MTEP15 Chapter 7.5: MTEP15 MVP Limited Review
|Analysis shows that projected benefits provided by the MVP portfolio have decreased since MTEP14, but are on par with the original MVP Review conducted in MTEP11|
The MTEP15 Multi-Value Project (MVP) Limited Review provides an updated view into the projected congestion and fuel savings of the MVP Portfolio. The MTEP15 MVP Limited Review’s business case is on par with the review of the original business case in MTEP11. Although there are reduced benefits from the MTEP14 Triennial Review, the MTEP15 Limited Review provides evidence that the MVP criteria and methodology works as expected. The MTEP15 analysis shows that projected MISO North and Central Region benefits provided by the MVP Portfolio are comparable to MTEP11, the analysis from which the portfolio’s business case was approved.
The MTEP15 results demonstrate that the MVP Portfolio:
- Provides benefits in excess of its costs, with its benefit-to-cost ratio ranging from 1.9 to 2.8; a decrease from the 2.6 to 3.9 range calculated in MTEP14
- Creates $8.4 to $34.7 billion in net benefits (using MTEP14 benefits for all categories besides congestion and fuel savings) over the next 20 to 40 years, a decrease of up to 38 percent from MTEP14
Decreased benefits related to the congestion and fuel savings are largely driven by natural gas price assumptions.
The MTEP15 MVP Limited Review Business Case sheet is available on the MISO website.
The fundamental goal of the MISO’s planning process is to develop a comprehensive expansion plan that meets the reliability, policy and economic needs of the system. Implementation of a value-based planning process creates a consolidated transmission plan that delivers regional value while meeting near-term system needs. Regional transmission solutions, or Multi-Value Projects (MVPs), meet one or more of three goals:
- Reliably and economically enable regional public policy needs
- Provide multiple types of regional economic value
- Provide a combination of regional reliability and economic value
MISO conducted its first limited MVP Portfolio review, per tariff requirement, for MTEP15. The MVP Review has no impact on the existing MVP Portfolio’s cost allocation. MTEP15 Review analysis is performed solely for informational purposes. The intent of the MVP Review is to use the review process and results to identify potential modifications to the MVP methodology and its implementation for projects to be approved at a future date.
|The MVP Limited Review has no impact on the existing MVP portfolio’s cost allocation. The intent of the MVP Review is to identify potential modifications to the MVP methodology for projects to be approved at a future date.|
The MVP Review uses stakeholder-vetted MTEP15 models and makes every effort to follow procedures and assumptions consistent with the MTEP14 analysis. Consistent with previous MTEP MVP Reviews, the MTEP15 MVP Review assesses the benefits of the entire MVP Portfolio and does not differentiate between facilities currently in service and those still being planned. Because the MVP Portfolio’s costs are allocated solely to the MISO North and Central regions, only MISO North and Central Region benefits are included in the MTEP15 MVP Limited Review.
MTEP15 analysis shows the MVP Portfolio creates $17.7 to $54 billion in total benefits to the MISO North and Central Region members (Figure 7.5-1). Total portfolio costs have increased from $5.86 billion in MTEP14 to $6.46 billion in MTEP15. Even with the increased portfolio cost estimates and decreased gas prices from MTEP14, MVP Portfolio benefit-to-cost ratios are comparable to the original business case studied in MTEP11.
The bulk of the decrease in benefits is due to a decrease in the assumed natural gas price forecast in MTEP15 compared to MTEP14. In addition, the MTEP16 natural gas assumptions, which will be used in the MTEP16 MVP Portfolio Limited Review, were studied and are comparable to the MTEP15 forecast. Under each of the natural gas price assumption sensitivities, the MVP Portfolio is projected to provide economic benefits in excess of costs (Table 7.5-1).
|Natural Gas Forecast Assumption||Total Net Present Value Portfolio Benefits ($M-2015)||Total Portfolio Benefit-to-Cost Ratio|
|MTEP15 – MVP Limited Review||17,249 – 54,029||1.9 – 2.8|
|MTEP11||17,875 – 54,186||2.2 – 3.2|
|MTEP14 – MVP Triennial Review||21,451 – 66,816||2.6 – 3.9|
|MTEP16||18,588 – 56,426||2.0 – 2.9|
Table 7.5-1: MVP Portfolio economic benefits and natural gas price sensitivities
Increased Market Efficiency
The MVP Portfolio allows for a more efficient dispatch of generation resources, opening markets to competition and spreading the benefits of low-cost generation throughout the MISO footprint. The MVP Review estimates that the MVP Portfolio will yield $14 to $47 billion in 20- to 40-year present value adjusted production cost benefits to MISO’s North and Central regions – a decrease of up to 21 percent from the MTEP14 net present value.
The decrease in congestion and fuel savings benefits relative to MTEP14 is primarily due to a decrease in the out-year natural gas price forecast assumptions (Figure 7.5-2). The decreased escalation rate causes the assumed natural gas price to be lower in MTEP15 compared to MTEP14 in years 2024 and 2029 ‑ the two years from which the congestion and fuel savings results are based.
|A decrease in the natural gas price escalation rate, decreases congestion and fuel savings benefits by approximately 39 percent in MTEP15 compared to MTEP14|
The MVP Portfolio allows access to wind units with a nearly $0/MWh production cost and primarily replaces natural gas units in the dispatch, which makes the MVP Portfolio’s fuel savings benefit projection directly related to the natural gas price assumption. A sensitivity applying the MTEP14 Business As Usual (BAU) gas prices assumption to the MTEP15 MVP Limited Review model showed a 38.6 percent increase in the annual year 2029 MTEP15 congestion and fuel savings benefits (Figure 7.5-2).
Post MTEP14 natural gas price forecast assumptions are more closely aligned with those in the original business case of MTEP11. A sensitivity applying the MTEP16 BAU natural gas prices to the MTEP15 analysis shows just a slight increase in year 2029 MTEP15 adjusted production cost savings.
The MVP Portfolio is solely located in the MISO North and Central regions and therefore, the inclusion of the MISO South Region to the MISO dispatch pool has little effect on MVP-related production cost savings.
Distribution of Economic Benefits
|Benefit-to-cost ratios have decreased since MTEP14, yet remain comparable to the original business case in MTEP11|
The MVP Portfolio provides benefits across the MISO footprint in a manner that is roughly equivalent to costs allocated to each local resource zone (Figure 7.5-3). The MVP Portfolio’s benefits are at least 1.6 to 2.0 times the cost allocated to each zone.
MTEP16 will feature a Limited Review of the MVP Portfolio benefits. Each Limited Review will provide an updated assessment of the congestion and fuel savings using the latest portfolio costs and in-service dates. Beginning in MTEP17, in addition to the Full Triennial Review, MISO will perform an assessment of the congestion costs, energy prices, fuel costs, planning reserve margin requirements, resource interconnections and energy supply consumption based on historical data.
 Benefits 2 through 6 are from the MTEP14 MVP Triennial Review. The next MVP Triennial Review will occur with MTEP17.
 Sensitivity performed applying MTEP16 natural gas price to the MTEP15 congestion and fuel savings model. MTEP11 and MTEP14 values come from the MTEP14 MVP Triennial Review Report.