In 2021, front of the meter utility-scale battery storage will continue to grow rapidly in certain states and will begin to make a significant difference in some wholesale markets, most notably the California ISO (“CAISO”). By contrast, even though the interconnection queues for storage have been increasing in size in MISO and SPP, the practical impacts of battery storage are not likely to be reflected in these wholesale markets for the next few years. By 2025, however, MISO and SPP will join CAISO in experiencing widespread adoption of storage. Once growth starts accelerating in MISO and SPP, it will be very difficult to keep up and meet both the opportunities and challenges that lie ahead if utilities are not prepared.
MCR helps G&T cooperatives, municipals, public power districts and joint action agencies in SPP and MISO realize the full revenue potential from their transmission assets. We use a collaborative approach for all our transmission engagements with the goal of finding and generating value for our clients. Download our brochure to learn more about the services that add value to our clients.Download the MCR Transmission Services Brochure
Click here to download the Cost and Rate Competitiveness Services brochure
MCR provides transmission strategy support to municipals, public power districts, joint action agencies, G&Ts, T&D cooperatives, and independent transmission developers in various RTOs. Our clients have a goal of optimizing the value of their current and future investments in electric transmission. We help them understand their costs and realize the full revenue potential from these transmission assets. MCR’s Transmission Strategy practice provides the following services:
Transmission Cost/Rate Competitiveness (see earlier pages for more detail)
Transmission Formula Rate Analysis
Strategic Economic Analysis
Over the past decade, the transmission business has been lucrative for most transmission owners in SPP transmission. Transmission investment has been a driver of earnings growth for investor-owned utilities (“IOUs”) and transmission companies (“Transcos”), while providing high returns for public power and cooperatives. On the horizon, however, there are numerous potential threats to the transmission business and to transmission owners’ ability to sustain high levels of new investment. MCR believes that although some of these threats may eventually have an increasing impact on future investment opportunities, there are factors that mitigate these threats. Transmission will continue to be a strong business in SPP through at least the mid-2020s.
On April 30, the Midcontinent Independent System Operator’s (“MISO”) filed proposed revisions to its tariff in an effort to substantially expand the number of Market Efficiency Projects (“MEP”) that would be available for competitive bidding. These revisions were the result of more than four years of stakeholder discussions between MISO and a group of participating MISO Transmission Owners (“TOs”). The compromise reached by this group focused on broadening the benefits included in the economic evaluation of MEPs, lowering the MEP project voltage threshold, and more precisely assigning the costs of MEPs. But despite this lengthy, well intentioned effort, these changes are unlikely to bring the desired, dramatic change envisioned for the transmission market.Download MISO’s New Criteria for Market Efficiency Projects white paper
Over the past decade, the transmission business has been lucrative for most transmission owners in MISO. Transmission investment has been a driver of earnings growth for investor-owned utilities (“IOUs”) and transmission companies (“Transcos”), while providing high returns for public power and cooperatives. On the horizon, however, there are a number of potential threats to the transmission business and to transmission owners’ ability to sustain high levels of new investment. MCR believes that although some of these threats may eventually have an increasing impact on future investment opportunities, there are factors that mitigate these threats. Transmission will continue to be a strong business in MISO through at least the mid-2020s.Download the Threats to Transmission Business white paper
Transmission rates in most zones in MISO and SPP have risen significantly and are becoming a larger portion of your customers’ total bills. In response to the higher rates, many of MCR’s public power and cooperative clients have asked MCR to conduct a review of the transmission formula rate of the incumbent IOU or Transco in their zone. This review identifies any mistakes in the incumbent’s formula rate (MISO Attachment O and SPP Attachment H) and provides peace of mind that the IOU/Transco’s transmission costs ultimately are accurate and warranted.
Download the Incumbent Review brochure to learn more about this service for public power and cooperative utilities.
There are many factors driving transmission investment. Just when one factor seems to run its course, another reason for investing in transmission takes over. In MISO, the growth rate of transmission investing over the last year has slowed a bit, but the absolute levels of investment will remain high for at least the next several years as investor-owned utilities (“IOUs”) and transmission companies (“Transcos”) continue to see transmission investment as a major driver of earnings. Although transmission investment is broadening somewhat to more generation and transmission cooperatives (“G&Ts”) and municipal utilities, the message for public power and cooperatives in MISO remains clear: Investing in transmission is the most effective way to counter rising transmission rates.Download the MISO Investment white paper
In PJM, total transmission investment by investor-owned utilities (“IOUs”) and transmission companies (“Transcos”) continues at high levels and is driving earnings. The factors encouraging investment show little sign of abating, ultimately leading to higher transmission rates. Many generation and transmission cooperatives (“G&Ts”) and public power entities are facing higher transmission rates from this substantial investment. Obtaining their own fair share of transmission investment can provide a means to mitigate the impacts of transmission rate increases and provide value to their members.Download the PJM Transmission Investment white paper
In SPP, total transmission investment continues at high levels and is being driven by many factors. However, recent investment by investor-owned utilities (“IOUs”) has been dominated by two IOUs. Many generation and transmission cooperatives (“G&Ts”) in SPP have recently stepped up their investment activity and some are now investing in transmission at a rate equivalent to their load ratio share, providing a means to mitigate the impacts of transmission rate increases and provide value to their members.Download the SPP Transmission Investment white paper
The new tax law reduces the income tax rate for IOUs. What does that mean for public power and cooperatives when it comes to transmission investing? The enclosed MCR Point of View discusses the impact of the tax rate reduction on transmission investing and whether it will affect the relative cost competitiveness of public power and cooperatives compared to IOUs.Download the tax law point of view
MCR’s Formula Rate Review is beneficial in a number of ways. It ensures you are:
MCR has developed or reviewed over 100 formula rates for clients in SPP, MISO and PJM. Through this extensive experience, MCR has developed a Formula Rate Review to assess whether transmission revenue is being left on the table and whether your transmission-related costs are “bulletproof” against third-party scrutiny.Click here for SPP
The “arms race” for transmission investments continues. In addition to investor-owned utilities (“IOUs”) and transmission companies (“Transcos”), generation and transmission cooperatives (“G&Ts”) and public power in MISO are increasing their levels of investment. But in many cases, G&Ts and public power make transmission investments at a disproportionally lower percentage than their load ratio share. This mismatch results in substantial exposure to transmission rate increases for their members and customers. In order to mitigate the impacts of these transmission rate increases, public power and cooperatives need to focus on how transmission investing can create value for their members.Download the Transmission Arms Race white paper
There has been an “arms race” for transmission investments among investor-owned utilities (“IOU”) and transmission companies (“Transcos”), resulting in substantial increases in transmission rates for all MISO pricing zones. By contrast, many generation and transmission (“G&T”) cooperatives have not increased their transmission investment at the same rate of growth, resulting in substantial exposure to transmission rate increases for their cooperative members. In order to mitigate these rate increases, a G&T needs to run transmission as a business and put in place a business plan and disciplines that focus on creating value for its members.Download the Running Transmission as a Business white paper
Cost allocation of transmission investment costs continues to be a major obstacle to building large new transmission and achieving renewables generation goals in the Midwest ISO (MISO) region. Existing methods of cost allocation can result in disproportionate impacts on certain utilities in close proximity to new transmission, so new methods of cost allocation are being proposed. Like the carnival game of Whac-a-Mole, any particular cost allocation method that eases the annual transmission revenue requirement on some MISO regions or utilities will inevitably burden other MISO regions or utilities.Download the MISO cost allocation white paper
Transmission rates across the country and, particularly, in the Midwest Independent System Operator will be dramatically increasing over the next ten years due to new high voltage transmission projects and the steady stream of local transmission facility replacements and upgrades. Municipal joint action agencies, municipals and G&T transmission owners have the opportunity to mitigate or partially hedge these rate increases if they implement an offensive transmission investment strategy. This strategy involves thinking about transmission investment “as a business” and pursuing investments more aggressively than in the past.Download the Public Power and G&T Utility Transmission Investing white paper
Some public power utilities have not yet decided whether it makes economic sense to join the Midwest ISO (MISO) as a Transmission Owner. In most cases, these municipal agencies and generation and transmission cooperatives are already a Market Participant in the Day 2 energy market, but they have not yet turned over functional control of their transmission assets to MISO and become a Transmission Owner. Expiring grandfathered agreements and a desire to maximize full recovery of future transmission investments are now triggering municipal agencies and generation and transmission cooperatives to consider becoming a transmission owner in MISO. Evaluating whether to become a MISO Transmission Owner is a major strategic decision dealing with multifaceted issues requiring complex analysis. Deciding whether and when to pull the MISO transmission trigger can result in saving hundreds of thousands or potentially millions of dollars.Download the MISO Transmission Ownership Evaluation white paper