MISO said Wednesday it is close to completing a proposal to create a four-season capacity market after floating a rudimentary plan with stakeholders, who remain skeptical over stricter accreditations.
While the RTO expects to file the plan with FERC by the end of the second quarter, seasonal auctions won’t become a reality until the 2023/24 planning year at the earliest. MISO is currently leaning toward the idea of simultaneously conducting four seasonal auctions with separate zonal clearing requirements.
“MISO’s inclination is to go forward with one auction but monitor it closely and have further discussion about modifying that,” Director of Research and Development Jessica Harrison said during a Resource Adequacy Subcommittee teleconference.
Independent Market Monitor Michael Chiasson said monitoring staff continues to feel “quite strongly” that the design should include a spot auction prior to each season to complement the annual auction.
The RTO said it is “monitoring the pace of changes and evaluating needs for additional spot or true-up auctions.”
As part of the seasonal approach, the grid operator will likely require resources to demonstrate their minimum capacity capabilities. MISO will also likely use a three-year average of historical data to define “resource adequacy hours,” or the system’s tightest hours of the year for reserve margins when resources should make sure to be available. (See MISO Intends to Add Seasonal Capacity Auction.)
“If we’re going to have reduced capacity credits throughout the year, we have to make sure they’re available,” Harrison said.
She added that MISO must still determine how to treat capacity resources that take long-term outages. The RTO’s draft plan stands to reduce capacity accreditation for resources on long-term outages during the predefined tight hours, even if MISO has already approved the planned outages.
Stakeholders seemed most preoccupied with the potential for capacity resources to be penalized through accreditation reduction for planning extended outages during RA hours. Stakeholders said those hours would probably be difficult to predict and avoid when planning generation outages months in advance.
“Why would anyone bother to get permission for outages if they’re going to be penalized by MISO?” Customized Energy Solutions’ Ted Kuhn asked. “There is no benefit to providing this information. You’re basically going forward with an accreditation process that says, ‘I don’t care if you’re approved; you’re going to be penalized anyways.’”
Kuhn said the move might disincentivize resources from providing the data that MISO relies on for system reliability and to define tight margin hours.
“There is room for outages to be planned effectively and avoid these hours,” Harrison countered.
Harrison said the proposal focuses on individual unit behavior instead of socializing the risk across several capacity resources.
“I think we’re moving away from a process that penalizes everyone by focusing on individual units’… ability to meet capacity requirements,” she said.
“It seems incongruous of MISO to say, ‘Sure, you can take an outage, but the risk is on you,’” MidAmerican Energy’s Greg Schaefer said. He said the proposal seems to rely on resources’ “sheer luck” of not scheduling outages during RA hours.
“We all agree to pay a small premium to avoid people getting hammered,” he said, likening resources’ shared risk to a health insurance pool.
Kuhn asked MISO to consider implementing less severe repercussions for resources that aren’t available in light-risk seasons, when the RTO can only identify a few RA hours. Harrison said MISO would consider the idea.
Senior Manager of Resource Adequacy Coordination Lynn Hecker argued the availability-based accreditation proposal that takes the riskiest hours into account is “outage agnostic” by taking a true measure of resources’ availability.
MISO Executive Director of Market Operations Shawn McFarlane said it rewards the “more available portfolios” and reduces the accreditation of “less available portfolios.”
