MGA Renewable Electricity, Advanced Coal and Carbon Storage Advisory Group Transmission Subgroup Mee

1
MGA Renewable Electricity, Advanced Coal and
Carbon Storage Advisory GroupTransmission
Subgroup Meeting 1 Summary

• June 12, 2008
• Washington, DC

2
Participants and Observers Present

• Mike Bull, Wind on the Wires
• Mike McNalley, DTE Energy
• Terry Grove, CAPX 2020 and Great River Energy
• Clair Moeller, Midwest ISO
• David Hadley, Midwest ISO
• Kristine Schmidt, Xcel Energy
• Natalie McIntire, American Wind Energy
  Association
• Nathaniel Baer, Iowa Environmental Council
• Geoff Matthews, Edison Mission
• Larry Johnston, Southern MN Municipal Power
  Agency
• Mike Stuart, Wisconsin Public Power, Inc.
• Beth Soholt, Wind on the Wires
• Julie Voeck, American Transmission Company
• Kurt Simonsen, Manitoba Department of Energy,
  Science and Technology
• Rob Gramlich, American Wind Energy Association
• Tom Stanton, Michigan Public Service Commission
• Staff
• Wick Havens, Center for Climate Strategies
• Mike Gregerson, Great Plains Institute

3
Introductions and Review of Agenda

• Mike Gregerson of the Great Plains Institute
  welcome everyone and asked them to introduce
  themselves. Mike reviewed the meeting objectives
  and materials.
• Brad Crabtree of Great Plains Institute provided
  a brief overview of the MGA Energy Security and
  Climate Stewardship Platform and Greenhouse Gas
  Accord and described the advisory group process
  for implementation of Summit outcomes.
• Mike then introduced the resolution deliverables
  and invited meeting participants to begin
  discussing each one.

4
Transmission Resolution Deliverable 1

• RESOLVED, that the scope of work for the working
  group shall include, but not be limited to,
  recommendations regarding the following
  deliverables
• identified partners, methodology and timeline for
  conducting a state-by-state evaluation of
  expected new megawatts of wind power development
  through 2020, including interim megawatt targets,
  the need for that growth to meet
  state/provincial, Midwestern, and national RPS
  goals, and corresponding needed transmission
  infrastructure

5
Discussion of Deliverable 1

• MISO has sent a data request to LSEs to get a
  better sense of how they are interpreting
  requirements for new generation
• How much of which fuel type by when
• Responses by next Thursday projects identified
  within a year
• Only went to states with legislative mandates
  (MN, IA, WI and IL). Will look regionally from a
  siting standpoint to include the Dakotas.
  100,000 MW discussion scares some folks
• Given national discussions, there is a view that
  the Midwest needs to produce a third of the
  national commitmentabout a 100,000 MW
• Challenge of parochialism. Can we get beyond the
  approach of requiring the bulk of new wind
  generation to be located within a given
  jurisdiction? Uncertainty about this, both
  political and legal.
• MISO is addressing this through
  scenarioslocal-local, local-regional and
  regional-regional. Participants expressed support
  for this approach.
• MB hydro additions 200 by 2012, 640 by 2017-18,
  1260 by 2021, in addition to 1,000 MW of wind by
  2017-2018
• Modeling challenge The Joint Coordinated System
  Plan (JCSP) will help address the seams issues
  for modeling beyond the MISO footprint to
  determine impacts on transmission

6
Defining Deliverable 1

• Need to define the output
• Start with specifying the number of MWhrs, then
  overlay that with state-specific requirements and
  siting constraints (e.g. how much must be within
  a particular jurisdiction)
• Identify the gap between jurisdictional
  obligations and the MGA goal.
• Need to query the LSEs because their responses
  will provide information on what they plan to
  spend money on with regards to generation and
  transmission
• Important to include LSEs outside MISO but within
  MGA footprint and request needs to come from
  governors/premier to CEOs. LSEs are reluctant to
  provide information, so approach through
  governors will help.
• There are ways to scale things to reduce
  sensitivities about proving information. It will
  be important to be very clear about the use of
  the data.
• MGA, unlike governors offices and PUC/PSCs, is
  not subject to data practices requirements, which
  will also help.
• Agreed action work through MGA steering
  committee of governors and premiers staff to
  survey load serving entities (LSEs) in MGA
  jurisdictions beyond MN, IA, WI and IL, which has
  already received a survey from Midwest ISO.
  Establish a subcommittee of this group to prepare
  survey instrument for Steering Committee review.
• Step 1 survey for inventory deliverable
• Step 2 include in the survey necessary data to
  expand the scope of Midwest Transmission
  Expansion Plan (MTEP) 09 to include the MGA
  footprint (MTEP 09 is national, and the MGA
  portion will be a regional look that accomplishes
  deliverable one in the resolution and part of
  deliverable 3)
• Clair, Beth, Tom, Natalie, Julie? volunteered to
  work with Mike Gregerson on review of the MISO
  survey and finalize something
• Mike to set up a conference call
• Group review of survey instrument following conf
  call
• Presentation of final survey instrument to
  governors/premiers staff on July 22nd

7
Discussion of Transmission Studies

• Annual publication of MISO transmission expansion
  plan
• Appendix A projects expected to go under
  construction within 4 years
• More exploratory investigations
• MTEP 06 looked at implications of RES
  requirements on system
• MTEP 08 will be the first to look at future
  scenarios (four scenarios reference future/BAU,
  environmental w/25 ton CO2, wind at 20 percent
  in MISO, limited gas. Incorporates overlay plans
  such as high voltage overlay)
• MTEP 09 will include changed definitions for the
  future scenarios, one being the JCSP that looks
  at implications of DOE 20 percent plan in MISO.
  Another is a limited transmission investment
  future (assumes only short term investments due
  to uncertainty).
• Discussion of ancillary services and their costs.
  Agreement that as wind penetration levels
  increase, the costs of those ancillary services
  increase. However, there are a number of
  solutions to address this, and the grid will not
  be managed at these higher levels in the same way
  that it is managed today. Also, a robust
  transmission system at regional scale facilitates
  the ability to manage volatility/variability more
  effectively at less cost.
• Regional Generation Outlet StudyRGOS (MN, IA,
  WI, IL). Purpose identify a minimum point that
  we build to system-wide, regardless of the
  operative scenario. Also, an attempt to model
  the geographic dispersion of these systems to
  provide some sense of the cost of siting
  constraints. Helps get beyond the queue problem
  by identifying major likely areas of
  developmentrenewable energy zones--where
  transmission can built in a build it and they
  will come approach.
• Will MISO have the political support to name
  these renewable energy zones despite lacking
  legal authority?
• Should mesh with studies underway in CAPEX 2020
• Results for stakeholder review in April 2009,
  finalization in fall of 09
• If other jurisdictions make RES/REO commitments,
  an additional study could be done for them.

8
CAPX 2020 Discussion

• 2016 Study Effort focused on this timeframe
  because of MN REO commitments and need to meet
  them
• Can take renewable zone identification by MISO to
  the project level.
• 2025 Vision Study Minnesota 2025 goal shifts the
  focus more to MISO level studies
• As gaps in jurisdictional policy region-wide are
  filled with RES/REO commitments, CAPX-like
  efforts or MISO RGOS will be necessary in other
  parts of the region

9
DOE Study

• Conducted by NREL using WIND model
• 300 GW nationally, with distribution weighted
  toward Midwest and less for Southeast
• Worked with AEP on 765kv grid overlay to
  accomplish the plan
• Accompanied by costs and benefits analysis
• Challenge for building and sustaining support for
  extra high voltage transmissionmust extend
  beyond one governors term
• Build-out needs to be region-wide to ensure
  effectiveness and to justify investment

10
Other Studies

• Need more background on the MI transmission study
  from Tom.
• Action Tom to share study with Mike Gregerson.

11
Near-Term 2015 Target

• Concern raised about losing sight of 2015, as we
  look at 2020.
• Discussion that the MGA has established a 2015
  target as well and that the 2020 evaluation could
  and ought to assess degree to which we have or do
  not have a 2015 gap between jurisdictional policy
  commitments and the regional MGA target of 10
  percent.
• Agreement Evaluation for resolution deliverable
  1 needs to correspond with each MGA target,
  beginning in 2015 (i.e. what is actually expected
  for MW development relative to the target and any
  gap and what is needed in terms of the
  transmission build-out).

12
MB Hydro Discussion

• Grand bargain potential partnership with
  Manitoba Hydro and wind. Hydro access in return
  for load-following to help enable the large
  expansions of wind contemplated under the MGA
  targets
• DC capacity would be important in such a scenario
  for stability due to challenges of moving large
  amounts of energy between generation and load

13
Concluding Thursday Discussion

• You can plan forever, but you have to start
  building stuff. Also, some of the smaller things
  need to be in place to do the bigger things. In
  other words, lower voltage transmission build-out
  at the subregional level is needed to meet
  earlier 2015 MGA target. However, this more
  robust subregional system at lower voltage is
  also necessary to have a reliable foundation for
  eventual deployment of a 500-765 kW high voltage
  capacity to move larger amounts of renewables
  from west to east between MISO subregions and,
  eventually, between MISO and regions to the east
  and southeast.
• Governors do not necessarily understand
  transmission issues at this level, and we have a
  teachable moment.
• We will have to build new infrastructure that
  will cost a lot of money (not just because of
  wind, but for a lot of reasons). The planning
  will help identify where we most efficiently
  build that infrastructure to minimize that
  expenditure. Higher level discussion and
  political will is important, and the
  governors/premier can play an important role
  here.
• Agreement - Early direction that governors can
  get behind and build on
• Regionalize CAPX experience beyond Minnesota,
  Dakotas and SE Wisconsin by applying model to
  other subregions within MISO and
• Extend the Regional Geographic Outlet Study
  approach beyond the four participating
  jurisdictions (currently MN, IA, WI and IL)

14
Deliverable 4 Cost Allocation and Recovery

• 4. key elements and next steps for developing a
  transmission cost share and cost recovery
  mechanism for the build-out of resource
  transmission. (These efforts should take a fresh
  look at cost-sharing methodologies, identifying
  beneficiaries in a broad sense
  sellers/developers, buyers/loads as well as jobs
  and tax beneficiaries and the burdens borne by
  different states, in order to develop an
  equitable cost allocation mechanism. In addition,
  these efforts should ensure any major expansion
  plan permits equitable participating in the
  ownership of improvements by each states
  utilities/transmission companies, so that the
  load serving needs of each state are properly
  accounted for.)

15
Cost Allocation and Recovery Discussion

• Midwest ISO tariff began in 1998. A license
  plate tariff was set up in the absence of
  agreement over cost allocation. Lost revenue was
  recaptured through captive network customers.
• Decision to revisit in six years with hint that
  there might be a move to postage stamp approach.
  Subsequent discussions failed to reach agreement.
• Current cost sharing for reliability projects is
  20 percent postage stamp, with 80 percent
  premised on a power flow model. Four MISO
  members have indicated that they may withdraw as
  a result.
• Big problem of whose investment, when some firms
  have to share costs and pass them on to their
  customers but their shareholders do not get a
  return on their investment. Joint ownership of
  assets in this case would help. Barriers are
  primarily political.
• The tariff is voluntary, so there is an effective
  no-losers test. The threat of opt-out is real.
  Concerns on the part of some members have
  increased as discussions have expanded from 345
  kV to 765 kV and potential costs have increased.
• FERC has limited jurisdiction, and the states are
  responsible here. Benefits of keeping firms in
  the ISO are large for building out the
  transmission system. Governors can help through
  this advisory group process.

16
Cost Allocation Discussion Continued

• Challenge that some ways to meet
  governors/premiers targets might preclude system
  choices for meeting national targets. You need to
  site and permit 345 kV 8x to get to 765 kV
  equivalent.
• Need ability to take longer view of
  benefitslonger than Regional Expansion Criteria
  Benefits allows.
• Issue that needs to be explored can a state
  commission take into consideration the question
  of public interest beyond their borders? Some
  are precluded by statute from doing this.
• Questions about feasibility came up and question
  as to whether it is not just easier to negotiate
  the really big projects across jurisdictions.
  Proposal to circumscribe more narrowly the
  criteria for projects that would me the regional
  benefits test.
• At minimum, where jurisdictional impediments to
  regional benefits consideration, we ought to
  change that.
• Agreed Action Develop agreed model legislation
  that would expand commission authorities, where
  necessary, to enable them to consider public
  benefits at regional scale.
• Next step survey jurisdictional authorities.
  Nathaniel, Tom and Beth will help GPI staff to
  craft an info request of commissions.
• Subsequent step draft model legislation for
  steering committee review based survey results
  and subgroup discussion
• Agreed Action try to secure cost sharing
  agreement at subregional level first (e.g. MN,
  WI, IA), where greater commonality of need and
  circumstances exist. This could then be expanded
  to other subregions.
• Feasible and helpful for meeting jurisdictional
  policy requirements, but does not get us to the
  inter-RTO 765 kV capacity expansion (e.g. moving
  large amounts of wind from Midwest to New
  England).
• Joint ownership needs to be part of such a
  package at the subregional level (CAPX model).
  This may not be an option in some jurisdictions
  like MI with ITC.
• Questions to consider What does eastern portion
  of the region look like? Who is the champion?

17
Cost Allocation Discussion

• Agreed Action Framework or architecture of
  subgroups final recommended work product should
  tie together deliverables 1, 3 and 4 into single
  package recommendation to the governors and
  premier.
• 1) Evaluation of new generation and transmission
  needed to accommodate that new generation 2) the
  regional transmission plan focused on required
  high-voltage interstate network additions to
  accomplish that transmission and 3) proposed
  cost recovery mechanism/ownership structure to
  facilitate financing it.
• This generation is not just wind, but the whole
  suite of new generation resources and
  technologies needed to meet the MGA energy and
  climate targets. There is tremendous value in a
  robust transmission system to have the capacity
  and flexibility to deploy generation and manage
  cost-effective integration to meet the MGA goals.

18
Draft Letter to FERC Re MISO Transmission Queue
Reform

• Subgroup participants and observers reviewed,
  edited and agreed on a draft letter to the U.S.
  Federal Energy Regulatory Commission for
  consideration by governors and premiers.
• The letter is included separately from this
  meeting summary.

19
Scheduling and Adjournment

• Transmission subgroup members agreed to have a
  group conference call on Tue, July 8th from
  10-noon Eastern/9-11 Central.
• Subgroup members also agreed to have an in-person
  transmission breakout discussion on Wed, July
  30th in Dearborn, MI (Detroit airport). The
  breakout session will be part of the day-long MGA
  Renewable Electricity, Advanced Coal and Carbon
  Capture Advisory Group meeting, and the breakout
  will be held in the afternoon.
• The meeting was adjourned.