At the May Board of Water, Electric and Communications Trustees meeting, the Trustees learned of the new Midcontinent Independent System Operator (MISO) electricity capacity auction process, and the impact on the energy market, impacting operations at Muscatine Power and Water (MPW) and the millions of customers in the MISO territory. One key takeaway from the results is that MPW’s local generation assets continue to prove valuable to Muscatine.
The MISO 2025-26 Planning Reserve Auction (PRA) results were posted in April. This year’s PRA was the first MISO capacity auction to feature the reliability-based (sloped) demand curve, which was intended to stabilize historical capacity market volatility and send a clear and stable market signal across the system for asset investment and the value of capacity to system reliability. The result for MPW, with its three local generating units and wind generation, was an average of $216.61 per megawatt-day (‘MW-day’). This average compares to last year’s result of $22.08 per MW-day, a ten-fold increase in generation capacity revenue.
While the energy industry is experiencing a consequential shift in its generation portfolio, grid operators across the nation are reevaluating plans to ensure adequate power is available to meet customer demand. Demonstrated by this year’s results, MISO appears to have achieved its goal of sending a stronger market signal for the value of generation capacity. As intermittent resources – renewables – are coming online, the obligation of MISO and utilities to provide power when needed remains unchanged.
As discussed at MPW’s Power Breakfast event earlier this year, the MISO grid is experiencing several trends that put increased strain on reliability, including higher levels of intermittent solar and wind resources, retirement of many dispatchable resources, and high levels of forecasted load growth. These trends have increased the need for electricity-usage warnings and the risk of blackouts during extreme weather events. “MPW remains committed to ensuring Muscatine has the right mix of resources to ensure reliable and affordable electric supply as our system and the MISO grid continue the transition to a greater mix of renewable energy,” said Gage Huston, general manager.
MPW staff updated the Trustees of improvements at the Isett Street substation property. In May 2024, the Trustees authorized a $177,000 purchase of a parcel of land located adjacent to the substation. The Utility took possession of the property in August 2024, and to date, has completed several improvements to the property that improve the aesthetics of the area and help ensure continued reliability of the substation.
Huston commented, “This land purchase was a strategic move, most importantly improving
access to the substation, but it will also provide additional storage space, increase the
usability of the site, provide opportunity for future expansion, and secure long-term stability
by owning the parcel instead of just utilizing an easement.”
The Board also heard an update from Greg Slonka, director of power production and supply, who reviewed the results of a study to comply with a new environmental regulation affecting the power plant. The study had encouraging results and included an updated compliance cost estimate of $15.9 million. Slonka commented, “This would still be a very expensive project for MPW, and there’s still a lot of work to be done, but this looks much better than a prior alternative estimated at $41 million.”
As discussed at the April Board meeting, MPW secured a proposal from Eide Bailly for a two-year pricing commitment for financial and fiduciary audits for the 2025 and 2026 calendar years.
MPW net income for April was $393,000, which was $124,000 above budget and well above
the $74,000 of net income in April 2024. Market prices for wholesale energy sold to MISO from
MPW’s generation were significantly higher than April 2024. Energy prices for the electric energy MPW purchases from MISO to meet its customers’ needs were also higher. The net result was that margins were better than budget for electric wholesale transactions. April margins were worse than last year when natural gas prices were extremely low and MPW could purchase from the market rather than run its local generation units.
In other action, the Trustees:
- Approved payment for April 2025 expenditures and transactions for a total of $10,180,749.68.