CARMEL, Ind., March 21, 2011 /PRNewswire/ -- MISO released testimony Friday in Arkansas Public Service Commission (Arkansas PSC) proceedings related to the total potential benefits available to Entergy and its customers, if the company chooses to join the MISO market. The testimony recognizes the hundreds of millions of dollars of benefits identified in a Charles Rivers Associates (CRA) study released last week, but also addresses scope limitations in the CRA analysis. One of the primary scope limitations is that the study only evaluated a subset of the benefits available to Entergy and its customers through participation in the MISO energy markets.
"By excluding other significant sources of value, such as benefits from improved reliability, the efficient provision of ancillary services and increased footprint diversity, CRA's study significantly understates the value to Entergy's customers of joining the MISO," said Wayne Schug, executive director of stakeholder engagement and strategic planning for MISO. "Over the last few years, we have spent considerable time collaborating with our stakeholders to develop methodologies to quantify the benefits that the MISO provides. This is published in the annual MISO Value Proposition Study. We used these same methods to calculate the value that could be gained by Entergy's integration into MISO. Our analysis demonstrates more than $500 million in annual benefits when all of these other sources of value are considered."
The CRA study looks principally at trade benefits associated with reduced energy production costs. This is equivalent to the Dispatch of Energy savings in the MISO Value Proposition and hence represents only approximately 16% of the total benefits quantified in the MISO Value Proposition.
The testimony also addresses a fundamentally flawed assumption in the study that undermines the study results. The study compares the benefits available in a fully-functioning market to potential benefits in a market that does not yet exist. "With benefits in the hundreds of millions of dollars at stake each year, the fact that the MISO market is delivering significant savings to our members and their customers today should give Entergy and its customers comfort that these benefits are real and available to them from the very first day they join MISO," said Schug.
Finally, on the critical issue of transmission cost allocation, the CRA study misinterprets some key facts. "The CRA study compares $5.5 billion of approved transmission projects in Southwest Power Pool (SPP), to $4.4 billion of potential MISO projects that may or may not be approved over the coming years," said Schug. "We and our members evaluate the cost and benefits of all proposed transmission projects thoroughly, and our Board of Directors will only approve project groups when the benefits justify the costs. Entergy would only be responsible for costs related to transmission projects that generate benefits in excess of cost; otherwise the projects simply will not get built."
MISO ensures reliable operation of and equal access to high-voltage power lines in 13 U.S. states and the Canadian province of Manitoba. MISO manages one of the world's largest energy markets, clearing nearly $23 billion in energy transactions annually. MISO was approved as the nation's first regional transmission organization in 2001. The non-profit 501 (C) (4) organization is governed by an independent Board of Directors and is headquartered in Carmel, Ind., with operations centers in Carmel and St. Paul, Minn. Membership is voluntary.