By Amanda Durish Cook

MISO is gearing up for a forward market mechanism and improvements to its scarcity and emergency pricing as market-side solutions under its yearslong resource availability and need (RAN) project.

Emergency pricing is often “inconsistent” with system conditions, MISO has concluded. During a Market Subcommittee teleconference Thursday, Market Design Adviser Michaela Flagg said the RTO’s shortage and emergency pricing has generally been inefficiently low.

In a now familiar refrain, Independent Market Monitor David Patton said MISO does not accurately price the “true value of energy when we’re tight.”

Suppressed prices during emergencies are prevalent in MISO South, Flagg said, because of a flaw in which the RTO’s pricing engine does not account for congestion from flows crossing the transmission constraint between the South and Midwest subregions. Accounting for that congestion is just one avenue MISO may pursue, she said.

Other solutions may include updating MISO’s value of lost load or changing the shape of the operating reserve demand curve.

“Prices should be high enough to reflect that MISO is running out of resources when it makes emergency declarations,” the RTO said.

Flagg said MISO will complete an evaluation of its emergency pricing by June and a scarcity pricing evaluation by December. Proposed solutions will follow the evaluations.

Director of Market Design Kevin Vannoy said MISO could stimulate imports and avoid making emergency purchases if it raises prices during scarcity events.

Customized Energy Solutions’ Ted Kuhn said MISO currently cannot compete for resources against neighboring RTOs, where prices can go as high as $8,000/MWh.

“At some point we’re going to have to match up on emergency pricing or ask FERC to join the bus,” Kuhn said at a Market Subcommittee meeting March 5.

Vannoy said MISO is also considering a forward market process that can guide commitment decisions before the day-ahead market is able.

“We definitely see that resource commitments and margins are becoming more challenging with lower operating margins and system volatility,” he said, noting that MISO’s must-run coal units have entered a retirement trend and lower LMPs incent fewer commitments.

“We definitely need more information earlier on capacity sufficiency and earlier than the day-ahead market,” Vannoy said, adding that long-lead units “are out of reach of the day-ahead market commitment.”

He said MISO is looking for members to provide input on what they look for to make unit commitment and availability decisions.

“For the most part, owners with long-lead and high-start-up-cost resources were making those decisions based on their own optimizations and their view of the market. Those decisions are becoming more and more challenging,” Vannoy said.

MISO is also experiencing an increase in emergency-only capacity as part of the overall portfolio, he said. Such resources require an emergency declaration before the RTO can access them.

But Madison Gas and Electric’s Megan Wisersky said MISO could encourage the construction of the more flexible generation it wants, saying insufficient transmission buildout in the footprint is restricting utilities’ ability to build new generation.

“It isn’t for grins that you see the growth in load-modifying resources. We as load-serving entities have to do something, and it takes years in the interconnection queue and some unknown dollar amount for network upgrades,” Wisersky said. “The easiest, fastest, cheapest thing we can do is put in demand-side resources.”

Scarcity and emergency pricing and a forward market mechanism comprise the market-side improvements in MISO’s multifaceted RAN effort. The changes under discussion include moving capacity resource accreditation and the capacity auction from an annual basis to a seasonal or subannual basis.

MISO Executive Vice President of Market and Grid Strategy Richard Doying said the RTO’s annual resource adequacy design is also open to further changes.

“Is it worth conducting [the auction] four times a year, or is there something else to provide that platform for liquidity and trading?” Doying asked rhetorically.

“We can all see the portfolios evolving. We’re not sure it’s an imperative for this change,” WPPI Energy economist Valy Goepfrich said.