By Amanda Durish Cook

INDIANAPOLIS — MISO is likely to face an increasing frequency of emergency conditions in the near future, and key officials participating in the RTO’s Board Week sought to understand exactly what’s behind the development.

MISO executives, the Board of Directors and the Independent Market Monitor dissected contributing factors like erratic weather, demand response rules and the RTO’s reserve margin. They also debated whether solutions could be found in the interconnection queue or capacity auction.

Directors were presented the results of the annual resource adequacy survey produced jointly by the RTO and Organization of MISO States, which predicts adequate reserves through 2019, but less certainty thereafter. Over the next five years, the footprint could see anything from a 7.5-GW surplus to a 4.5-GW shortfall. (See OMS-MISO Survey Reveals Dimmer View of Future Supply.)

MISO Executive Director of Resource Planning Patrick Brown said that despite flat load growth, resource retirements and increased forced outages continue to drive up the planning reserve margin, which increased year over year from 15.8% to 17.1%.

Forced outages in MISO South are nearing 14%, compared with about 8% at the time Entergy was integrated in 2013. Brown said the outages will eventually abate as new capacity resources replace retiring generation.

“However, this new capacity will require time and transmission,” Brown said during a June 12 conference call of the board’s System Planning Committee ahead of the quarterly Board Week.

At a June 19 meeting of the board’s Markets Committee, Director Baljit Dail asked if MISO could simply discount the planning reserve margin to shave the probability of emergencies.

RTO President Clair Moeller responded that MISO is currently reconsidering its planning reserve margin altogether as emergencies become more likely in shoulder months.

“The question we’re trying to ask is, ‘How do we evaluate risk every hour of the year instead of those four to five days across summer peak?’” Moeller said. MISO has said its analysis shows that peaks will soon occur during any hour of the year, rather than simply during an annual predicted system peak period.

Queue to the Rescue?

New generation could boost MISO’s resource adequacy, with the RTO possibly seeing as much as 11.4 GW of new generation come online by 2023. Wind generation interconnection requests should taper off as production tax credits expire in 2020, but solar requests should rise as the cost of panels come down, according to Brown.

But a record interconnection queue could impede development of new generation. And while stakeholders typically blame MISO’s lengthy study process for queue delays, Brown said the “true bottleneck” can be found in the physical limitations of the RTO’s transmission system.

Brown said MISO requires billions of dollars in transmission upgrades to support the 93 GW of generation currently in its queue, something particularly true of the nearly 200 proposed projects in MISO’s West region (including the Dakotas, Minnesota, Iowa and part of Wisconsin), where proposed projects can become uneconomic when the costs of new transmission to support them are factored in.

MISO Vice President of System Planning Jennifer Curran said the RTO is also evaluating expanded use of bidirectional HVDC technology to manage the changing fleet and make the grid more interconnected with other RTOs.

Monitor: PRA Should Take Share of Blame

However, Monitor David Patton said he partly blames the increasingly tighter operating conditions on the annual Planning Resource Auction, which he thinks is discouraging construction of new generation. He called the recent $10/MW-day clearing price “near zero.” (See MISO Clears at $10/MW-day in 2018/19 Capacity Auction.)

“Our markets are telling us not to build anything,” Patton said. “This is why our competitive suppliers are doing whatever they can to export to PJM.” He again urged MISO to adopt a sloped demand curve in its capacity auction.

“This is the first I’m hearing that the market is not sending the right price signal,” Director Michael Curran joked, feigning shock to a roomful of laughter. “The price signal is the price signal, but there’s more than 90 GW sitting in the queue,” he added.

Patton said he remains unconvinced that all the proposed generation in the queue will come online.

“It’s very expensive to let lower-cost generation retire and be replaced with more expensive new generation,” he added.

Patton also said new natural gas generation set to come online in MISO South won’t really benefit MISO Midwest because it will be trapped behind the transfer constraint along SPP’s transmission link between the regions.

He also predicted that the larger amounts of DR cleared in this year’s auction will lead the RTO to call emergency alerts earlier and then possibly cancel them, as occurred during a mid-May near emergency. He also remains concerned that states won’t take sufficient measures to guarantee resource adequacy.

Dail, asked if the situation was really that dire.

“If it’s harder for you to sleep at night, then my mission is accomplished,” Patton responded.

Volatile Spring

MISO’s average load was 72.2 GW this spring, compared with 69 GW a year earlier, and staff attributed the uptick to volatile conditions that saw April temperatures well below normal and May well above. The RTO hit a 111.6-GW systemwide peak on May 29, compared to last spring’s 92-GW spring peak on May 16.

“April was much colder than normal, and we flipped a switch in May to much hotter than normal. … We skipped over spring,” said MISO Executive Director of Market Operations Shawn McFarlane. Compared to the last spring, average load increased about 5% for the quarter, and peak load increased a “pretty incredible 20%, with a few other days approaching similar levels,” McFarlane said.

“This quarter was bizarre,” agreed Patton. “On May 29, temperatures in Minneapolis hit 100 degrees.”

Patton said high temperatures that day forced the RTO to derate transmission and contributed to a local transmission emergency in the central portion of MISO Midwest. He praised RTO operators for successfully managing the transmission emergency.

“We had 15 straight days of heat in May. That will impact day-to-day operations,” said MISO Executive Director of System Operations Renuka Chatterjee.

However, energy prices were down about 3% from last spring, averaging $29/MWh. MISO credited the lower prices to fewer instances of congestion and lower natural gas costs compared to last spring. The RTO also set a 15.6-GW wind peak on March 31, breaking the previous Jan. 17 wind output record of 15 GW. Spring maintenance season brought 29 GW in outages, in line with usual seasonal trends, it said.

The unusually warm May (the hottest in MISO’s history) yielded an emergency alert declaration on May 11 (a Friday) for conditions projected for May 14 (a Monday). The RTO ultimately retracted the warning on May 13 as forecasts changed and later asked stakeholders if they preferred the earlier warning. (See MISO Mulls Additional Emergency Communication.)

McFarlane said MISO issued the alert “out of an abundance of caution.”

Curran asked if load-modifying resources (LMRs) were equipped to respond in that instance.

The LMRs reported they could have furnished about 750 MW had an actual emergency been declared, said Rob Benbow, MISO senior director of systemwide operations. McFarlane reminded the board that LMRs are only required to respond to summer emergencies. May’s near emergency would have fallen outside the required months.

In response to the high spring temperatures, McFarlane said MISO is now exploring the possibility of revising its seasonal forecast model from one that switches over based solely on the calendar to one that also considers weather forecasts one to two weeks out.

MISO predicts above-normal temperatures will continue into summer, especially for MISO South, leading to a higher peak load. The RTO now predicts a 121.7-GW peak load, about 1 GW above last summer’s peak. It also forecasts an 80% chance of deploying emergency resources this summer. (See MISO: Summer Reserves Adequate, but Emergency Likely.)

But calling up DR resources takes careful planning, RTO officials said.

“Many of them have an eight-hour lead time, so you have to see the emergency yesterday,” Moeller said.

Staff have signaled that the RTO will possibly seek rule changes for DR participation, part of a larger effort to address changing resource availability and need times.

“For about eight years, we’ve been recommending that load-modifying resources be moved up in the stack,” said Patton, who noted he has recommended repeatedly that MISO allow itself to call up LMRs at the earliest stage of its emergency process, giving those resources adequate time to generate by the time emergency conditions materialize.

Director Thomas Rainwater suggested that MISO consider separating its emergency resources into those that can be ready in four hours or less and those that require a longer lead time. He added he was “encouraged” by the idea that some non-traditional generation in the queue could function as more nimble reserves.

Ted Thomas, OMS president and chair of the Arkansas Public Service Commission, said Patton’s concerns about DR were overblown. He said all MISO states except Illinois have a legal obligation to ensure resource adequacy, and he expected the footprint to persevere despite the possible shortfall reported in the OMS-MISO survey.

“While we had some red in some areas of the chart, we’re not going to cruise along for the next five years until we hit a wall,” Thomas said at a June 21 board meeting. “I will be resting just fine, waking up early to work through these issues.”