Why Cardinal Hickory Creek Will Make Energy More Affordable

The Iowa Utilities Board issued their final ruling approving construction of the Cardinal Hickory Creek transmission line in Iowa. IEC applauded the decision, noting in earlier support of the project that the project will facilitate more renewable energy development in Iowa and allow our state to better utilize our robust wind energy resources. 

Nathaniel Baer, former IEC staffer, noted in written testimony to the IUB last year that,“The Cardinal-Hickory Creek project would relieve congestion on the electric grid, particularly between Iowa and Wisconsin. Adding transmission allows lower-cost, clean electricity resources, like Iowa wind, to be delivered to customers across the Midwest.”

How does adding this line that will carry power from rural Dubuque County to the outskirts of Madison, Wisconsin, achieve this?

The need for new transmission is growing because of the transition to renewable energy. Historically, increasing demand for electricity would drive utilities to build a power plant nearby. The short distance from generation to usage resulted in short transmission routes. For renewable energy like wind, the old approach doesn’t always work: some of the nation’s best wind resources are in Iowa, distant from the largest demands for energy like Chicago. Solar resources are also not distributed equally, with much of Iowa being similar to the productivity in Houston, Texas. Getting the energy where it is needed requires transmission at a larger scale than in the past.

The transmission grid consists of high-voltage power lines that connect generation to lower-voltage distribution lines. Iowa already has a number of high-voltage lines that help distribute energy across and through the state. Several – plus Cardinal-Hickory Creek – were part of a regional portfolio of lines that were identified through an evaluation of long-term energy needs, based on scenarios of potential renewable generation. Through the Cardinal-Hickory Creek case, one of the experts IEC and its partners worked with showed that the renewable generation in Iowa has outpaced even the highest predictions.

The regional transmission operator for Iowa, MISO, tracks real-time prices on the wholesale energy market (i.e., the market for utilities to buy and sell energy). When the generated energy cannot get to the people who need it, prices shift: prices drop in the places with excess energy and rise where demand is higher than generation. Those shifts can leads to large disparities. The map below shows a snapshot when prices in Northeast Iowa were negative – generators are being paid to stop generating – while the prices in Wisconsin and Michigan’s Upper Peninsula were over $50 per megawatt hour. Everywhere else, prices were below $30 per megawatt hour.

If Northeast Iowa could transmit its excess power to Wisconsin, the prices for both places would settle somewhere in between. Iowa’s power generators would earn more, while Wisconsin customers would pay less. At other times, the process may reverse so energy would flow the other direction.

In the long term, this price correction would benefit customers in both states. The increased revenue to Iowa from Wisconsin would lead Iowa customers’ rates to decline, because rates are calculated to meet an amount of revenue approved by the Utilities Board. Wisconsin’s customers would stop paying for the more expensive generation after shifting to Iowa’s renewable energy. Analysis of the regional package of transmission lines, which included the Cardinal-Hickory Creek line, found that total economic benefits to Iowans would be roughly three times the cost of building the transmission lines.

News stories have highlighted the limitations of the current transmission system. Projects under development have been dropped due to the lack of transmission capacity. Prices to connect new generation to the grid are higher because connecting may require building more transmission. Meanwhile, nearly all of the generation under development in Iowa and nearby states is renewable energy, so those are the projects that will not move forward.

Building the Cardinal-Hickory Creek line won’t solve all of the region’s transmission constraints, but it fixes a clear limitation for Iowa while allowing more renewable energy.

1. clean energy
2. renewable energy
3. solar power
4. wind power