LETTER FROM THE PRESIDENT – FALL 2021
UNDERSTANDING MISO LONG RANGE TRANSMISSION
The extraordinary rate of the change in the electric industry has shined the spotlight on new challenges – both for responding to how we use the grid now, and for planning to be prepared for how we will use electricity in the future. It’s becoming increasingly apparent that we need a lot more infrastructure – including transmission lines, stretching longer distances, to adapt the grid to meet our needs reliably.
In February 2020, MISO released “MISO’S RESPONSE TO THE RELIABILITY IMPERATIVE,” a sweeping report that built upon previous studies (such as the landmark Renewable Integration Impact Assessment, or “RIIA Study”) and details a worrisome and accelerating pattern of regional transmission system reliability issues in the MISO footprint. The fundamental reliability issue identified by MISO was a growing inability for MISO to ensure that its system had enough widespread generation available to meet the demands of load on every hour of every day basis, as evidenced by a pronounced uptick in the number of emergency events in the MISO footprint since 2016. Historically, emergency events occur in summer months and the current planning process accounts for this. But, in the last five years there has been a trend of emergency events in off-peak seasons. The February 2021 Arctic Winter Weather Event was yet another chilling reminder that MISO’s system is becoming increasingly stressed, particularly during traditional “off-peak” times.
To address the reliability issue, MISO has introduced a Long-Range Transmission Plan (LRTP) – a transmission roadmap that will identify transmission projects to address regional needs as the resource fleet continues to evolve. It’s important to note that in Michigan and throughout the MISO footprint, this transition is already well underway. Coal generating plants are retiring, clean energy is coming online and electric vehicles are on the verge of becoming mainstream. MISO projects this generation resource transition will become even more pronounced 20 years into the future.
These renewable generation resources are “intermittent resources,” meaning they only generate electricity when the sun is shining and the wind is blowing, so they will require support from this LRTP to maintain the reliability we all expect from the power grid. LRTP is expected to significantly increase interzonal transfer capability throughout MISO, which should increase the ability of Michigan to rely on generation resources in other areas during Michigan’s times of need, and to market Michigan’s generation to other MISO members during their times of need. The LRTP will provide a new regional backbone necessary to accommodate the vast changes in the MISO footprint’s generation fleet looking 20 years into the future.
At ITC, we support MISO’s Long-Range Transmission Planning approach. Historically it can take 10 or more years from planning through completion of transmission projects. The time to plan for our future is now.
Vice President, ITC Holding Corp., and President, ITC Michigan
ITC Provides Grant to Northeast Michigan Community Services
To help NORTHEAST MICHIGAN COMMUNITY SERVICE AGENCY (NEMCSA) achieve their mission of enhancing life quality and strengthening communities in northeast Michigan, ITC is supporting the agency through a $5,000 grant.
“We applaud the good work of NEMCSA with helping communities gain access to food, education and emergency support,” said Neal Bishop, Senior Area Manager, Local Government & Community Affairs, ITC Holdings Corp. “We are proud to contribute to this important body of work.”
NEMCSA is a private, nonprofit Community Action Agency that provides many programs and services throughout its eleven core northeast Michigan counties, a territory of 6,300 square miles. These counties include Alcona, Alpena, Arenac, Cheboygan, Crawford, Iosco, Montmorency, Ogemaw, Oscoda, Otsego and Presque Isle.
PHOTO CAPTION: Last month, SHINE BRIGHT, NEMCSA’s new volunteer program, along with our RETIRED & SENIOR VOLUNTEER PROGRAM came together to beautify Alpena area HEAD START playgrounds for the upcoming school year.
METC Launches $75 Million Green Bond Issuance
As part of ITC’s ongoing commitment to sustainability and renewables, Michigan Electric Transmission Company (METC) launched a $75 million green bond issuance in the private placement market on June 30, 2021, the first-ever ESG-based financing under ITC Holdings Corp. The issuance comes after monitoring the Environmental, Social and Governance (“ESG”) debt market for several years to determine an optimal time to pursue a green bond issuance to be directed towards capital investments that would yield a positive environmental impact. Well-received by investors, the issuance allows METC to achieve the lowest interest rate on any ITC operating company fixed debt issuance and an approximate pricing benefit of 5 basis points over a non-green bond issuance with similar terms, which translates to a pricing benefit that will be passed along to ITC customers. The issuance was priced on July 16, 2021 at 2.90% for 30 years (based on the 30-year treasury rate plus a 95 basis point spread) and closed/funded on August 3, 2021.
The proceeds from the issuance will be used to finance or refinance, in whole or in part, transmission infrastructure designed to support the connection of wind and solar generation facilities. As part of the issuance process, ITC Holdings Corp. also prepared and published a comprehensive Green Bond Framework document to be leveraged for future green bond issuances at any of ITC’s operating companies, as it defines all potential eligible green investments, lays out the process for selecting eligible investments, outlines the process for managing and tracking proceeds and indicates reporting and external review processes. The Framework also received a Second Party Opinion from Sustainalytics attesting to its alignment with market standards. Going forward, ITC will publish a Green Bond Report annually on all green bond issuances, including the METC issuance, on our website that will include impact metrics and an attestation of Management’s Assertion on the use of proceeds from our external auditor, Deloitte.
Visit ITC’s website to LEARN MORE ABOUT THE GREEN BOND FRAMEWORK and the associated Second Party Opinion.
Saginaw Chippewa Indian Tribe of Michigan Achieves Utility Status
While the Saginaw Chippewa Indian Tribe of Michigan saw huge success with the popularity of its casino, it had to shut down its operation when the COVID-19 pandemic hit the region in early 2020. But, prior to this, the tribe was already working on ways to diversify its revenue stream.
Working with Michigan Electric Transmission Company, a subsidiary of ITC Holdings Corp, the tribe was able to build and connect its seven-megawatt electrical substation to the nearby bulk electric power transmission system. The substation was originally constructed to support a hotel connected to its casino, but by leveraging ITC’s experience and connections with the Midcontinent Independent System Operator (MISO), the Tribe was able to establish the only Tribal Electric Authority in Michigan. By creating its own electric utility, the Tribe can make wholesale power purchases directly through the MISO and sell it to businesses located on tribal trust lands. What originally began as a power need for the hotel turned into an economic development tool with the potential to create new revenue streams for the tribe.
“We’re using our tribal utility as the driver for economic development. We’re directly connecting to the bulk power system,” said Kevin Blaser, Business Growth, Development and Energy Specialist with the Migizi Economic Development Co., the tribe’s economic development arm. “Now we’re getting cheaper power and finding ways to monetize it. Having our own tribal utility allows us to sell power to non-tribal entities. It’s what we’re using as the tip of our economic development spear.”
ITC is now collaborating, where needed, with the Saginaw Chippewa Indian Tribe to promote economic development within its tribal trust lands.
Coldwater Reliability Efforts Pay Off
ITC routinely maintains its transmission assets for the highest level of reliability possible. Following the completion of A MULTI-YEAR PROJECT TO PROVIDE SYSTEM REDUNDANCY in the Coldwater region, ITC performed vegetation management work clearing trees within its easement to ensure the safety, reliability and grid integrity expected throughout Coldwater.
Severe weather in the summer of 2021 tested the upgraded system in Branch County. While there were major power disruptions in the area, the transmission system held strong and the majority of ITC’s customers in Coldwater, including Clemens Food Group, Maroa Farms, and other industrial customers were not impacted. The strong performance of the transmission system is a great testament illustrating the importance of ITC’s proactive maintenance programs.
CASE STUDY – SUPPORTING ECONOMIC DEVELOPMENT IN COLDWATER
Located in south-central Michigan, the City of Coldwater’s convenient location and quality of life beckon both residents and businesses alike, making reliable power essential in this quaint and thriving community. In recent years, Coldwater also has attracted a number of significant industrial developments, bringing new jobs and opportunity to the area.
Coldwater’s electricity needs have long been served by the Coldwater Board of Public Utilities (CBPU); its hallmarks being reliability, customer service and responsiveness. So, in 2015, when Clemens Food Group made the decision to invest more than $255 million in a new pork processing plant and bring 800 new jobs to Coldwater (this number has now grown to over 1,200 direct and indirect jobs created), the CBPU and ITC got to work planning system improvements that would support power quality and the area’s growing load.
At the time, Coldwater was served by two transmission feeds coming into the city, but on the same structures. “This presented some risk to our industrial customers. We wanted to provide more redundancy that would reduce that risk, not only for Clemens Food Group but for our other industrial customers that depend on reliable power,” said Jeff Budd, Utility Director for Coldwater Board of Public Utilities. Coldwater also is home to Maroa Farms, Asama Coldwater Manufacturing and a WalMart distribution center, among others.
The approach: a two-phase, multi-year project that would bring new substations and transmission lines to the City of Coldwater, and in Coldwater, Girard and Union Townships, providing the system redundancy that Coldwater required.
Phase one of the project consisted of a new substation called Newton that connects to the existing Michigan Avenue substation via a three-mile, 138kV, single-circuit transmission line. Construction began in late 2016 and was completed in early 2017. Phase two of the project consisted of a new substation called Wagner that connects both the existing Verona – Batavia 138kV transmission line, as well as the Newton substation via a new 138kV single-circuit transmission line. Construction of the Wagner substation, and Wagner – Newton transmission line was completed in late 2019. Construction of the Butters substation, which began in early 2020, and connects to the existing Coldwater – Michigan Ave 138 kV line, was wrapped up in December 2020, essentially completing the project. Prior to construction, ITC procured easements on each side of the centerline along the lines’ routes to allow for construction and maintenance access – including performing the vegetation work needed to ensure the safety, reliability and grid integrity throughout Coldwater.
“The tremendous amount of work over the years really speaks to the focus and dedication of both the Coldwater and ITC teams to improving the Coldwater system. We appreciate that ITC was willing to work with our industrial customers to minimize the impact on their production. The partnership between ITC, Coldwater Board of Public Utilities and our industrial customers was very unique and necessary to get the job done.”
– Andrew Cameron, Electrical Engineer, Coldwater Board of Public Utilities
Severe weather in the summer of 2021 tested the upgraded system in Branch County. While there were major power disruptions in the area, the transmission system was not affected and the majority of ITC’s customers in Coldwater, including Clemens Food Group, Maroa Farms, and other industrial customers, were not impacted.
Now, as Coldwater looks to the future, Budd says its infrastructure has become a selling point to attract new investment, especially in rural areas that previously weren’t able to compete. “When it comes to economic development, where we’re located, we’re competing with Indiana and Ohio. A potential customer always wants to know about the quality of the power. Now, we take them out and show them our infrastructure, show them the ITC substations and how we’ve built redundancy into our system. It makes a big difference.”
BARNUM CREEK – BATAVIA
The BARNUM CREEK – BATAVIA LINE REBUILD started in the fall of 2020 and is expected to be completed by the end of this year. This 23-mile rebuild spans five townships which include Batavia, Union, Burlington, Newton and Emmett. This project is an example of METC’s ongoing commitment to maintaining the reliability and safety of the transmission system within our rural communities.
PARTNERS IN BUSINESS – SAVE THE DATE
Mark your calendars for ITC’s annual Partners in Business Meeting which will be held in-person on Tuesday, October 19, 2021 at The Henry Center in East Lansing, Michigan. Details will be coming your way this summer.