By Amanda Durish Cook

CARMEL, Ind. — MISO last week revived the idea of implementing a seasonal capacity auction as part of its multipronged resource availability and need (RAN) initiative but promised to gather more data on resource flexibility before defining long-term solutions.

Seasonal Auction Revival

MISO planning adviser Davey Lopez said he’s observed a shift from stakeholders criticizing a two-season capacity auction to becoming open to analysis of possible benefits, including better capacity availability and price signals. Lopez also said stakeholders indicate the most support for a four-season construct. However, stakeholders still support holding a single auction rather than performing auctions in different seasons, he added.

But whether that single auction would be conducted simply with seasonal inputs, encompass four separate seasons or be four auctions performed simultaneously remains to be seen, Lopez said. MISO said it will work on seasonal design elements through the end of the year.

“I think by the end of the year we’ll have at least some results on here’s what a seasonal auction would look like and here’s what the results will be,” Lopez said at a March 6 Resource Adequacy Subcommittee meeting.

But representatives from Xcel Energy, DTE Energy and Madison Gas and Electric said they still favored MISO’s erstwhile monthly auction design. The RTO switched from monthly voluntary auctions to an annual voluntary capacity auction in 2013.

MidAmerican Energy’s Greg Schaefer said the monthly auction was a lot of work that yielded unclear price signals.

“Rather than leaping from once per year to 12 times per year, let’s try something intermediate,” Schaefer urged.

But some stakeholders say price signals are no better in MISO’s current capacity situation.

“With the current annual construct, we don’t have a price signal … we have a price that is essentially zero,” Coalition of Midwest Power Producers’ Mark Volpe said.

Many stakeholders said MISO must come prepared with study results that show a seasonal capacity auction will solve potential capacity shortfalls.

“From our perspective, the case has yet to be made, and the analysis has yet to be exhausted,” WPPI Energy’s Steve Leovy said. He also argued that MISO shouldn’t proceed with a seasonal auction unless the RTO’s loss-of-load expectation (LOLE) study shows risks outside the summer season.

MISO Independent Market Monitor Michael Chiasson said the current annual capacity market design prohibits some resources unavailable in the summer from entering the market at all.

“So those are essentially lost resources from a capacity value perspective. This sort of flexibility should increase the number of capacity resources. … That will make our market a lot deeper … and more economically efficient,” Chiasson said.

“Assuming that the LOLE can be edited, [we still] need to be careful about summer and winter compared to the spring and fall,” Minnesota Public Utilities Commission staff member Hwikwon Ham said, emphasizing that MISO should still recognize that summer and winter risks will continue to be more pronounced than those in spring and fall.

“I need to remind people we’re in a planning reserve sharing group. And if we go to seasonal accreditation, what’s the point of being in the MISO?” Consumers Energy’s Jeff Beattie said. “The bottom line is we need to show value in this; otherwise we’re going to … be in a ‘Groundhog Day’ situation,” Beattie said in reference to MISO’s proposed, three-year forward capacity auction design that was rejected by FERC in early 2017.

Beattie noted that Consumers is relying on MISO’s reserve sharing characteristics while its Ludington pumped storage facility is on an extended outage for major upgrades. He said when the facility returns, Consumers will repay the reserve-sharing debt with nearly 2 GW in storage capacity.

Consumers has said MISO moving to a two- or four-season construct would be “a step back” in the RTO’s value to stakeholders unless it also devises a method for monthly true-ups, similar to NYISO’s practice.

“A seasonal construct with a minimum of two seasons with forward monthly true-ups has been proven to be FERC-acceptable for many years,” Consumers said in comments to MISO.

Mississippi Public Service Commission consultant Bill Booth asked how a seasonal auction construct would impact MISO’s annual must-offer requirements for resources.

“It may be a little premature to talk about must-offer requirements … but I think, yeah, we’d have to address the must-offer requirement in some form or fashion,” Lopez said.

MISO Director of Resource Adequacy Coordination Laura Rauch said the RTO may find it needs a higher percentage must-offer requirement but a lower overall megawatt requirement for fall, when outages spike and weather becomes volatile.

“There will be impacts across the board that we’ll have to analyze,” Rauch said.

Lopez said outages in particular will be a consequential variable for a seasonal auction. He also said MISO will have to examine seasonal auction inputs, including the loss-of-load target, planning reserve margins, local reliability requirements and capacity import and export limits. Resources, including wind and solar generation, would also need accreditations that vary by season.

Lopez said MISO will likely devise hypothetical seasonal inputs and study them against annual auction values based on a summer peak.

Data on the Way

MISO this week committed to more internal study on its system to gather more data to support future long-term RAN solutions, including the possible seasonal capacity auction.

At a March 7 Market Subcommittee meeting, MISO market design adviser Dustin Grethen said the RTO will conduct an analysis to provide “visibility into availability and flexibility.”

“So a lot of buzzwords there,” Grethen said, smiling. “We’re really going to be digging deep into availability and flexibility. What are the system needs and characteristics that MISO has? … We need to make sure we have good empirical evidence for the things we’re proposing.”

MISO said it will assess multiple years of hourly, real-time location-specific values for load, reserves and net-scheduled interchange. It will use those data sets to look into changing needs for energy, ramp and reserves in MISO regions and in load pockets throughout the year. Grethen said MISO will also examine its past forecasts and the “final disposition” of all megawatts that were potentially available to meet system needs. The goal is to quantify MISO’s uncertainty and resource flexibility, he said.

Grethen also said stakeholders have made “many calls” for MISO to develop a multiday market forecast as part of the RAN project. He said MISO will have to complete its data-gathering and future discussion before such an addition is made. Discussions on a multiday forecast are currently on hold until early 2020, according to the RTO’s Market Roadmap list of possible market changes.

Xcel Energy’s Kari Hassler asked MISO to not assume in its new analyses that coal and nuclear resources continue in their must-run capacities, as incentives to continue operating such generation are vanishing.

“Please don’t assume that all of your must-run resources will continue to run that way,” she told Grethen, who took notes.

“Waiting for data is not the answer. Volatility is a given; uncertainty is a given. We have to work under that assumption instead of waiting for data. To me, that’s a very dangerous proposition,” the Minnesota PUC’s Ham said.

Ham also said as long as distributed energy resources aren’t visible to MISO, its data collection will continue to be incomplete. He said MISO should aggregate DERs and let them into the market in order to alleviate some uncertainty.

Grethen said MISO hasn’t been sitting on its hands waiting for data and pointed to its three “stopgap” Tariff filings aimed at freeing up 5 to 10 GW of capacity this spring. MISO has two near-term filings awaiting FERC action as part of the short-term piece of the three-phase RAN project, one to subject demand response to annual capability testing and one to impose new generator accreditation penalties for planned outages taken with fewer than 120 days notice and during “low-margin, high-risk periods.” (See MISO LMR Capacity Rules Get FERC Approval.)

History on Repeat?

As part of RAN, MISO is also mulling modeling both nonoptimized planned outages and resource lead times in its annual LOLE study, and an investigation into how resources are accredited before the 2020/21 Planning Resource Auction. MISO’s current LOLE doesn’t account for either variable. Lopez also said MISO will continue to evaluate its capacity accreditation for the PRA over the next several months.

However, MidAmerican’s Schaefer said he didn’t see why MISO was considering modeling sub-optimized scheduled outages in the LOLE when it has a Tariff filing out for FERC approval aimed at improved scheduling.

“It doesn’t make sense that we’re telling FERC we can do better. … We just can’t blindly tell FERC that history will repeat itself when we’re telling FERC that history won’t repeat itself,” Schaefer said.