In a bid to clamp down on an increase in emergency operating conditions, MISO plans to develop a new direction for its capacity auction and reliability requirements by the end of the year.

The grid operator said it wants to modify its capacity auction design to include a sub-annual component and create a selection method for new resource adequacy hours that define risk throughout the year. MISO hopes to file the two proposals with FERC by mid-2021.

Speaking during a virtual workshop Dec. 2, MISO Director of Research and Development Jessica Harrison said it’s time to “lean in and pick an option” on how the grid operator will divide its annual capacity auction into sub-annual portions and to determine which resource adequacy hours it will use to size up reliability risks instead of relying on analyzing summer peaks.

When pressed by stakeholders, Harrison said MISO prefers a seasonal auction frequency over monthly auctions, which would make forecasting more complicated. She also said it is leaning toward selecting resource adequacy hours using a “hybrid” approach where it would use both past maximum generation events and forward-looking risk predictions to select the year’s most precarious hours.

The RTO said sub-annual requirements will better reflect differing capacity needs during the year when compared to a single annual requirement.

The grid operator recently conducted yet another analysis in an attempt to persuade stakeholders that loss-of-load risk is looming outside the summer season. Staff said the footprint can no longer rely on a hypothetical summer peak day as an adequate risk measure.

MISO performed a loss-of-load risk analysis on its current portfolio mix should the interconnection queue’s projects be realized using two of the grid operator’s three futures. The analysis showed that the current portfolio’s risk was largely confined to the summer, including a slight risk in September. In the other scenarios, it found additional risk in January that increases year over year.

According to the analysis, the footprint could be exclusively winter peaking by 2035 when using the planning future with the most aggressive electrification and renewables predictions.

Duke Energy’s Bryan Garnett said when he discusses a MISO seasonal construct with colleagues, he’s invariably asked: “Didn’t MISO already do that?” Garnett was referencing the RTO’s monthly voluntary capacity auctions that became annual auctions in 2013.

“Why is MISO doing this when no other RTO is doing this?” Garnett asked during the Resource Adequacy Subcommittee teleconference on Nov. 4.

“While there’s not a long, tenured history on this, I think we are seeing other ISOs and RTOs starting this discussion,” Harrison said. “We need to modify our construct before we run into problems.”

Madison Gas and Electric’s Megan Wisersky cautioned staff that load-serving entities can only build new capacity so fast. She said MISO’s seasonal definition of risks might push LSEs into building more generation on distribution systems.

“Tread carefully here about when you think all of this will happen and how fast we can respond,” Wisersky said.

MISO predicts it needs an 18.3% reserve margin requirement in 2021, compared with the 18% it used for 2020. Staff project a regional surplus for the 2021 summer and possibly 2022’s; however, it said supply could fall near or below its required reserve margin in 2023 or 2024. The RTO said its increasing resource-adequacy risk can be avoided if its LSEs firm up commitments of additional resources.

Some stakeholders aren’t convinced that MISO will effectively manage separate seasonal offers or be able to accommodate coal generation outages under a seasonal capacity design.

WEC Energy Group has suggested MISO can obviate the need for its planning reserve margin and capacity accreditations if it transitions to an annual capacity auction with four independent seasonal auctions, coupled with monthly auctions to take care of expected scarcity conditions.

WEC’s Chad Koch said the monthly auctions can account for supply changes, including planned outages, retirements, new resources, seasonal renewable profiles and retail seasonal non-firm load.

Impending Availability Accreditation?

Independent Market Monitor David Patton recommended MISO transition to an “availability-based accreditation based on resources’ availability during tight margin hours,” as the RTO ponders whether to recalibrate resources’ capacity accreditation.

Patton said he doesn’t believe that adjusting the accreditation will tighten supply and drive prices up as some stakeholders have suggested, but will lead instead to “more available, more accessible” capacity.

He said MISO’s current capacity accreditation is lacking because it doesn’t account for any outages or derates beyond forced outages or the operating inflexibility of certain resources. He said those factors raise the accreditation for all units.

“If I’m an old steam unit with a 20-hour startup time, I may offer into the day-ahead, but I’m rarely going to be used,” Patton explained during a Resource Adequacy Subcommittee teleconference on Dec. 3.

However, MISO should rely on history, not forecasts, to define the tight margin hours that accreditation would be based on, he said.

“I can’t conceive of any other way to define tight margin hours other than using actual tight margin hours, not a forecast,” Patton said. “If at the end of the day we’re managing a system with uncertainty … we have to use real-world hours.”

He added that using real-world hours in accreditation shouldn’t deter MISO from forecasting tight conditions and using them as a basis to rearrange planned outages.

Some stakeholders used nuclear maintenance as an example, where outages are scheduled three years ahead of time. They asked what happens if the outage lands on one of the predefined tight margin hours.

“That goes back to our principle: If you’re not there when you’re needed, then your accreditation should reflect that,” Patton said.