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A new plan for Midwest power lines could cost $23 billion. Is it enough?

By Walker Orenstein, Star Tribune
Published: March 24, 2024, 5:12am

The cost of a gargantuan new plan to upgrade the regional electric grid with more than a dozen transmission lines across the Upper Midwest could top $20 billion. And that still might not be enough.

State utility regulators and several major power companies are calling for even more transmission capacity to help the region grapple with major challenges like rising demand for power and the shift away from fossil fuels, even as some welcome the sweeping proposal as a start.

Joe Sullivan, vice chairman of the Minnesota Public Utilities Commission, said “it’s pretty clear that it doesn’t get us where we need to go.”

“They’re taking a bite out of these issues,” he said.

The draft proposal the Midcontinent Independent System Operator (MISO) released in early March is light on specifics but includes at least three power lines in Minnesota, including part of what MISO termed a “superhighway” of high-capacity infrastructure across much of southern Minnesota and extending into Wisconsin.

MISO’s executive director of planning transmission, Laura Rauch,also promised a second wave of Midwest projects to complement its latest proposal. But as it stands, this transmission package would be historic in scope and price tag, with undetermined costs eventually passed to millions of utility customers.

“It would be, to my knowledge, the largest portfolio of high-voltage transmission lines in the country to ever have been proposed and to ever be built,” said Mike Schowalter, senior manager focused on the wholesale electric grid transition for the St. Paul-based nonprofit Fresh Energy.

A call for more

This latest proposal is the second in a series of at least four transmission packages meant to strengthen the system across MISO’s footprint. The Indiana-based nonprofit manages the electric grid and the open energy market in 15 states from Minnesota to Louisiana and north into the Canadian province of Manitoba.

In 2022, MISO approved the first set of projects — called Tranche 1 — aimed at the Upper Midwest. That included three new power lines in Minnesota worth more than $2 billion as part of a $10.3 billion package of 18 lines across the Midwest.

Those lines are still moving through the regulatory process in Minnesota.

MISO estimated Tranche 2 to cost $17 billion to $23 billion, and it appears to include either three or five lines in Minnesota and more than a dozen in total across Minnesota, North Dakota, Wisconsin, Iowa, Missouri, Illinois, Michigan and Indiana.

The potential cost of the Minnesota projects and the effect on bills is still unclear. Electricity customers ultimately pay for power lines, though costs for the MISO plans in the Upper Midwest are spread across the region based on electric use.

In a public meeting Friday, MISO invited feedback and said its plans could change. Local electric utilities said the current version of Tranche 2 is sparse in Minnesota and North Dakota, leaving the states with unmet needs.

They offered mostly general critiques.

Drew Siebenaler, Xcel’s manager of regional transmission planning and analytics, told MISO officials the power lines don’t do enough to account for a projected rise in energy demand.

That spike is happening across the country, and Xcel is predicting a one-third increase in its electric load by 2040. That represents a sharp split from a long period of ultraslow growth, and to supply all that extra electricity, Xcel could need to build significantly more power generation.

The MISO proposal would create a new transmission highway in the Upper Midwest of 765 kilovolt power lines, which Sullivan said can carry a “massive amount of energy” and are substantially bigger than the 345 kV lines that serve as the backbone of the current system.

The draft map shows a long 765 kV corridor in southern Minnesota, along with one 345 kV line near Rochester and another going from roughly Alexandria to Fargo.

But Siebenaler said there needs to be large-capacity transmission projects cutting across more than the southern part of the state. And he urged MISO to not rule out substantial additions to the plan.

Duluth-based Minnesota Power and Fergus Falls-based Otter Tail Power also voiced broad concerns.

Minnesota Power spokeswoman Amy Rutledge said in a statement the utility will keep pushing MISO to ensure “transmission projects necessary for regional reliability are fully considered for Tranche 2 to advance Minnesota’s carbon-free goals in a timely manner.” There were no MISO lines proposed in the company’s northeastern Minnesota service territory.

Ongoing plans

Despite the size of the transmission plan, MISO officials themselves said Friday the proposal wouldn’t meet all of the region’s needs. That’s why the nonprofit is considering a second part to Tranche 2.

The first two transmission packages have focused on MISO’s northern region. Tranche 3 will aim at power needs in southern states, and Tranche 4 should better connect north and south together.

Though each transmission project must gain local approval, MISO plans the lines with a goal of creating a more reliable grid addressing challenges like the spike in energy needs from electric vehicles, data centers and new manufacturing while keeping other energy costs lower.

MISO seeks projects with benefits to the entire region that it says are worth more than the cost. In general, state regulators and local utilities back the idea. Sullivan, for instance, said more transmission can cut the need for new power generation, which he said is more expensive to build.

It can also carry renewable power, like that generated by remote wind farms, to more areas. MISO said power is going unused in its western region, including Minnesota, because of insufficient transmission capacity.

Beth Soholt, executive director of the Clean Grid Alliance, a trade group representing renewable power and battery developers, said bigger, more integrated systems protect against blackouts in severe weather.

“The flexibility of being able to deliver power when and where it’s needed,” she said.

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