Cost Allocation Cost Allocation Proposals associated Proposals associated with MISO Transmission with MISO Transmission Expansion Expansion WIEG Board Meeting WIEG Board Meeting May 6, 2010 May 6, 2010 Presented by: Presented by: Kavita Maini, Principal Kavita Maini, Principal KM Energy Consulting, LLC KM Energy Consulting, LLC Protecting Y our Bottom Line Protecting Y our Bottom Line
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Cost Allocation Proposals associated with MISO Transmission Expansion WIEG Board Meeting May 6, 2010 WIEG Board Meeting May 6, 2010 Presented by: Kavita.
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Presented by:Presented by:Kavita Maini, PrincipalKavita Maini, Principal
KM Energy Consulting, LLCKM Energy Consulting, LLC
Protecting Your Bottom LineProtecting Your Bottom Line
Midwest Independent System Operator (MISO)
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MISO: 2010 Generation Capacity Breakdown
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Designated Capacity:131,284 MW
Demand: 104,288 MW
Reserve Margin:25.9%
2009 MISO Transmission Expansion Plan
Appendix A: Approved Projects ($903 M approved in 2009; $7.2 Billion to date)
Appendix B: Probable Projects, $1.5 Billion
Appendix C: Conceptual Projects, $23 Billion
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Current Cost Allocation Methodology
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Reliability Based Transmission Upgrades – Methodology results in localized allocation of costs with 20% socialization for lines 345 KV and above
Economic Based Transmission Upgrades – Based on economics (production costs and energy prices) with 20% socialization for lines 345 KV and above; benefit/cost threshold to be at least 3:1
Generator Interconnections – 345KV and above used to be 50% to generator, 40% to transmission owner, 10% socialized; Temporary solution (2009) 90% generator, 10% socialized to fix the “Otter Tail Problem”
Revisiting Cost Allocation
MISO needs to make a compliance filing on July 15, 2010 Provide a permanent solution to generation
interconnection related upgrades Resources located remotely from load result Now, even cost allocation methodologies associated
with reliability and economics open for debate and discussion
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Cost Allocation Principles and Methods
Beneficiaries /cost causers pay – License Plate High voltage benefits longer distances and
therefore, region wide benefits – Postage Stamp FERC was remanded on its approval of PJM’s
Postage Stamp method by Circuit Court of Appeals for 500 KV and above
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Current Initiatives Investigating Transmission Planning and Cost Allocation