Regional planning and participation: Putting customers’ needs first

Providing a reliable, cost-effective transmission system for our customers remains our number one goal. At the same time, the emphasis on global climate change and increased reliance on renewable fuels is changing the landscape. Wind is the leading renewable “fuel,” and with an increased emphasis on state-mandated portfolio standards, more transmission infrastructure is needed to move the energy from the wind-rich areas west of us to where it can be used.  While we have successfully put the power of more than 400 megawatts of wind on the wires within our footprint, there are many policy decisions that will affect how much wind generation will be built, where it will be located and how it will be integrated with the existing system to maintain reliability.

At American Transmission Co., we believe the best plans are developed through an open, participative process that puts customers’ needs first. Through our participation in a number of regional and inter-regional initiatives, we are working to identify projects that meet not only reliability needs, but support policy initiatives related to climate change and other issues, along with improved access to the regional market. Our approach is based on two critical foundations – comprehensive analysis and collaboration.

In this year’s 10-Year Assessment, we continue our process of assessing and reassessing the needs of existing and anticipated system users, individually and collectively, according to accepted industry criteria and practices. Our goal is to initially determine, and then evolve over time, the best set of transmission projects that meet those needs. “Best” means striking the right balance among reliability, risk, cost and societal impact so that the resulting plan is publicly acceptable and constructible.

While our reliability performance data indicates that our system is performing well, we continue to emphasize managing the risk of aging infrastructure, ensuring reliable performance and safety into the future. Where previous assessments have discussed near-term asset renewal efforts, this year we have extended the detail of our potential asset renewal projects through the full 10-year horizon. 

The 2009 Assessment identifies $2.5 billion in necessary transmission system improvements. The total includes $1 billion for transmission network upgrades specifically described in this report, along with $1.5 billion in interconnection and asset renewal projects, infrastructure replacements and relocations, and other smaller network reliability improvements.

While the cost estimate in our 2009 Assessment is slightly less than the $2.7 billion identified in last year’s report, our 10-year capital spending may need to be increased because of increased focus on regional transmission support to move renewable generation to areas where the power is needed. With more than $2.1 billion invested in the system since 2001, we have become a recognized, national leader in planning, permitting and building electric transmission infrastructure.

Please refer to the Projects section for a list of specific projects in each zone identified to improve reliability.

Flora Flygt                           Paul Roehr                                   Mark Davis

Capital cost

Based on this 2009 Assessment, the total cost estimate for needed transmission system improvements is about $2.5 billion over the next 10 years (through 2018).  The total $2.5 billion in projects, expressed in constant (inflation adjusted) year dollars, can be broken down into the following categories.

* Other includes Administration & General, Asset Acquisition, Asset Contribution, and Infrastructure Relocation.

The total cost trends of the last five assessments and updates are as follows:

In the 2009 Assessment, we project a reduced total cost estimate for all needed transmission system improvements over a rolling 10-year period. Although the proportionate share of cost of projects specifically detailed in the assessments continues to decrease, the overall total is relatively static as a result of an increase in Asset Renewal expenditures. In addition, we are evaluating several higher-voltage transmission projects to support the need for regional renewables. If these scenarios emerge, we project that there will be additional capital expenditures in the 10-year planning period.

Other issues that can influence the total 10-year cost up or down as each future assessment is completed includes the following factors:

• Completion of prior projects that improve reliability and renew assets,
• Changing load forecast,
• Changes in generation and distribution interconnection projects,
• Improved resource planning to manage construction projects
• Changes in mandatory reliability standards,
• Additional projects that are driven by economic benefits and
• Changing equipment and labor costs.

Referring to the breakdown of the 2009 total cost, unspecified network projects are defined as those projects that may shift into the 10-year timeframe because of factors listed earlier. This $258 million represents anticipated costs from projects not defined in the assessment, but potentially driven by some combination of the following issues that we continue to analyze:

• Reliability impacts to our customers, both short- and long-term
• Regional impacts to our customers,
• Economic impacts to our customers, and
• Multiple outage impact solutions.

Future assessments will continue to define these unspecified costs as issues are further defined in the continuing planning process.

Table 2009_Financial outlines the costs of network and economic assessment projects and ATC construction projects overall.

Reliability for renewable energy: helping states meet their renewable goals

In addition to providing updated need and project information, the 2009 Assessment presents information regarding our involvement in regional and inter-regional transmission system studies that support wind generation development. Please refer to Regional Planning for more information.

Developments in the Upper Midwest and the Eastern Interconnection could affect us and/or our customers. Among the more relevant of these include renewable portfolio standards, exploratory transmission initiatives being investigated by the Midwest ISO, and wind generation developments. The latest developments are summarized below.

• The Joint Coordinated System Plan Study

This joint effort among several regional transmission organizations (RTOs) issued its final report earlier this year. The study was performed in coordination with a Department of Energy study of wind integration in the Eastern Interconnection. Conceptual transmission overlays were identified for two future generation development scenarios – a reference scenario and a 20-percent wind scenario for the U.S. footprint in the Eastern Interconnection excluding Florida.

It is currently unclear whether RTO's will continue participating in the study effort or when the next study cycle will begin. Refer to the study website, http://www.jscpstudy.org, for more details.

• Midwest ISO Regional Generation Outlet Study I and II (RGOS)

The Midwest ISO initiated RGOS -- Phase I as a targeted study as part of a larger process. The objective is to identify a set of regionally coordinated transmission projects that interconnect and deliver new wind generation based on renewable portfolio standards in Illinois, Iowa, Minnesota and Wisconsin. This effort also collaborates with the Upper Midwest Transmission Development Initiative (UMTDI) effort, as the initiative requested this study to support its transmission development effort.

In March 2009, the UMTDI executive committee directed the Midwest ISO to conduct detailed analyses of the indicative transmission plans for two wind zone scenarios developed in RGOS and modified by UMTDI. The results are scheduled to be available by the end of October 2009. The Midwest ISO kicked-off RGOS--Phase II in May 2009, which will identify the transmission alternatives needed to implement new or expanded renewable portfolio standards and other renewable goals not necessarily addressed in the RGOS Phase I study. Please refer to the Regional Planning section for more information.

• Michigan Wind Energy Resource Zone Board

This is a special council created by Michigan legislation that will identify one or more areas that could become prime wind energy production zones. Currently, the board has listed four zones for further study, all in the Lower Peninsula of Michigan. A secondary list of sites that did not meet prime siting or high-production criteria included one Upper Peninsula zone in the Keewenaw Peninsula. Preliminary studies by the board and a Michigan university had pointed to a few additional potential wind production areas in the U.P. where generation development could occur in the future. We are following the developments of this special council.

• Minnesota Renewable Energy Standard Studies

Minnesota transmission-owning utilities conducted three studies to identify the next round of transmission upgrades that will help meet the stat’s renewable energy standard milestone in 2016. Reports can be found on the Minnesota Electric Transmission Planning website at www.minnelectrans.com. We pay close attention to these study efforts to determine what impact the identified plans would have on transmission development in and around Wisconsin and communicate with the Minnesota  utilities regarding study details so as to participate in ongoing and future joint studies.

• SMARTransmission Study

The currently underway Strategic Midwest Area Renewable Transmission (SMARTransmission) Study is a collaborative effort among ATC, American Electric Power, MidAmerican Energy Co., Exelon, Xcel Energy and NorthWestern Energy Corp. to identify potential extra-high voltage (345-, 500- and 765-kilovolt) projects that could be needed to move wind power within a nine-state region from the Dakotas to Ohio, including the areas covered by the RTOs of SPP, MISO and PJM.

As part of this study, transmission alternatives will be analyzed for impact, and economic benefits of several options will be quantified. The outcome of the SMARTransmission Study in combination with other studies currently being performed by the Midwest ISO will be used as input to the regional transmission planning processes and result in transmission projects being identified. This study is scheduled for completion in January 2010.

• Upper Midwest Transmission Development Initiative (UMTDI)

The governors of five states (North Dakota, South Dakota, Minnesota, Iowa and Wisconsin) launched this initiative in September 2008. The goal is to promote regional electric transmission investment and cost sharing that supports these states’ commitment to cost-effective renewable generation while maintaining reliability. This initiative includes two charges – development of a transmission plan and a cost sharing methodology. A major input that supports this effort is RGOS Phase I, organized by the Midwest ISO. We, along with other transmission owners and stakeholders in these five states have been participating in and providing input to both the UMTDI and Midwest ISO efforts. It is possible that UMTDI will recommend a transmission plan and a cost-allocation approach by the end of 2009.

Planning for a reliable future

Since publishing last year’s assessment, we’ve energized a number of components that provide reliability benefits to our customers.

• Gardner Park-Central Wisconsin – Construction was completed on a new 50-mile 345-kilovolt line between the Gardner Park Substation near the Weston Power Plant and the new Highway 22 Substation in central Shawano County. The 345-kilovolt line supports output of the Weston Power Plant and strengthens reliability.
• Morgan-Werner West 345-kilovolt and Werner West-Clintonville 138-kilovolt lines –This project relieves electric system congestion in and around Green Bay, provides additional transfer capability and improves electric system reliability. 
• North Madison-Huiskamp – This new, five-mile, 138-kilovolt transmission line in Dane County resolves thermal overloads in the area.
• Cranberry-Conover-Plains –The Cranberry-Conover 115-kilovolt transmission line was completed in 2008. The overall reinforcement project also includes the rebuild and conversion of the Conover-Iron River-Plains 69-kilovolt line to 138-kilovolt operation by 2010. This alternative addresses the long-term reliability issues of the Rhinelander Loop, provides substantial voltage support to the 69-kilovolt system in the western portion of the Upper Peninsula and addresses potential long-term condition issues due to the age of the existing 69-kilovolt system.

Another aspect of reliability involves customers’ distribution and/or generator interconnections. Several unanticipated large-customer interconnections have recently developed in our service territory. Ethanol plants have been interconnected within the last two years. A large gas distributor is installing a pumping station for a pipeline extension to northeast Wisconsin. Several economic development opportunities in Michigan’s Upper Peninsula may also require new distribution interconnection facilities. Additional interconnections are also being developed to support pollution control equipment that is being added at two coal fired power plants. For more information, see T-D Interconnections.

While natural gas generation dominated new energy proposals in recent years, new proposals now focus on wind generation. Currently, more than 16 proposals to install more than 1,371 megawatts of wind turbines in Wisconsin are in the Midwest ISO generation queue. For more on generation developments in Wisconsin and Michigan’s Upper Peninsula, see Generation Interconnections.

Engaging the public in our plans

Our approach to transmission planning is built upon two critical foundations – comprehensive engineering analyses and collaborative communications.

We are continually assessing and reassigning the needs of existing and anticipated system users, individually and collectively, according to accepted industry system performance criteria and practices. Our goal is to initially determine, and then evolve over time, the best set of transmission projects to address those needs.

In addition to identifying reliability-based projects to address system needs, we are engaging stakeholders to identify the most important economic benefit projects. Through collaboration with stakeholders, projects to connect our system to renewable energy from the west and to relieve congestion around southern Lake Michigan have been identified for economic analysis in 2009.  Six alternatives have been identified to connect our system to renewable resources in the west, including multiple variations of a La Crosse – Madison area 345-kilovolt circuit, a low-voltage alternative to this path, a 765-kilovolt by-pass of this path, and a Dubuque, Iowa to Madison area 345-kilovolt alternative.  In order to relieve congestionaround southern Lake Michigan, a 345-kilovolt circuit connecting southeast Wisconsin to northeast Illinois will be studied as well.

The economic analysis studies of these seven project alternatives will determine the economic benefits that each alternative may provide to the ATC footprint. This information can be combined with the results of other studies to determine which project alternatives merit further investigation.

Since economic analyses may be used in the prioritization and staging of projects, an attempt is made to capture all relevant factors in determining the economic benefits of a project. We test such projects against multiple plausible futures for Wisconsin’s electric industry, such as robust or slow economic growth, regulatory changes, and fuel supply volatility. The futures are based upon key drivers such as load growth, generation retirement and expansion, fossil-fuel costs, use of renewable energy, and increased environmental regulation. The specific futures analyzed in the 2009 assessment include slow economic growth and 20 percent energy from wind. This process also uses pre-analysis stakeholder input and is described more thoroughly in the Economic Analysis section.

Besides those described in the Reliability for renewable energy section described above, several collaborative efforts are underway and are described below:

• ATC Energy Collaborative-Michigan

Even with significant upgrades to transmission infrastructure in the Upper Peninsula in recent years, operational challenges remain due to the delicate balance among generation, load, market flows and transmission that currently exists.

To verify our planning assumptions for the intermediate (three- to five-year) and long term (10-15 year) periods before future projects are proposed, we engaged stakeholders during 2008 in a collaborative process across the U.P. to examine the bounds of several plausible futures. We developed a set of core transmission system needs across the Upper Peninsula, and we are continuing to work with stakeholders on a plan that will provide continued reliability and more operational flexibility. This plan may impact the Lower Peninsula of Michigan and Canada, as well as the U.P. and northern Wisconsin. Please refer to our U.P. Collaborative section for more details.

• Eastern Interconnection Planning Collaborative (EIPC)

The EIPC consists of a group of 23 Planning Authorities, working with the Department of Energy, formed to develop conceptual Eastern Interconnection-wide transmission plans. ATC is an active participant in EIPC, which has submitted a bid to perform Eastern Interconnection-wide planning in response to a DOE funding opportunity. The DOE’s proposal selection is expected by early November, 2009 and a final contract is expected by the end of this year.

• Western Wisconsin Reliability Study

This study is currently underway and is being led by ATC with participation by Xcel Energy; Dairyland Power Cooperative; Great River Energy; International Transmission Co., Midwest; Southern Minnesota Municipal Power Agency; and coordination with the Midwest ISO. The purpose of this study is to investigate reliability needs in western Wisconsin, and to identify projects that could address the identified needs. This study is expected to be complete in the second quarter of 2010.

• La Crosse-Madison 345-kilovolt line

We continue with efforts begun in 2008 to work with stakeholders in identifying projects that provide economic benefits and upgrades that could improve access to lower-cost sources of power inside and outside our service territory. Stakeholders continue to express significant interest in a high-voltage line between La Crosse and Madison; it also is believed that the line would support the Upper Midwest Transmission Development Initiative to meet renewable portfolio standards in the region.

• Organization of MISO States Cost Allocation and Regional Planning

The Organization of MISO States (OMS) launched its cost allocation and regional planning (CARP)  effort in January 2009 to address the issue of cost allocation for transmission in the Midwest ISO, including developing indicative transmission plans to illustrate the amount of transmission that might be needed in various scenarios and the associated costs.

During the first half of 2009, the group – which includes representatives from each of the 13 state regulatory commissions in the Midwest ISO – has identified assumptions and scenarios that will be used in developing transmission plans. In June of 2009, this group also began its investigation of alternatives to the current Midwest ISO cost-allocation methods for transmission. After reviewing various alternatives, the group will determine whether to further pursue the adoption of one of those alternative methods or to revise the current methods.

Asset renewal

Our Planning and Asset Management departments work closely together to maintain and improve system reliability. System reliability is improved by focusing upon the life-cycle management of our transmission assets. The coordination of design, commissioning, operation, maintenance and replacement strategy are necessary to achieve this objective. Asset renewal is the “replacement strategy” piece of the asset life cycle. Asset renewal is driven by public and worker safety, regulatory compliance, reliability performance as defined by criticality, and environmental stewardship. For details about this program, please refer to the Asset Renewal section.

While the top goal is always public and worker safety, two of the major objectives for our Asset Management department are to minimize the total life-cycle cost and to manage the risk of aging infrastructure. Knowing and managing the costs and risks help us identify the best-possible system improvements that serve multiple purposes and reduce overall cost. This year’s assessment includes $750 million in asset renewal work, which includes maintenance and protection projects. Please refer to the 2009 Asset Renewal Financial Table for details.

Ever mindful of the environment

With a construction program of nearly $250 million each year, we recognize that our work has an impact on the environment. We take our commitment to environmental protection and stewardship seriously – our goal is to avoid making impacts where we can, minimize those that can’t be avoided and restore the environment. In some instances, we can improve conditions when our work is finished. Please refer to Routing & Siting for details regarding our environmental efforts.