmission Planning (LRTP) Workshop, MISO invited informal feedback by March 24, 2023[3] on MISO’s preliminary proposed overall set of eleven benefit metrics and the methodologies proposed for the four metrics specifically discussed by MISO at the March 10 workshop.  In particular, MISO encouraged stakeholders to address the following:

• Is the set of eleven benefit metrics sufficient in scope to capture the transmission value proposed?

• If not, what other metrics should be considered?

• Do the analysis methods for the four benefit metrics discussed at the March 10 workshop reflect distinct streams of value that are additive?

MISO’s preliminary proposed list of eleven benefit metrics is as follows:

1. Congestion and Fuel Savings

2. Avoided Capital Cost of Local Resource Investment

3. Avoided Transmission Investment

4. Resource Adequacy Savings

5. Avoided Risk of Load Shedding for Extreme Weather Events

6. Decarbonization

7. Capital Cost Savings from Reduced Losses

8. Production Cost Savings Due to Reduced Energy Losses

9. Production Cost Savings from Facility Outage Impacts

10. Ramping Flexibility for Variability of Renewables 

11. Reliability Benefits

MISO used proposed metrics #1 through #6 for LRTP Tranche 1.  Application of Metrics #7 through #11 to a LRTP tranche would be new.

MISO in its March 10 workshop presentation focused on presenting MISO’s preliminary proposal for Metrics #3 (Avoided Transmission Investment), #5 (Avoided Risk of Load Shedding for Extreme Weather Events), #6 (Decarbonization) and #7 (Capital Cost Savings from Reduced Losses).

However, MISO committed to future stakeholder discussion on the remaining seven metrics that MISO has preliminarily proposed (Metrics #1, #2, #4 and #8 through #11).

Preliminarily, we do not have any conceptual issue with proposed Metrics #1 through #10 and preliminarily believe they may be sufficient to measure the forecasted benefit of any transmission projects proposed for LRTP Tranche 2. 

We oppose Metric #11, Reliability Benefits, because it is vague and likely duplicative of proposed Metric #5.  We are not conceptually opposed to considering additional reliability metrics proposed by MISO or other stakeholders, provided however that any such additional proposed reliability metrics are specific, non-speculative, quantifiable and not duplicative of other proposed metrics.

With respect to the proposals that MISO provided in its March 10 workshop presentation for Metrics #3 (Avoided Transmission Investment), #5 (Avoided Risk of Load Shedding for Extreme Weather Events), #6 (Decarbonization) and #7 (Capital Cost Savings from Reduced Losses), we do not have any initial concerns with respect them, but may later have concerns with certain aspects of them depending on how MISO further fleshes out the details for these four proposed metrics.  We would also note that, MISO’s proposal with respect to #5 (Avoided Risk of Load Shedding for Extreme Weather Events), which would use a probabilistic approach involving forecasted Expected Unserved Energy (EUE) reductions in each Local Resource Zone, preliminarily appears to be a significant improvement over the approach MISO used for LRTP Tranche 1 for this metric and may lend itself toward more granular cost allocation.   As we detailed in our May 12, 2022 substantive comments that were memorialized in Appendix F of the MTEP21 Addendum Report, MISO’s approach for this metric for LRTP Tranche 1 greatly overstated the magnitude of this benefit that was forecasted to be provided by LRTP Tranche 1 transmission projects.

To conclude, we oppose Metric #11, Reliability Benefits, and we urge MISO to devote the resources necessary to promptly fully flesh out and vet with stakeholders its proposed Metrics #3, #5, #6 and #7.  In addition, we urge MISO to devote the resources necessary to promptly develop proposals for its remaining proposed metrics, other than proposed Metric #11, and then promptly fully flesh out and vet those proposals with stakeholders as well.  This will help to ensure any stakeholder concerns with the proposed metrics are resolved well before LRTP Tranche 2 is presented to the MISO Board of Directors for approval.  It would also allow this work to serve as an input into the cost allocation discussions that are currently taking place in the MISO RECBWG and OMS CAPCOM.

If you have any questions or concerns regarding the above comments, please do not hesitate to contact any of the following representatives:

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

Ken Stark

McNees Wallace & Nurick LLC (for CMTC)

(717) 237-5378

kstark@mcneeslaw.com

MidAmerican Energy supports MISO effort in calculating benefit metrics consistent with the benefit metrics calculation of Tranche 1 projects