Reliability. Efficiency. Development.
Balancing an increasing demand for electricity against an aging electric transmission infrastructure requires a commitment to protecting reliability, an independent eye to maintain equal treatment and fair access to the transmission system, and a strong desire to seek cost-effective ways to improve the way energy is delivered.
This is the charge of the more than 700 employees and 300 Market Participants who form the Midwest ISO.
Every day, we protect the reliable delivery of energy across thousands of miles of high-voltage electric transmission lines in the Midwest. In addition, we provide fair opportunity for all interested parties to participate in serving the electric energy needs of consumers in 15 states and the Canadian province of Manitoba. We do all of this with an eye to the future, identifying improvements to be made to the wholesale bulk electric power system.
Find out more about how we and our members are energizing the Heartland.
Benefits of the Midwest ISO
The Midwest ISO is the first federally approved Regional Transmission Organization (RTO) and the sole North American RTO built from the ground up. Since it began operations in 2001, the Midwest ISO has faced its share of challenges and successes. Through it all, the staff and members of the Midwest ISO continue to focus on identifying ways to improve reliability and increase efficiency in the delivery of electric energy in the Midwest.
Almost a decade after initial formation discussions began, Midwest ISO services provide annual benefits of between $555 million and $850 million. These benefits derive from improved reliability, increased efficiencies in the use of generation resources, and improved regional planning. During the next 10 years this savings is expected to provide net benefits to the region of between $4.6 billion and $6.9 billion.
As shown in the chart below, these benefits flow from a number of areas. The following briefly describes each benefit area.
- Improved Reliability – Since the establishment of the Midwest ISO, the use of the region’s electric system has undergone significant change because infrastructure built primarily for local use is operated on a regional basis. Despite this increased pressure on the grid, analysis of disturbance data available from the North American Electric Reliability Corporation (NERC) shows that Regional Transmission Organizations reduce the size, duration and number of outages in their footprints. In the Midwest ISO this results in annual benefits between $230 million and $340 million.
- Dispatch of Energy – Through the Day-Ahead and Real-Time Energy Markets, the Midwest ISO is able to optimize the dispatch of energy throughout the region, ensuring that energy needs are met by the most cost effective, deliverable generation available in the region. This results in annual benefits between $200 million and $250 million.
- Dispatch of Reserves – The Midwest ISO Ancillary Service Markets will commit and dispatch operating reserves and regulation in a co-optimized manner with energy. This will allow portions of cost-efficient generation that are now held for operating reserves to be dispatched for energy needs, while shifting the operating reserve locations to less cost-efficient generation and still maintain reliability. This lowers overall costs for the region, providing annual benefits between $115 million and $205 million.
- Contingency Reserves – Through the cooperation of its stakeholders, the Midwest ISO has been able to coordinate a Generation Reserve Sharing Group that significantly reduces the contingency reserve requirements for the region while maintaining reliability. This reduction in the requirement allows generation that would have been held to meet prior contingency reserve requirements to meet regional energy requirements. This results in annual benefits of $135 million to $145 million.
- Generation Investment Deferral – The shift from localized use of the electrical system to regional use allows more efficient and effective use of the generation assets and allows for a reduction in the planning reserve margins for the region. Even a conservative estimate of a 1 percent to 1.25 percent drop in the planning reserve requirement results in annual benefits of between $135 million to $150 million.
Midwest ISO Annual Benefit by Value Driver1 (in $millions)
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