The McKnight Foundation (an environmental advocacy foundation based in Minnesota) retained Anderson Economic Group to conduct an economic and fiscal footprint analysis of Xcel Energy’s draft Integrated Resource Plan (IRP), as well as an alternative energy development plan proposed by a coalition of clean energy organizations (CEOs). Xcel Energy is the largest electric utility provider […]
Ranger Power is a New York City based renewable energy developer. Ranger retained Anderson Economic Group to assess the net economic and fiscal impacts of the construction and operations of three proposed solar projects across Michigan. In order to assess these impacts, we obtained basic project data on each development from Ranger and also conducted […]
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.