MISO: New Outage Rules Boosted Mich. Capacity Prices

Jun 14, 2020

MISO said a new rule prohibiting resources on extended outages from offering capacity contributed to the historic spike in Zone 7 prices in April’s PRA.

MISO confirmed last week that a new rule prohibiting resources on extended outages from offering capacity contributed to the historic spike in Lower Michigan prices in April’s Planning Resource Auction (PRA).

Zone 7 cleared at the cost of new entry (CONE) price of $257.53/MW-day for the 2020/21 planning year that began June 1, while all other zones cleared under $7/MW-day. Zone 7 fell 123 MW short of its nearly 22-GW local clearing requirement and had to turn to other zones for capacity procurement, activating the CONE price. (See Michigan Prices Soar in 8th MISO Capacity Auction.)

MISO Outage rules impacted Zone 7 in the PRA — MISO’s Zone 7 | *MISO*

MISO now restricts extended planned outages to a cumulative 90 days in the first 120 days of the planning year — June 1 to Sept. 30 — which it deems the most critical months for demand and loss-of-load risk. Resources that will be unavailable for more than 90 days are disqualified from PRA participation.

MISO Manager of Capacity Market Administration Eric Thoms told the Resource Adequacy Subcommittee on Wednesday that if the long-term outage policy had also been in effect for the 2019/20 PRA, Zone 7 would have fallen short of its local clearing requirement then as well.

Zone 7 also would have come up short by nearly 222 MW, Thoms said. Last year, Zone 7 had a 21.8-GW local clearing requirement and received slightly more than 22 GW from capacity offers and utilities’ fixed resource adequacy plans. However, about 474 MW of capacity wouldn’t have qualified for the auction based on planned outage schedules.

Under the new outage rule, MISO analysis showed a loss of load in Zone 7 occurring one day in six years in 2019. If the zone had not imported capacity this year to meet its local clearing requirement, the risk would have been one day in eight years. MISO adheres to a one-day-in-10-years standard.

MISO adopted the rule after the Independent Market Monitor last year criticized the RTO for allowing a large generator in Michigan to clear the PRA even though it was slated to be on outage the entire planning year. (See Emergencies Prompt MISO to Re-examine LMR Protocols.) Had MISO disqualified the generator from the auction, prices in Zone 7 might have hit $243.37/MW-day instead of the $24.30/MW-day clearing price in 2019, the Monitor said.

Coalition of Midwest Transmission Customers attorney Jim Dauphinais said MISO’s analysis shows the importance of the new rule.

Capacity Market Generation MISO Resource Adequacy Subcommittee (RASC)