By Amanda Durish Cook

CARMEL, Ind. — MISO last week said it might rely on a long dormant analysis to create a pricing structure to compensate resources for delivering energy to restore the system in the event of the real-time market ceasing to function.

Speaking at a Sept. 13 Market Subcommittee meeting, MISO Director of Market Services John Weissenborn said a five-year-old white paper on the subject provides good recommendations for compensating resource owners and allocating costs when portions of the system are islanded.

MISO’s Steering Committee directed the Market Subcommittee to take up the issue in July on recommendation from the Reliability Subcommittee after nearly five quiet years on the topic. (See MISO Stakeholders to Reconsider Restoration Pricing.)

The white paper proposes a framework that allows MISO to make real-time pricing adjustments for islanded areas to facilitate real-time and day-ahead market settlements while providing generators the ability to make further revenue adjustments to ensure adequate compensation for the production costs of providing energy.

MISO said the pricing relies on the monitoring of generator output and load served within an island. Generators within a separated area would receive an hourly restoration cost recovery calculated by multiplying the number of megawatt-hours served by either 110% of their FERC-approved rate or $100/MWh, whichever is greater. Asset owners could also file a restoration energy rate with FERC that includes start-up, fuel and variable operation and maintenance costs with FERC and submit the approved rates to MISO.

To recover from a total blackout, MISO would turn over generation control of islands to local balancing authorities (LBAs) until those areas can be turned back over for dispatch. Restoration pricing would be in effect from the first partial hour of the blackout to the last partial hour prior to re-synchronization with the grid. Until MISO establishes a firm, interconnected grid, LBAs will have control of connected market generation, though the RTO’s system will have begun generating LMPs.

Weissenborn said the issue would require a Tariff filing. He added that MISO “isn’t looking for a 14-page” standalone filing, but “something we can provide in the Tariff to capture our intent to cover this compensation if we have one of these events.”

Currently, islanded commercial pricing nodes are assigned LMPs from a functioning nearby pricing node in the footprint.

Weissenborn also said the white paper might need some updating because of its age.

“I’m not saying that we’re going to turn this thing upside down and redo it, but I do think it provides good guideposts,” he said.

It’s unclear whether MISO plans to use the same megawatt cost values in an updated version of the pricing calculation.

Weissenborn said the restoration pricing structure will not impede the restoration energy plans of LBAs already in place. In its white paper, MISO said its “strategy to restore the system to normal operation does not rely on economic commitment and dispatch but instead addresses the immediate need for energy supply needed to support stable power system operation.”

“We’re going to first think about getting the lights back on, but then we’re going to have to contemplate compensation,” Weissenborn said.

Stakeholders at the meeting asked MISO to involve the Independent Market Monitor in drafting Tariff language. Others urged the RTO to consider the extraordinary incidental costs of weather-related events, such as utilities providing lodging and meals for working employees when their homes have been destroyed.

Weissenborn said he would return to the Market Subcommittee in November for more discussion. He said MISO may convene a special stakeholder group to help create the pricing structure.