By Amanda Durish Cook

MISO has released a draft guide detailing how it estimates costs for cost-allocated transmission projects after state officials and stakeholders called for more transparency around the process.

The guide is intended to cover any market efficiency or multi-value projects that might be approved under MISO’s 2018 Transmission Expansion Plan. State regulators in the Organization of MISO States earlier this year asked the RTO to provide more visibility on project costs. (See Commissioners Ask MISO to Share Tx Project Cost Data.)

The RTO is asking stakeholders to review the guide and suggest revisions by the end of January. After being vetted by stakeholders, the guide will become effective in March, MISO design engineer Alex Monn said during a Dec. 18 Planning Subcommittee conference call.

MISO accepts stakeholder assessments as a starting point for estimating the costs for market efficiency and multi-value projects but develops final planning-level cost projections based on its own project assumptions.

The RTO said its total estimates include a construction cost estimate, a 20% construction cost contingency fund and a 7.5% allowance for funds used during construction. MISO initially uses a straight line plus 30% calculation to estimate transmission line length, then updates the measurement using the proxy route provided by transmission developers. For substation upgrades and new builds, it similarly uses general estimates based on the area, then updates cost needs once developers submit more details.

For the construction estimate, MISO factors in land and right-of-way costs in addition to the costs of potential substations, transmission structures, conductor, accessories like shield wire and professional services such as the engineering and testing needed to assemble the line. Right-of-way acquisition terrain and grading estimates are based on the length of the new transmission line and the topography along the route. MISO also said it has the right to assume other project-specific mitigation costs “when necessary.”

Before MTEP 15, MISO relied on transmission owners to provide cost estimates for projects that fell within their service territory, but it began developing its own cost estimates after FERC issued Order 1000. The estimates are used to assess the worthiness of a project: MISO’s Tariff requires a benefit-to-cost ratio of at least 1:1 for multi-value projects and 1.25:1 for market efficiency projects.

2018 Construction Assumptions

The guidelines stipulate that MISO will assume the need for seven tangent structures per mile on 69-kV single circuit line (nine per mile for a double circuit) to three tangent structures per mile on a 500-kV single circuit line (five per mile for a double circuit). For all line ratings, MISO assumes developers use a steel pole structure type, except for 500-kV lines, which will have steel lattice towers.

The RTO also assumes a right-of-way width of anywhere from 80 feet for 69-kV and 115-kV lines, and up to 200 feet for 500-kV lines. For substations, MISO will assume 1.5 acres are needed for a 69-kV rated substation, 1.75 acres for a 115-kV substation, 2 acres for a 138-kV substation, 2.5 acres for a 161-kV substation, 4 acres for a 230-kV substation, 8 acres for a 345-kV substation and 20 acres for a 500-kV substation. Land costs for the 2018 planning year will vary by state, with the cheapest land in Montana for $677/acre and the most expensive in Illinois at $3,583/acre.

To mobilize and then break camp for all equipment and people needed for construction of a project, MISO will assume costs ranging from $51,250 for a 69-kV project to $153,750 for a 500-kV line project, up to $262,660 for certain substation work.

For terrain-clearing costs, MISO will assume $260/acre for level ground with light vegetation, $4,920/acre for forested land and $57,500/acre for wetland matting, as well as an additional $46,125/acre to secure environmental mitigation credits for wetlands. MISO will also factor in a $6,400/acre cost to grade any mountainous terrain a transmission line might traverse.

As part of the guide, MISO is also releasing state-by-state exploratory construction estimates, which represent high-level cost estimates for potential projects that still lack specifics.

The exploratory cost estimates range anywhere from $1.2 million/mile for a single-circuit 69-kV line in Iowa, the Dakotas and Montana, to $6 million/mile for a double-circuit 500-kV line in Arkansas, Louisiana and Mississippi.