Value Proposition Study Reveals Billions in Benefits for 2016

[vc_row][vc_column][vc_column_text]Suppose you invited 20 people to your house for a backyard barbeque. Assuming your guests did not have unique eating habits, you could probably buy one big tub of ketchup instead of 20 individual bottles of the red stuff. The latter approach would be unnecessarily expensive, and besides, you’d be up to your ears in excess condiments!

The same principle holds true with electric utilities and power plants. Unless your utility had other reasons for doing so, it wouldn’t build five plants if it only needed two to keep the lights on. And that approach comes through loud and clear in the latest Value Proposition study that the Midcontinent Independent System Operator (MISO) released on February 23, 2017.

The Value Proposition study, which MISO performs every year, quantifies the economic benefits that MISO creates (in aggregate terms) for the millions of homes and businesses throughout the 15-state MISO region. MISO creates these benefits by managing its members’ power plants and high-voltage transmission lines in a pooled, region-wide manner. Like the ketchup analogy, it is  far less costly than numerous individual utilities operating their systems in isolation of each other. And it is more reliable too.

All told, the new Value Proposition study found MISO provided the region around $3 billion in net benefits in 2016. And remember how you saved money on your hypothetical backyard barbeque by buying ketchup on a “bulk” rather than an “individual” basis? That’s the same basic principle that underpins how MISO creates the single largest chunk of benefits in the Value Proposition: Managing the region’s existing power plants on a collective, regional basis so utilities do not have to build as much additional generation capacity as they otherwise would.

Specifically, without MISO, utilities would have had to build or otherwise acquire an additional 14,000 megawatts of generating capacity in 2016—enough to power as many as 14 million homes—to serve their customers and meet their minimum reserve requirements. But thanks to the efficiencies of MISO’s regional approach, utilities were able to avoid making those investments, which translates into a savings of around $2 billion.

Another big chunk of the benefits that MISO created in 2016 had to do with integrating new wind turbines into the electrical grid. Some of the region’s states and utilities have mandates to procure certain amounts of their electricity from renewable sources, and MISO does a number of things to help them meet their targets at lower costs. MISO’s efforts in this area saved approximately $380 million in 2016.

MISO also creates benefits in several other ways that are outlined in the Value Proposition. And remember—the big tub of ketchup is the best value for those backyard cook-outs![/vc_column_text][vc_message message_box_color=”peacoc” icon_fontawesome=”fa fa-file-text-o”]Download the 2016 Value Proposition Flyer[/vc_message][/vc_column][/vc_row]

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