Willmar Utilities Commission OKs becoming a transmission owner

By David Little
dlittle@wctrib.com
WILLMAR - The Willmar Municipal Utilities Commission voted Monday to become an owner in the region’s electrical transmission grid.
The commission’s action will lead to Willmar becoming an owner in Midcontinent Independent System Operator. MISO manages the transmission grid in all or parts of 15 states including Minnesota and the Canadian province of Manitoba.
The commissioners acted after consultants from MCR Performance Solutions of Deerfield, Illinois, reported two weeks ago that Willmar Utilities would benefit financially by becoming a transmission owner and increasing its assets in MISO.
Willmar’s transmission assets are currently administered by Great River Energy under a long-term power supply contract that was struck many years ago to supply 30 megawatts of energy to Willmar.
Willmar will become a MISO owner when the long-term Great River Energy agreement expires Jan. 1, 2016.
Utilities such as Willmar pay a delivery charge for the electricity they buy off the grid. In return, utilities that own assets in the grid receive revenue from payments made by transmission users for shipping that electricity over the grid.
Since 2009, Willmar has received an annual revenue credit allowed by federal energy regulators that allows Willmar to recover some of its transmission-related expenses and receive a return on its transmission assets.
However, the credit does not cover all of Willmar’s transmission expenses.
In 2013, Willmar paid out $1.9 million in transmission charges compared to $1.6 million in transmission revenue. MCR representatives said that $300,000 deficit, which is subsidized by ratepayers, will widen as transmission rates increase.
MCR said the deficit can be reduced if Willmar’s 3.2 percent of transmission assets in the GRE pricing zone were equal to Willmar’s 4.2 percent share of the total load in the GRE pricing zone.
Commission President Steve Salzer asked if commissioners had further questions after they had had time to study the MCR report.
Hearing none, Salzer spoke in favor of joining MISO and filling the revenue gap. Also, Salzer said he was a little concerned with Great River Energy being in control of Willmar’s transmission assets.
“I personally feel that there’s a lot of pros to this proposal,’’ he said.
Utilities General Manager Wesley Hompe said Willmar will become actively involved as a MISO transmission owner. He said Willmar uses Great River Energy as sort of a “gatekeeper and credit allocator.’’
“By taking this step, we would be at the table and directly working with the rest of the transmission owners in MISO,’’ Hompe said. He said Great River Energy would hand over Willmar’s assets to MISO and Willmar would continue as a MISO owner.
Hompe said Willmar will have the opportunity to propose transmission projects that are in Willmar’s best interest.
He said Willmar will have no choice but to pay more for transmission. But being a MISO owner provides an opportunity to receive a credit back that is hopefully equal to Willmar’s transmission cost.
“Our goal has always been to net out our transmission cost to zero, so we’re not making money but our ratepayers aren’t paying more,’’ he said.
Commissioner Joe Gimse said mitigating projected 11 to 12 percent increases in transmission costs is a good goal to meet.
Commissioner Dan Holtz noted the benefit of having a seat at the MISO table and being able to determine a project rather than it being predetermined for Willmar.
“We have the ability to determine what that project will be, as long as it’s approved,’’ he said. “I think that’s huge as opposed to it being dictated to us what projects we could invest in. We would take ownership.’’