Hit it, Alanis...
This is a rather long story, but it is deeply satisfying in an "I told you so" way.
You all know that Grain Belt Express has been in the works for years. In order to get approval from the Missouri Public Service Commission, GBE offered MJMEUC (now going under the acronym MEC) a sweetheart, below cost deal if only they would sign up for service on GBE. MJMEUC accepted and has been exclaiming over how much money GBE would save for its customers. GBE is the bomb, said MJMEUC.
A couple years ago, regional grid planner/operator MISO began to plan a new collection of transmission projects to increase connectivity and reliability across its region, known as "Tranche 1." Tranche 1 looks like this on a map:
You all know that Grain Belt Express has been in the works for years. In order to get approval from the Missouri Public Service Commission, GBE offered MJMEUC (now going under the acronym MEC) a sweetheart, below cost deal if only they would sign up for service on GBE. MJMEUC accepted and has been exclaiming over how much money GBE would save for its customers. GBE is the bomb, said MJMEUC.
A couple years ago, regional grid planner/operator MISO began to plan a new collection of transmission projects to increase connectivity and reliability across its region, known as "Tranche 1." Tranche 1 looks like this on a map:
There's a set of projects in Iowa/Missouri that would import wind energy from Iowa into Missouri. On the map, it's represented as Orient-Denny-Fairport-Zachary-Thomas-Maywood, the 9, 10, 11 projects on the map. When MISO was developing this plan, GBE got upset. GBE insisted that its project was a better deal for ratepayers and would obviate the 9, 10, 11 projects, if only they could build it. In order to cement its position and prevent these projects from being approved by MISO, GBE began complaining to MISO that if only MISO included a built version of GBE in its planning, then the 9, 10, 11 projects would no longer be necessary. MISO rejected that idea because it has no control over whether GBE will ever be built. MISO preferred not to put all its eggs in GBE's transmission basket and proceeded with its plan to build the projects because MISO thought those projects would be a better deal for consumers.
And that's the question -- what IS a better deal for consumers in Missouri? As you know, the GBE project must be fully paid for by voluntary customers like MJMEUC. However, the MISO projects would be cost allocated to all consumers across the whole MISO region, with Missouri only paying a portion of the cost of constructing the lines. Considering the cost differences between GBE ($7B) and the MISO lines ($84M so far), it's a fair question to ask. Of course, MISO can't touch GBE's special deal pricing to MJMEUC because it is BELOW COST, but that only applies for "up to 200 MW" of service, less than 5% of GBE's capacity. The remaining 95% would be offered to other Missouri customers at vastly increased rates. As well, the MISO projects are cost allocated to captive customers. That means everyone pays a share, whether they use it or not. MJMEUC (and all Missouri electric customers) will pay for a portion of the MISO lines, even if they sign up to use GBE. If you sign up to use GBE, you'd be paying for GBE AND the MISO lines and there's nothing you can do about it.
GBE also claimed that MISO's projects would hurt its project's economics. I can only believe that means that MISO's projects are going to be much cheaper for Missouri customers than GBE. If MISO is offering comparable service at a lower price, why would anyone sign up to use GBE at full price?
GBE felt so strongly about all this that it filed a complaint against MISO at the Federal Energy Regulatory Commission, demanding that FERC make MISO include GBE in its transmission planning. FERC has totally ignored GBE's complaint and it has now become obsolete without accomplishing anything.
MISO moved on and opened an RFP for the #9 project in its Tranche 1, a new transmission line and substation in Missouri known as Fairport-Denny. Ameren bid to build the project, and as part of its proposal it will be partnering with MJMEUC. Ameren will sell 49% of the new transmission project to MJMEUC upon completion. MJMEUC must think MISO's project is a good deal for its ratepayers. It must be cheaper than additional transmission service on GBE.
MISO recently selected the Ameren/MJMEUC project to be built. And they're off to the races...
With the MISO project in the works offering transmission service for importing new wind resources into Missouri, why would anyone in Missouri sign up for GBE and pay more for wind being shipped from SW Kansas on a more expensive transmission project?
If not for that "sweetheart deal" MJMEUC received, would MJMEUC even be GBE's customer? Indicators point to "no". MJMEUC only loves GBE because it got a sweet deal. MJMEUC doesn't seem to care if GBE ends up costing other Missouri customers more than the MISO projects. Isn't that a bit selfish?
And shouldn't MJMEUC re-examine its deal with GBE and compare to taking service on the new MISO lines instead? MJMEUC can get out of its GBE contract at any time. But will it stop being selfish long enough to acknowledge its mistake? Otherwise, MJMEUC is now competing against itself. Dumb decisions make dumb results. I told you so.
And that's the question -- what IS a better deal for consumers in Missouri? As you know, the GBE project must be fully paid for by voluntary customers like MJMEUC. However, the MISO projects would be cost allocated to all consumers across the whole MISO region, with Missouri only paying a portion of the cost of constructing the lines. Considering the cost differences between GBE ($7B) and the MISO lines ($84M so far), it's a fair question to ask. Of course, MISO can't touch GBE's special deal pricing to MJMEUC because it is BELOW COST, but that only applies for "up to 200 MW" of service, less than 5% of GBE's capacity. The remaining 95% would be offered to other Missouri customers at vastly increased rates. As well, the MISO projects are cost allocated to captive customers. That means everyone pays a share, whether they use it or not. MJMEUC (and all Missouri electric customers) will pay for a portion of the MISO lines, even if they sign up to use GBE. If you sign up to use GBE, you'd be paying for GBE AND the MISO lines and there's nothing you can do about it.
GBE also claimed that MISO's projects would hurt its project's economics. I can only believe that means that MISO's projects are going to be much cheaper for Missouri customers than GBE. If MISO is offering comparable service at a lower price, why would anyone sign up to use GBE at full price?
GBE felt so strongly about all this that it filed a complaint against MISO at the Federal Energy Regulatory Commission, demanding that FERC make MISO include GBE in its transmission planning. FERC has totally ignored GBE's complaint and it has now become obsolete without accomplishing anything.
MISO moved on and opened an RFP for the #9 project in its Tranche 1, a new transmission line and substation in Missouri known as Fairport-Denny. Ameren bid to build the project, and as part of its proposal it will be partnering with MJMEUC. Ameren will sell 49% of the new transmission project to MJMEUC upon completion. MJMEUC must think MISO's project is a good deal for its ratepayers. It must be cheaper than additional transmission service on GBE.
MISO recently selected the Ameren/MJMEUC project to be built. And they're off to the races...
With the MISO project in the works offering transmission service for importing new wind resources into Missouri, why would anyone in Missouri sign up for GBE and pay more for wind being shipped from SW Kansas on a more expensive transmission project?
If not for that "sweetheart deal" MJMEUC received, would MJMEUC even be GBE's customer? Indicators point to "no". MJMEUC only loves GBE because it got a sweet deal. MJMEUC doesn't seem to care if GBE ends up costing other Missouri customers more than the MISO projects. Isn't that a bit selfish?
And shouldn't MJMEUC re-examine its deal with GBE and compare to taking service on the new MISO lines instead? MJMEUC can get out of its GBE contract at any time. But will it stop being selfish long enough to acknowledge its mistake? Otherwise, MJMEUC is now competing against itself. Dumb decisions make dumb results. I told you so.
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