The Midwest electricity rates

MISO runs from the Canadian border to the Gulf of Mexico, which makes it geographically enormous and internally inconsistent. Unlike PJM, most of its states never fully restructured, so utilities here are typically vertically integrated: they generate, deliver and recover their costs through rate cases rather than through wholesale auctions.

The result is that MISO states move independently. Iowa sits near the bottom of the national table on a wind fleet its utilities own outright. Michigan sits well above the national average on delivery costs. Both are in the same market.

Wind is the defining resource. Iowa generates more of its electricity from wind than any other state, and the Dakotas and Minnesota all have large fleets. Wind has no fuel cost, and where utilities own it rather than buying it under contract, that advantage reaches ratepayers directly.

The region is mid-transition and paying for it. Coal fleets across Indiana, Michigan, Missouri and Wisconsin are being retired earlier than originally planned, and replacement gas, wind, solar and storage all require new capital entering rate base. Retiring plants frequently carry undepreciated book value that regulators allow the utility to recover, so ratepayers can pay for a closed plant and its replacement at once.

Michigan carries the region's most visible delivery problem. Its reliability statistics are among the worst in the country, and the regulatory response has been to approve substantial spending on tree trimming, pole replacement and circuit automation. The reliability problem and the rate problem are two views of the same thing.

Data-centre growth in central Iowa is the emerging variable. It has so far arrived with its own generation contracts rather than being socialised across residential customers, which is the arrangement worth watching.

Almost nowhere in this region has residential retail choice. Michigan caps it at ten per cent of load, and Illinois, which does have choice, sits in PJM rather than MISO for most of its population. So the levers are rate schedule and usage.

Minnesota and the Dakotas have some of the best-designed optional residential tariffs in the country, including off-peak and dual-fuel heating rates with substantial discounts in exchange for the utility controlling load during peaks. They are opt-in and lightly advertised.

Low rates in Iowa, Missouri and the Dakotas make electrification arithmetic unusually favourable: heat pumps and electric vehicles pay back faster where the operating cost comparison starts from a lower base.