MISO Approves Plan for 215 New Midwestern Transmission Projects Amid EPA Rule Concerns

The Midwest Independent Transmission System Operator (MISO) on Thursday approved 215 new transmission infrastructure projects as part of the grid operator’s Transmission Expansion Plan 2011 (MTEP11). The projects include 17 transmission line projects that are estimated to cost as much as $5.2 billion to manage a “severe drop in planning reserve margins” that MISO has forecast could occur in the next years if pending environmental regulations proceed as planned.

MISO’s Board of Directors unanimously approved the MTEP11, a long-term regional plan that was developed during an 18-month process. The plan seeks to connect 2,700 MW of queued generation and lower the cost of delivered energy while enabling energy policy mandates in the 12 U.S. states and the Canadian province of Manitoba where MISO operates. “Board approval requires MISO’s transmission owners to use due diligence to construct the facilities approved in the plan,” the nonprofit regional transmission organization said in a statement.

The plan recommends 215 new transmission projects, including 17 industry-leading multivalue projects (MVPs). “Together with the previously approved MVP, the 17 MVPs alone will create $15.5 to $49.2 billion in net present value economic benefits over a 20 to 40-year timeframe. The MVP portfolio provides broad regional benefits commensurate with costs and also supports approved state and federal energy policy mandates in the MISO region,” MISO said.

“In total, the portfolio will deliver benefits in excess of 1.8 to 3.0 times its costs. For retail customers, that translates to $23 in benefits from lowered delivered energy costs for about $11 a year in investment—a 109 percent return.”

MVPs are expected to better transmit wind generation while minimizing distances from planned transmission to other fuel sources, aiding the region’s transition to new generation facilities. “This in turn allows the states within the MISO footprint to meet their renewable energy [goals] and ensure lower-cost generation is fully utilized in the wake of pending environmental regulations that could cause the simultaneous outage of 61,000 MW of coal-fired generation in the region,” MISO said.

MISO and four other regional grid entities in August asked the Environmental Protection Agency for some flexibility to give generators more time to comply with the agency’s new rules to keep some key units available to help power reliability. MISO said the EPA’s proposed mercury rule would, in particular, hit the MISO system the hardest because most work needed to comply with the rule would occur during the 2014/2015 timeframe.

“The timing for implementation of the EPA regulations is problematic, in part, because it takes three to four years to retrofit or to replace a power plant,” MISO Vice President of Transmission Asset Management Clair Moeller warned at a November Federal Energy Regulatory Commission (FERC) technical conference.

“MISO expects generation station retirements to eliminate all generation capacity above minimum capacity requirements. In aggregate the cost of compliance will be on the order of $30 billion,” she said.

The MISO markets had approximately 116,000 MW of generation and demand resources participating as of summer 2011. Of that capacity, 72,000 MW is coal-fired generation, and 62,000 MW of that coal capacity would require retrofit investments or replacement, Moeller warned.

“Ranges of retrofit costs vary depending on size, vintage and current air quality control equipment installed. It is expected that 28,000 MW will require fabric filters at an average cost of $150,000/MW, approximately 20,000 MW will require additional scrubber type control equipment with an average cost of nearly $450,000/MW, and with 13,000 MW expected to retire as the cost to retrofit these generation stations is the same or higher than the cost to replace them at nearly $667,000/MW.”

Reliability in the Midwest will be “severely challenged” throughout the implementation period of the proposed rules, she added. “The compliance time allowed by the proposed rule and the time required to accomplish the installation of new control equipment or capacity replacement is exactly the same, meaning owners of all these units must remove them from service simultaneously leaving inadequate generation resources to sustain reliable electricity supply.”

MISO would be forced to deny generator outage requests to ensure reliability, and “generation owners will thus face a conflict between complying with FERC tariff and NERC reliability requirements or EPA air quality rules,” she said.

In a separate filed response to questions from FERC Commissioner Philip D. Moeller, MISO urged the commission to direct regional transmission organizations to work together to ensure that physically available transfer capability across regions is accessible to those who need and can provide excess power. “The pending EPA regulations and potential impact on generator operations highlights the need for coordinated planning between generator owners and market transmission providers,” the filing states.

Sources: POWERnews, MISO, FERC, EPA