The coronavirus pandemic continues to clamp down on MISO’s spending, with the RTO again predicting to be millions under budget by the end of the year.
Staff told the Board of Directors during its meeting Thursday that they expect MISO’s base operating expenses to be about $6.6 million, or 2.5%, below budget. That’s a slight decrease from the $7.3 million variance the RTO reported to the board in June. The RTO budgeted $264.7 million in base operating expenses this year. (See Pandemic Pause Leaves MISO Under Budget.)
MISO has reduced expenses through slimmed-down employee training and travel expenses, a product of social distancing measures aimed at slowing the virus’s infection rate. The grid operator also has a higher-than-normal employee vacancy rate, as the pandemic complicated its usual hiring tempo.
Carl Nystrom, MISO’s senior director of corporate planning and analysis, said building maintenance expenses are also down this year because the facilities are less populated and offices used less often. However, he said the grid operator is buying a new air filtration system and equipment to improve ventilation in its Carmel, Ind., headquarters.
CFO Melissa Brown said MISO expects to bill its members for 703 TWh of energy in 2020, a 3.3% reduction from 2019’s 727 TWh. Lower load levels during pandemic lockdowns have now inched back to near normal.
“In 2021, we are forecasting a return to normal,” Brown said, adding that MISO expects to collect on about 730 TWh next year.
MISO has a 45-cent/MWh Tariff revenue rate in effect for 2020 and will have a 44-cent rate in effect for 2021.
The grid operator said it expects continued pandemic-related cost savings to persist through at least early 2021. Brown said MISO anticipates pared-down travel and an embargo on in-person stakeholder meetings through June 2021.
“Obviously if the pandemic eases before then, we could have travel pick up,” she said.
MISO is planning for a $379 million budget in 2021, a 3% increase from 2020. Next year’s budget includes a $270.2 million base operating budget, a $50 million investment budget and $58.7 million in other operating expenses.
“Likely in 2022, we expect to see upward pressure on our budget,” Brown said. She attributed the increase to a more normal travel schedule, rebounding employee training activities, technology upgrades, and increased costs from running the old and new market systems in parallel during the new platform’s testing phase.
CEO John Bear said technology costs are trending toward subscription-based payments instead of lump-sum investments.
“We will be expensing things in the year instead of amortizing them,” Bear said of future budgets.
