By Amanda Durish Cook

FERC on Monday granted MISO a two-year lead time to implement a new offer cap into its fast-start pricing mechanism, while also directing the RTO to submit yet another compliance filing to meet Order 831 requirements.

The commission’s ruling set an Oct. 1, 2020, deadline for MISO to incorporate a $2,000/MWh hard cap for verified cost-based incremental energy offers into fast-start pricing (ER17-1570-002).

In a March ruling on a previous compliance filing, FERC accepted much of MISO’s plan to permanently double its hard offer cap, but it also required the RTO to pledge to apply the new hard cap to adjusted energy offers from fast-start resources. (See FERC OKs MISO’s Doubled Offer Cap, Orders Alterations.)

In the event FERC denied the extra time for implementation, MISO had also sought rehearing of the commission’s March order, warning it would otherwise need permission to “resort to manual processes” to enforce the caps. Citing the ongoing replacement of its market system platform, MISO contended it would likely need more time to “make appropriate adjustments to automate the requirements of Order No. 831” and “complete necessary system software changes.” The RTO also pointed out FERC granted ISO-NE a similar two-year lead time last November.

“We find that MISO has shown good cause for the granting of this requested effective date because it will allow MISO sufficient time for the development, testing and implementation of software needed to enable MISO’s existing market platform to apply the offer cap requirements to fast-start pricing,” FERC said.

One More Compliance Filing

Monday’s order also approved other revisions FERC had ordered in the March compliance filing, although it directed MISO to refine its proposed rules to address adders to the soft offer cap.

FERC accepted MISO’s fuller description of the data verification process for offers, how it would determine make-whole payments under the new offer cap and the process allowing market participants to dispute potential revenue sufficiency guarantee make-whole payments. The commission also accepted MISO’s clarification that its Independent Market Monitor will use data from its operating cost survey to determine facility reference levels. The IMM relies on the survey to collect operating cost data for market participants.

But in siding with the argument of a group of Midwestern transmission-dependent utilities (TDUs), FERC also directed MISO to submit another compliance filing to clarify that adders included in cost-based incremental energy offers above the soft cap of $1,000/MWh must be limited to a combined $100/MWh. MISO must also make clear those adders cannot be included in a resource’s after-the-fact make-whole payment, the commission said .

FERC also denied a request for a rehearing of its March order from the same group of TDUs, who argued the commission was too quick to accept MISO’s stance that outage risk is a verifiable component of energy cost rather than part of the $100/MWh adder above the soft offer cap. The TDUs argued it was arbitrary and capricious for FERC to find that outage risk is not an above-cost adder when it only used MISO’s rationale that outage risk is already included in a resource’s reference level in its current mitigation processes.

FERC didn’t bite at their argument.

“MISO explained that outage risk is a legitimate short-run marginal cost calculated separately for each resource based on validated data provided by market participants,” the commission wrote. “MISO also explained that incorporating this risk in a resource’s reference level continues MISO’s existing mitigation processes. As such, outage risk is a proper component of MISO’s reference level and is not an adder to verifiable costs pursuant to Order No. 831. Midwest TDUs have not proffered any arguments or evidence that contradicts MISO’s explanation of these risks.”