Chapter 3.1: MTEP13 Status Report
MISO transmission planning responsibilities include monitoring the status of previously approved MTEP Appendix A projects. MISO surveys all Transmission Owners on a quarterly basis to determine the progress of each project. Since 2006, these status updates are reported to the MISO Board of Directors and posted to the MISO MTEP Studies web page. This chapter provides the status of MTEP14 Appendix A projects as of April 2015, and elaborates on the status of the MTEP11-approved Multi-Value Project (MVP) Portfolio.
Following a project’s approval, MISO provides transparency by tracking the progress of projects. Project tracking ensures a good-faith effort to move projects forward, as prescribed in the Transmission Owners’ Agreement. Transmission Owners provide costs, in-service dates and status updates after these project milestones:
- Milestone 1: Final Subregional Planning Meeting/Out of Cycle Request Submittal
- Milestone 2a: Pre-project approval
- Milestone 2b: Developer selection
- Only applicable for Market Efficiency Projects (MEP) and MVPs that will proceed through the MISO inclusive evaluation process to select the transmission developer
- Milestone 3: Prior to ordering long lead materials
- Milestone 4: Pre-construction
- Milestone 5: Facility completion
Going forward, as part of MISO’s Order 1000 implementation, MISO’s post approval role will expand for cost-shared projects. Cost-shared projects and the developers selected to construct, own and operate them are subject to reevaluation if costs increase, schedules are delayed or the selected developer’s qualifications/capabilities materially change. MISO and its stakeholders continue to develop the criteria and process to determine if a selected developer and/or a project should continue to be constructed to meet the needed driver and timetable.
No MTEP15 projects are under reevaluation; however, general cost overrun and in-service date delay thresholds are referenced to concentrate the MTEP15 variance analysis on only relevant projects and trends. While only projects exceeding potential thresholds are highlighted in this chapter, these projects are the exception and not the norm. The majority of projects have small or no deviations from the MTEP approved costs and schedule.
Since MTEP13, MISO has performed cost and variance analysis on previously approved MTEP projects. The cost and schedule variance summarizes the differences between what was originally approved in MTEP and most up-to-date projections. The MTEP15 cost and variance analysis considers all MTEP14 Appendix A projects that are not in service or withdrawn as of April 2015. Additionally, because of the amount of investment of the MVP Portfolio relative to other projects included in Appendix A, the MVP Portfolio is excluded from the subset used in the variation analysis (Figures 3.1-1 and 3.1-2) and instead detailed in a status report (Figure 3.1-3).
The MTEP14 Appendix A projects in the variance analysis represents 590 projects totaling $5.7 billion in approved investment. Of the projects in MTEP14 Appendix A, 43 percent were approved in MTEP14 and the remaining 57 percent were approved in MTEP03 through MTEP13. All costs contained within this section are in nominal, as-spent dollars.
Non-MVP Project Cost Variation
The total costs for the 590 MTEP14 Appendix A projects have increased from the MTEP-approved $5.7 billion to $6.3 billion, thus the average cost variance is 10.7 percent. In MTEP14, the average cost increase from approval was 9.7 percent for a similar subset of MTEP-approved projects. Costs can vary for multiple reasons. At the time of Board approval, a project cost estimate reflects:
- Rough line routing and station costs
- Estimated labor and materials
- Known environmental concerns
- Contingency allowance
At project completion, after regulatory issues have been addressed and uncertainties eliminated, a project’s updated cost reflects:
- Final line routing and costs
- Actual commodity and labor costs
- Total environmental mitigation costs
Overall, projects with larger percent cost increases were a minority. The projects with a largest percentage deviation were generally projects with a small total cost. The current estimates have no reported cost increase from the approval estimates for 70 percent of the non-MVP MTEP14 Appendix A projects; 82 percent of estimates have deviated by less than 25 percent (blue line, Figure 3.1-1), which is consistent with the trend from the last two years.
The cost-shared projects of the MTEP14 Appendix A subset represent $1.7 billion in approved MTEP investment. Of the 19 cost-shared projects’ cost estimates, nine projects’ cost estimates have not increased since approval. Seven projects’ costs are projected to increase by more than 25 percent — all of these projects are Baseline Reliability Projects not justified based on economics (red line, Figure 3.1-1). While the cost-shared trend has consistently increased over the last two years, the number of cost-shared projects with cost increases greater than 25 percent has remained constant. The increasing trend is a function of the total number of active cost-shared projects (the denominator) decreasing as projects go into service.
The largest deviations on a percentage basis are primarily small projects. Each of these projects had small changes in scope (substation work, right of way, routing) that was a large percentage of the total project cost (bar graph, Figure 3.1-1). There were two exceptions: A $490 million Baseline Reliability Project currently has a projected cost variance of 31 percent and a $360 million Baseline Reliability Project currently has a projected cost variance of 42 percent. Both increases are attributed to a state commission requiring a longer line routing and the ability for future expansion.
Non-MVP Project Schedule Variation
The 590 MTEP14 Appendix A projects have, on average, adjusted their in-service date back by 13 months. In the MTEP14 report, the average in-service delay for a similar subset of projects was 16 months. Little or no impact on reliability is expected from the adjusted in-service dates. Transmission Owners may adjust project in-service dates to match system needs. Common drivers of schedule variance include:
- Budgetary constraints
- Length of regulatory process
- Equipment or material delays
- Time required to secure property rights
- Changes in design resulting from routing changes
The expected in-service date of 50 percent of MTEP14 Appendix A project have not extended beyond the MTEP-approved estimate. Projected in-service dates have extended beyond 12 months for 27 percent of the MTEP14 Appendix A investment (blue line, Figure 3.1-2).
The current expected in-service date has been extended by more than 12 months from the MTEP approval for eleven of the 19 cost-shared MTEP14 Appendix A projects (red line, Figure 3.1-2). Two of the eight projects with in-service date extensions beyond two years attribute the delays to customer need and two attribute right-of-way acquisition delays; the remaining four delays are because of regulatory delays, budgetary constraints, forecast changes or scope alterations (bar chart, Figure 3.1-2).
Multi-Value Project Portfolio Status
The MVPs are part of a regionally planned portfolio of transmission projects. The MVP portfolio represents the culmination of more than eight years of planning efforts to find cost-effective regional transmission solutions while meeting local energy and reliability needs. The MVP portfolio is expected to:
- Provide benefits in excess of its costs under all scenarios studied with benefit-to-cost ratios ranging from 1.8 to 3.0
- Resolve reliability violations on approximately 650 elements for more than 6,700 system conditions and mitigate 31 system instability conditions
- Enable 41 million MWh of wind energy per year to meet renewable energy mandates and goals
The 17 MVPs are generally projected to meet budget and schedule expectations. As of July 2015, three projects are in service, five projects are at least partially under construction, five projects have progressed beyond the regulatory process or have no regulatory process requirements, and four have partial regulatory approval and/or are currently in the regulatory process (Figure 3.1-3). Since the MTEP11 approval, the total projected budget for the MVP Portfolio has increased by 16 percent, the result of longer-than-planned line routing, substation design changes and use of more developed construction estimates. Additionally, several MVPs’ cost estimates have decreased since approval through a combination of design and schedule optimization, implementation of contracting/risk sharing strategies and favorable commodity prices.
The MVP dashboard (Figure 3.1-3) is updated semi-annually and the most up to date version can be referenced from the MISO website.