CARMEL, Ind. — MISO is planning a spring filing with FERC to implement a payment structure for resources that re-energize islanded areas of the grid following a blackout.

“It’s interesting to stand up here and talk about something that we hope never happens. But we do see value in having a process,” Director of Settlements Laura Rauch told stakeholders at Thursday’s meeting of the Market Subcommittee.

MISO’s preliminary proposal stipulates that, as a starting point for pricing, compensation for restoration energy will rely on resources’ last submitted offers before an emergency strikes, resulting in unique costs based on each resource rather than a uniform clearing price. The RTO will allow for recovery of start-up costs, emergency purchases and resource-specific energy costs. It will also include recovery for any unusual costs incurred during operation, provided they can be verified by the Independent Market Monitor. The RTO will also accept after-the-fact updates of offers.

Restoration pricing differs from MISO’s existing black start services definition because black start resources derive their revenues from the capacity they provide, not the energy market.

Rauch said restoration events will be considered over when the day-ahead market once again takes over economic dispatch of resources in the islanded area.

“We’ll need to define the area of impact and the island,” she added.

Rauch said MISO realizes load and generation totals during a restoration event “may be imbalanced” but said total generation costs will be allocated on a load-ratio share. The RTO had originally considered allocating resource costs based on local balancing authority boundaries, but this summer it said load ratio would be simpler to implement.

RTO officials have also said a fixed-price compensation approach for restoration energy would be a blunt instrument that would at times result in under- or over-collection by generators.

“The downside is that it’s much more complex,” MISO Director of Market Services John Weissenborn said in June of a unit-by-unit pricing calculation and settlement based on offers.

MISO Preps Tariff for Short-term Reserves

Although MISO filed with FERC on Oct. 4 to include a short-term reserve product definition in its Tariff (ER20-42), stakeholders shouldn’t expect generators to fire up to furnish the reserves until late 2021.

The RTO asked that the commission act on its request by Jan. 31 but make the revisions effective Dec. 7, 2021, seeking a waiver of FERC’s 120-day maximum notice requirement to give its Monitor and stakeholders “adequate time to budget for in advance and develop and test significant software and other operational adjustments.”

MISO said it’s already begun working with tentative market platform replacement vendor General Electric on software design details.

The reserves are meant to supply energy within 30 minutes to meet reliability needs and reduce make-whole payments, and MISO expects them to be especially useful in portions of MISO South, where the RTO’s subregional transmission limit restricts imports.

MISO expects the short-term reserves product to clear $4 million in revenue annually when it goes live in 2021. It also estimates an approximate $5 million annual net production benefit when the reserves are used. Part of the savings will result from RTO operators taking fewer out-of-market actions, for which it must make revenue sufficiency guarantee payments. (See “Short-term Reserves,” Stakeholders Confused over MISO Roadmap.)

— Amanda Durish Cook