MISO Transmission Rates in Joint Zones; Will the Transmission Rate Express Train Continue? (white paper)
MISO transmission rates have been rapidly escalating only to slow in recent years as transmission investment growth has moderated, the number of new transmission owners slowed, and the impacts of the corporate tax cut have played out. In 2021, however, MISO average transmission zonal rates increased by a stunning 17.7%, largely due to a 7.2% increase in transmission investment, a 4.1% decrease in load and the ending of deferred tax refunds. Looking to the next five years, MCR forecasts that zonal rates in joint pricing zones will increase by an average of 6.5% per year, well above the projected five-year inflation rate of 3.17%. We forecast that nine of the 20 joint pricing zones in MISO will see average annual rate increases over the next five years of at least 7%. These forecasted rate increases result from an expanding rationale for transmission investment as “resiliency” combines with social, political and regulatory changes; increasing capital, O&M and A&G costs due to rising inflation; and a continued hunger for earnings growth by IOUs and Transcos. The only way public power and cooperatives can protect their members and customers from the MISO “express train” of rising transmission rates is to develop a business plan to ramp up recoverable transmission investment that increases reliability, ensure no revenue is being left on the table by optimizing the transmission formula rate, and provide other transmission investing benefits to members and customers that make the impact of rising transmission rates more palatable.