By Amanda Durish Cook

FERC has allowed MISO to waive its $1,000/MWh offer cap for the fourth straight winter, two months after the commission rejected the RTO’s plan to permanently double its hard offer cap.

The commission on Friday said it had “good cause” to allow resources with incremental energy costs above the current $1,000/MWh offer cap to recover costs from Dec. 1, 2017, through April 30, noting that “some resources could face the untenable position of being forced to offer electricity at levels below their actual cost” if MISO wintertime demand spikes occurred when gas supplies were pinched (ER18-300).

MISO announced it would seek the waiver in November, days after FERC rejected MISO’s Order 831 compliance filing, saying it wrongly prohibited resources from submitting cost-based offers above the required $2,000/MWh hard cap. (See MISO to Seek Waiver After FERC Rejects Offer Cap Plan.) The commission last week acknowledged that once MISO files an acceptable “long-term solution,” it will no longer need temporary waivers.

FERC issued Order 831 in response to the unusually cold winter of 2013/14 that sent natural gas prices soaring and left generation owners complaining they could not recover fuel costs. MISO claims that offers above $1,000/MWh are a possibility when natural gas prices climb above $67/MMBtu.

In mid-December, the RTO asked FERC for clarification and rehearing of its offer cap filing, arguing that it should be permitted to exempt proxy offers of fast-start resources from the required offer caps because such offers are only used during emergency operating procedures. It contended that applying a raised offer cap to those resources is “inconsistent with previously adopted and articulated commission policies on price efficiency and reduction of uplift” (ER17-1570).

MISO’s markets have yet to experience an energy offer exceeding $1,000/MWh. However, in March 2014, generation resources offered approximately 900 MW at the $1,000/MWh offer cap in both the day-ahead and real-time markets, “indicating that the offer cap may have constrained those offers,” according to the RTO. Last week, the RTO’s Midwest and South regions were tested with temperatures about 20 to 25 degrees below normal, and it issued a cold-weather alert and conservative operations instructions that it kept in place for most of the week. (See Frigid Weather Tests Grid Operators.)