MISO Wisconsin Relationship

1
MISO Wisconsin Relationship

• Public Service Commission
• Randel Pilo, Assistant Administrator
• August 7, 2008

2
Potential Benefits from an ISO

• Production Cost Savings for Ratepayers By
  Dispatching Generation Over Larger Footprint.
  3-4 Savings
• Increased Use of Transmission System in Terms of
  Flow without Decreasing Reliability
• Less Reliance on Physical Curtailments on
  Congested Transmission Lines.
• Prevent Utilities that Own Generation and
  Transmission From Exercising Vertical Market
  Power, Whereby Grid Access is Denied or
  Overpriced to Other Utilities.
• Better Price Signals for Construction of New
  Generation or Transmission.
• Consolidation of Functional Areas like
  Contingency Reserves and Regulation to Create
  Savings
• Coordinated Inter-regional Transmission Planning
  Analysis

3
Potential Downsides to RTOs

• Set Up Costs for Control Centers, Computers, and
  Operation.
• Central Dispatch needs Effective Market
  Monitoring to Make Sure No Strategic Pricing or
  Capacity Withholding Occurs.
• Market Design Must Be Correct
• Loss of Economies of Scope. Utilities Who Were
  Efficiently Operating Their Combined Transmission
  and Generation Assets May Experience Increased
  Costs Due to Disaggregation.
• Settlements Process for Transactions Can Be
  Complex and Subject to Dispute.
• Seams Can Exist Creating Operational and Cost
  Disparities
• Federal and State Jurisdiction Legal Issues
  Abound.

4
Present Issue Areas

• 420 million Arrowhead-Weston Line was Excluded
  from Regional Cost Sharing PSCW is Challenging
  this in Federal Court.
• Transmission PlanningMISO, Xcel, ATC, and PSCW
  roles
• Several Ongoing Transmission Studies with Results
  Due in 2009.
• Transmission Cost AllocationRECB1 and RECB2.
• Presently, regional cost sharing is set at 20 of
  project cost.
• Resource AdequacyMISO has proposed an
  administrative fee approach in conjunction with a
  voluntary excess capacity auction.
• Prevention of Non-competitive Pricing by Market
  Generators.
• Targeted Load Shedding in Real Time .
• Should US DOE and FERC have Siting Autority over
  Projects in Wisconsin?
• Congestion Conference in Chicago mid September
  2008.

5
MISO Membership

• PSCW continues to monitor.
• 2007 Stakeholder study suggested staying in MISO
  because there would have been a 51 million exit
  fee, and the other options did not look much more
  appealing.
• Need to constantly assess due to membership
  changes, ongoing construction of new lines in
  MISO footprint, and cost sharing implications.
• Make sure MISO continues to bring value.

6
PSCW Watchdog Functions

• PSCW participates with Regional State Committee,
  Organization of MISO states containing 14 states,
  or OMS.
• PSCW interacts directly with RTO Board,
  Management, and MISO Staff. Dedicated
  Commissioner with 6 technical staff as backup.
• PSCW Intervenes in Appropriate FERC Dockets
• Costs Examined in Rate Proceedings

7
Appendix

• Congestion Fixes In ProgressATC.
• 2007 Energy Prices in Key MISO Zones.
• Market Monitor Synopsis on MISO pricing.
• Potential Transmission Improvements in Upper
  Midwest under study in MTEP.

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10
Executive Summary The Midwest ISO energy
markets performed competitively in
2007. Although certain suppliers in the Midwest
ISO have local market power, there was very
little evidence of attempts to exercise market
power in 2007. Hence, mitigation measures were
employed infrequently to address
economic withholding that would have increased
energy prices or uplift costs. The most frequent
mitigation occurred in Minnesota New Narrow
Constrained Area (NCA) defined in January
2007. Higher fuel prices, played a primary role
in the 13 percent increase in average
energy prices in 2007 and other rising costs,
including A 26 percent increase in uplift
costs associated with revenue sufficiency
guarantee payments (RSG) that was due to
higher fuel prices and increased commitment of
peaking resources to manage congestion. A 28
percent increase in congestion costs that was due
to the increased redispatch costs caused by
higher fuel prices and other factors discussed in
the report.
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Wisconsin Projects Under Study Only