Electricity transmission facilities are major investments. They have traditionally been funded by local utilities, with costs allocated across the local users. Improving the grid, however, requires more than a patchwork of locally planned and funded improvements. In the Midwest and other areas of the country, states, utilities, and other stakeholders have agreed to pursue a regional approach to plan and build a more robust grid. As a result, many new transmission projects are now designed to benefit large geographic areas.
Midwest Independent Transmission System Operator, Inc. (MISO)—an independent, non-for-profit corporation of grid stakeholders in the Midwest—is responsible for managing and planning this region’s grid. In early 2009, MISO began developing a new cost allocation method to be used specifically for regionally beneficial transmission projects. The approved cost allocation method assigns costs based on load (actual use of electricity), and applies only to a new category of projects called “Multi-Value Projects” (MVPs).
The MISO cost allocation for MVPs, which FERC found to be consistent with the “beneficiary pays” cost allocation principle, is now being challenged by parties that feel it does not assign costs in a way that is commensurate with benefits.
In this report, we assess whether or not the MVP cost allocation methodology is consistent with the legal principle that costs should be “at least roughly commensurate with benefits.” We also consider whether there is any evidence that the approved methodology places an unfair cost burden on Lower Michigan. Finally, we assess the risks and consequences that stem from modifying the structure of the already adopted cost allocation.
Anderson Economic Group, LLC, is an economic consulting firm with offices in Chicago, Illinois; East Lansing, Michigan; and Los Angeles, California. We have prepared this independent analysis of the likely economic impact of the proposed 2016 Summer Olympics in Chicago, and are making it publicly available before the IOC announcement date of October 2, 2009.
We are preparing this study to provide other Chicago-area businesses, as well as taxpayers and policymakers, a realistic assessment of the actual costs and benefits of hosting the games. Our analysis of past major events, and our past evaluations of the value of sports-related and other businesses, gives us a unique position to carefully examine this question.
Boosters of large sporting events and stadium construction have sometimes claimed economic benefits that later proved far too good to be true. However, our analyses of both sports franchises, and cities in which sporting teams oper-ate, show that some events can provide economic benefits that far exceed the costs. Given the scale of the Olympics, and the exposure it would give to Chi-cago on a world stage, it is certainly worth carefully considering the costs, risks, and benefits.
We have used a rigorous methodology to estimate the likelly economic impact of events like the 2016 Summer Olympics.
In response to a notice of termination and sales performance review from General Motors and ChannelVantage, a Michigan Cadillac dealership retained Anderson Economic Group (AEG) to provide an independent analysis for the dealership. The analysis specifically focused on 1) the factory’s assigned sales and service area, and 2) the methodology used to calculate the dealership’s Retail Sales Index (RSI).
To begin, we reviewed GM’s sales performance calculations and the methodology used by ChannelVantage to arrive at the dealership’s RSI score. Our Geographic Information System (GIS) was utilized to plot the location of the dealerships, its assigned Area of Geographic Sales and Service Advantage (AGSSA), nearby Cadillac dealers, and a ten-minute drive-time area from each dealer. The latter helped to identify census tracts within our client’s AGSSA that were more naturally and/or easily served by another dealer. Measuring the drive-time distances from each of center of these census tracts’ to nearby dealers aided in our revision of the assigned AGSSA. We next analyzed the demographics from the assigned AGSSA and the revised AGSSA, with a focus on variables that correlate with luxury vehicle sales, such as education levels, age, and income. We adjusted the RSI to account for our revisions to the AGSSA based on the reduction in the targeted demographic base, and a reduction in expected market share capture for the vehicle segment.
Our findings illustrated that our client had an unreasonably large market area, including over 20 census tracts that were located closer to other Cadillac dealerships. We also accounted for local demographics and customer behavior, as opposed to broad reaching assumptions based on state-level data, to estimate expected sales levels in the market. With these adjustments, we arrived at a significantly higher RSI relative to what GM determined, and used as a primary factor in termination the dealership. We compiled these findings in a report for the client, which he has shared with members of Congress while lobbying for passage of the Durbin-Hoyer bill that was enacted, and allows all terminated dealership a chance at arbitration.
This guide is for dealers that are considering participating in the arbitration process established by H.R. 3288, which was signed in to law by President Obama on December 16, 2009. It reviews the timeline and arbitration process, and the criteria that will be considered by the arbitrator. It concludes with some practical steps dealers should take as they consider whether to participate in the arbitration process.
As part of its dealership restructuring efforts, one of the Detroit Three invited current dealers to submit proposals for a new luxury vehicle dealership in suburban Detroit. Our client, a large dealership group in the Detroit area, retained us to assist in evaluating the OEM’s preferred site and an alternate site that was believed to be better positioned in the market.
We began with an assessment of the current dealer network in Wayne, Oakland, and Macomb counties. This included a drive-time analysis to assess market coverage, both for the current structure and for the structure after the known dealerships closing. We next identified the most likely site for a new dealership in the OEM preferred area and our client’s preferred area, and delineated a market area for each, accounting for drive-times, infrastructure networks, natural barriers, and the market areas for existing dealerships. A demographic and socio-economic analysis was done for each trade area, focusing on variables that predict the success of luxury automobile dealerships. We also analyzed luxury vehicle registration data from RL Polk to measure historic vehicle purchase patterns in each market. Lastly, we considered site specific factors, such as visibility, traffic count data, and proximity to other luxury vehicle dealerships.
Our final results were summarized in a memorandum and presentation to the client, and found the client preferred site to be a much stronger location. Our deliverable included summary data tables and custom maps showing market areas, demographics, and luxury vehicle registrations. The memorandum and presentation was included by our client in their proposal to the OEM.
Anderson Economic Group completed a market snapshot for the Main Street Newnan organization in Georgia, located southwest of Atlanta. The purpose of providing Newnan Main Street with the market snapshot was to help bolster the organization’s plans for attracting and recruiting business, and to uncover potential strengths and opportunities in the downtown.
We worked with Main Street Newnan to determine the downtown’s center of market activity and its likely primary and secondary market areas in terms of drive-time distances. We next used our Geographic Information System (GIS) to plot the location and delineate the drive-time boundaries on a map. To provide a visual display of key data in the community, we customized maps to display the current year per capita income and population density, and projected percent population change, all at the block group level.
The primary and secondary market areas and the county were further analyzed to provide a detailed understanding of Newnan’s demographic and socioeconomic make-up for the current year and projected trends over the following five years. Relevant categories, including age, income, households, education attainment, and consumer expenditures were detailed in a table and summarized in a narrative to explain the trends and key points.
The market snapshot product is being used by Newnan Main Street in their business and other attraction efforts.
Anderson Economic Group completed a market snapshot for the Traverse City Area Chamber of Commerce (TC Chamber) in Michigan. The purpose of the market snapshot was to help bolster plans for attracting and recruiting business, provide a marketing piece for promotional efforts, and to uncover potential strengths and opportunities in the area.
We worked with the TC Chamber to determine downtown Traverse City’s center of market activity and its likely primary and secondary market areas in terms of drive-time distances. We next used our Geographic Information System (GIS) to plot the location and delineate the drive-time boundaries on a map. To provide a visual display of key data in the community, we customized maps to display the current year per capita income and population density, and projected percent population change, all at the block group level.
The primary and secondary market areas and the state were further analyzed to provide a detailed understanding of Traverse City’s demographic and socioeconomic make-up for the current year and projected trends over the following five years. Relevant categories, including age, income, households, education attainment, and consumer expenditures were detailed in a table and summarized in a narrative to explain the trends and key points.
The market snapshot product is being used by the Traverse City Chamber in their business and other attraction efforts, and was used as a marketing handout at their annual Economic Forecast Breakfast in November 2009. Patrick Anderson, Anderson Economic Group’s CEO, also spoke at the event, and contributed to the region’s “2010 Economic Outlook” report.
For a copy of the market snapshot, and the 2010 Economic Outlook report, you can visit: http://www.tcchamber.org/events/economic-forecast-breakfast