The document discusses transmission planning in the Midcontinent Independent System Operator (MISO) region. It summarizes MISO's value-based transmission planning process, which focuses on identifying transmission projects that maximize economic benefits while maintaining reliability. The document outlines the conditions needed for increased transmission buildout, including policy consensus on renewable energy targets, approval of a cost allocation mechanism, and demonstration of a robust business case for proposed projects. It provides examples of transmission portfolios, like the Multi Value Project portfolio, that were recommended based on this planning process.

1. Transmission Planning in
an RTO Environment
JT Smith
9/16/2011

2. The continuing growth of the MISO’s value proposition
depends on transmission expansion
1600
Benefit by Value Driver1 $605-$673 ($254)
(in $ millions)
1400
$1,253-
1,634
1200
1000
$34-$42
$546-$604
800
$648-$874
600
400
$322-$482
200
0
Improved Reliability Market Commitment Wind Integration Benefits Driven by Midwest ISO Cost
MISO Cost Total Net Benefits Adjusted Total Net
and Dispatch Load / Supply Structure
Structure Benefits
Balance
1Figures shown reflect annual benefits and 2
costs for 2010

3. MISO Planning Objectives
Fundamental The development of a comprehensive expansion plan that meets
Goal reliability needs, policy needs, and economic needs
• Make the benefits of an economically efficient energy market
available to customers by providing access to the lowest electric
energy costs
MISO • Provide a transmission infrastructure that safeguards local and
Board of regional reliability and supports interconnection-wide reliability
Director • Support state and federal energy policy objectives by planning for
Planning access to a changing resource mix
Principles* • Provide an appropriate cost mechanism that ensures the
realization of benefits over time is commensurate with the
allocation of costs
• Develop transmission system scenario models and make them
available to state and federal energy policy makers to provide
context and inform the choices they face
* As modified and approved by MISO Board of Directors System Planning Committee 3
5/16/2011; pending full board approval

4. MISO’s transmission planning process is focused on minimizing
the total cost of delivered power to consumers: energy, capacity
and transmission
High Capacity Cost High Transmission Cost
Low Transmission Cost Low Capacity Cost
Goal
Minimum Total Cost:
Energy, Capacity and
Transmission
Total
Cost ($)
H Capacity Cost L
L Transmission Cost H

5. Planning Model Evolution
In order to achieve its planning objectives, MISO
has transformed its transmission expansion planning model;
this process will continue to mature as experience is gained
Reliability-Based Model Value-Based Model
• Focused primarily on grid • Focused on value while maintaining
reliability reliability
• Typically considers a short time • Reflects appropriate project time
horizon scales
• Seeks to minimize transmission • Seeks to identify transmission
build infrastructure that maximizes value
• Identification of the comprehensive
value of projects
5

6. MISO Transmission Expansion Plan (MTEP)
• The MTEP is the culmination of all
Top Down Planning planning efforts performed by
MISO during a given planning
cycle
• This planning process is
Inter- consistent with the Board of
Policy
Assessment
MTEP connection
Queue Directors Planning Principles
• Each of the four pillars of the
MISO Planning Approach informs
the other, resulting in a fully
integrated view of project value
inclusive of reliability, market
Bottom Up Planning efficiency, public policy, and other
value drivers across all planning
horizons
6

7. MISO Value Based Planning
STEP 1: MULTI-FUTURE
STEP 7: COST ALLOCATION
REGIONAL RESOURCE
ANALYSIS
FORECASTING
• Objective of value based
planning is to develop a
wide range of future
STEP 2: SITE-GENERATION
AND PLACE IN POWERFLOW scenarios
MODEL
STEP 6: EVALUATE
– The “best” transmission plan
CONCEPTUAL TRANSMISSION
FOR RELIABILITY
may be different in each
STEP 3: DESIGN CONCEPTUAL
policy-based future scenario
TRANSMISSION OVERLAYS BY
FUTURE IF NECESSARY
– The transmission plan that is
the best-fit (most robust)
against all these scenarios
should offer the most future
STEP 4: TEST CONCEPTUAL STEP 5: CONSOLIDATE & value in supporting the future
TRANSMISSION FOR SEQUENCE TRANSMISSION
ROBUSTNESS PLANS resource mix
7

8. Stakeholder Process
• FERC Order 890 Provides for Open and
Transparent Planning
• Order 890 Planning Principles:
• Coordination • Comparability
• Openness • Dispute Resolution
• Transparency • Regional Participation
• Information Exchange • Congestion Studies
8

9. Conditions Precedent to Increased
Transmission Build
9

10. Required: Policy Consensus
Current State Renewable Portfolio Standards
As of 07/27/2011
• Renewable Portfolio
Standards passed by all
MISO states except
Kentucky
• Proposed federal
legislation would drive
additional homogeneity
around resource
requirements
– Possible National
Renewable Portfolio
Standard of 15 - 20%
– Carbon Reductions
• Increasing number of
states with demand
response and energy
efficiency programs
Planned and Existing Wind as of 3/28/3011
10

11. Required: Cost Allocation and Recovery Mechanism
The cost allocation goal is
Multi Value Projects – A fair system
– Get transmission built to
Regional address a wide variety of
goals
– Maintain the MISO Value
Proposition
• Reliability (RECB I) State participation in the
Local • Market Efficiency (RECB II) process reduces recovery
• Generator Interconnection
risk to the extent
Projects – Investments are deemed
to be in the public interest
• Other Direct Assigned
and
Projects
– The cost allocation is seen
as “fair”
11

12. Required: Robust Business Case
• The following slides will walk through the
RGOS/MVP process that utilized the MISO
Value Based Planning Process as a framework
for transmission development
12

13. As an increasing number of renewable energy mandates were
passed by MISO states, analyses were performed to determine a
least cost generation siting methodology
Energy Zone Siting Approaches and Costs
The least-cost approach to generation siting, when both
generation and transmission capital costs are considered, is 13
a combination of local and regional generation locations.

14. This methodology resulted in a set of energy zones
which were used as the locations for incremental
generation in continuing analyses
Incremental Energy Zones
These energy zones were created by balancing relative wind
capacities along with distances from natural gas pipelines and 14
existing transmission infrastructure

15. Native Voltage Alternative
15

16. 765 kV Voltage Alternative
16

17. How Do You Decide On a Strategy?
• Robustness testing
– How does an alternative perform in a variety of future scenarios?
– Are significantly greater economic benefits projected in one case
over the other?
• Faith based scenario evaluation
– What would you have to believe?
– Actively test important assumptions
• Delay choosing as long as possible
– Without jeopardizing legal requirements
– Without risking wasted investment
17

18. What Would You Have To Believe…
• For the higher mileage lower voltage strategy to be
superior ?
• Energy policies will not expand beyond the current laws, thus the
actual construction will “most likely” stop short of full
implementation
• For the higher voltage lower mileage strategy to be
superior?
• Increasingly aggressive Energy Policy objectives will significantly
expand the objective and thus providing a more robust system
up front leads to significant flexibility and saved time
18

19. Should We Wait to Build Until Consensus
on Strategy is Achieved?
• No - we can delay decision – for a bit
- by making a set of investments with
relatively low risk/reward ratio
• Multi Value Project portfolio
candidates would meet criteria such
as the following:
Candidate
– Support renewable integration at
a level likely to still be required
765 MVP 345
under future policy shifts Portfolio
– Retain the flexibility to support
the choice of 345 kV or 765 kV
as the overall strategy
– Provide sufficient value to be in
the public interest on a stand
alone basis
19

20. Benefits of Candidate MVP Portfolio
• Evaluation of first Candidate MVP Portfolio is nearing completion
including business case development to document the value provided
by the portfolio.
• Goals of Multi Value Projects
– facilitate the integration of large amounts of location constrained
resources, including renewable generation resources
– support MISO member and customer compliance with evolving state and
federal energy policy requirements
– enable MISO to address multiple reliability needs and provide economic
opportunities through regional transmission development
• Benefits include reducing costs associated with: congestion and fuel,
operating reserves, system planning reserves, transmission line
losses; wind turbine investment, etc…
• Benefit of the portfolio as a whole is generally greater than the sum of
the benefits of its parts; looking at one element in isolation gives an
incomplete picture of the total benefits
20

21. These evaluations culminated in the
recommendation of the 2011 MVP Portfolio
• The 2011 MVP Portfolio
Analysis is the culmination of
MISO’s planning efforts to
meet the public policy
mandates of the MISO states,
while simultaneously
minimizing the total cost of
delivered power to consumers
• This analysis serves to justify
and demonstrate the value of
a regional portfolio of projects,
which brings multiple benefits
to stakeholders throughout the
MISO footprint.
• B/C of 1.7/1 to 2.7/1 with
sensitivity cases as high as
5.4/1
21

22. CapX 2020
• Participants
• Central MN Municipal Power Agency
• Dairyland Power Cooperative
• Great River Energy
• Minnesota Power
• Minnkota Power Cooperative
• Missouri River Energy Services
• Otter Tail Power Company
• Rochester Public Utilities
• Southern MN Municipal Power Agency
• WPPI Energy
• Xcel Energy
• Nearly 700 miles of transmission
• Costs estimated to be $1.9 billion
• Projects support local reliability and
regional transfer of energy
• Projects are a core assumption in the
MISO MVP development
22
Information source: http://www.capx2020.com/

23. Eastern Interconnect Planning Collaborative (EIPC)
• DOE Objective
– Facilitate the development / strengthening of capabilities to
prepare analyses of transmission requirements under a broad
range of alternative futures and develop long-term
interconnection-wide transmission expansion plans.
• DOE Expectations
– Improved
• Regional, inter-regional, and interconnection-level coordination on long-term
electricity policy and planning
• Quality of information available to state and federal policymakers and
regulators
• Understanding by stakeholders of Long-term transmission requirements
under a wide range of futures
– Facilitation and acceleration of development of renewable or
other low-carbon generation capacity
23

24. EIPC - Approach
• Establishment of a Multi-Constituency Stakeholder
Process
• Roll Up and Analysis of Approved Regional Plans
• Development of Inter-Regional Resource
Expansion Scenarios
• Development of Inter-Regional Transmission
Expansion Options
• Prepare/Submit Reports to DOE
24

25. Continuing Evolution: FERC Order 1000 -
Transmission Planning and Cost Allocation
• FERC issued Order 1000 on new transmission planning
and cost allocation requirements to build on the
principles identified in Order 890
– Coordination; Openness; Transparency; Information Exchange;
Comparability; Dispute Resolution; Regional Participation; Economic
Planning Studies and Cost Allocation
• The new rules address:
– Participation in a regional planning process
– Planning for public policy requirements, such as renewable mandates
– Coordinated planning and improved cost sharing for interregional
facilities
– Elimination of federal “right of first refusal” for projects identified in a
regional planning process with regional cost allocation
– Principles for regional and interregional cost allocation
25

26. Appendix
26

27. MTEP Activities
Top Down Bottom Up Interconnection Policy
Planning Planning Queue Assessment
Description •Develop solutions for Ensure plans identified Evaluate specific Analyze the impacts of
outstanding needs, by the member interconnection requests changes in state or
•Test effectiveness of Transmission Owners and Place resulting federal policy on the
input plans and seek are sufficient to address upgrades in base MISO system
efficiencies reliability standards and expansion model
form an efficient set of
expansions to meet
identified needs
Examples Regional Generator MTEP reliability analysis Interconnection Studies, EPA Regulations study,
Outlet Study, Candidate System Planning and Eastern Wind Integration
MVP Portfolio, MTEP Analysis, Detailed Transmission Study
economic analysis, Long Planning Phase
Term Assessment
Tools Production Cost models Load flow models Load flow models All
(PROMOD), Generation (PSS/E) (PSS/E)
Expansion (EGEAS),
Loss of Load (MARS)
27

28. MISO Cost Allocation Overview
Allocation Category Driver(s) Allocation Overview
Baseline Reliability NERC Reliability Criteria Primarily shared locally through Line
Project Outage Distribution Factor
Methodology; 345 kV and above 20%
postage stamp to load
Generator Interconnection Request Paid for by requestor; 345 kV and
Interconnection above 10% postage stamp to load
Project
Market Efficiency Reduce market congestion Distribute to planning regions
Project1 when benefits are 1.2 to 3 commensurate with expected benefit;
times in excess of cost 345 kV and above 20% postage stamp
to load
Multi Value Project Address energy policy laws 100% postage stamp to load
and/or provide widespread
benefits across footprint
1. Market Efficiency Project cost allocation
methodology currently under review at the 28
RECBTF