The Federal Energy Regulatory Commission last week denied Consumers Energy’s request for a waiver from MISO’s must-offer requirement, three weeks after approving a similar request by Indianapolis Power and Light.
Both utilities complained that there was no clear mechanism within MISO’s Tariff that would permit them to buy replacement capacity to cover a six-week gap in 2016 between when they planned to retire older coal units under the Environmental Protection Agency’s Mercury and Air Toxics Standards and the end of MISO’s planning year on May 31.
Michigan-based Consumers Energy plans to retire its “Classic Seven” coal units — three at the J.R. Whiting generation station near Luna Pier; two at the B.C. Cobb Generating Plant in Muskegon; and two at Karn/Weadock, near Bay City — on April 15, 2016.
Consumers said purchasing replacement power for the entire 2015-16 planning year would cost $5.8 million to $84.8 million.
The Michigan Public Service Commission told FERC it should approve Consumers’ request to minimize costs to ratepayers. Alliant also filed in support.
MISO opposed Consumers’ waiver request, saying that it could cause the ISO’s North and Central regions to fall below the Planning Reserve Margin, increasing the risk of a loss-of-load event.
MISO said that Consumers’ request for a waiver reinforced its resource adequacy concerns for the six-week period at issue “because the request implicates an additional 940.7 MW during the time period in which Indianapolis Power requests waiver of approximately 216 MW.”
Calpine, NRG Energy and Dynegy told FERC that MISO’s Tariff exempts resources that are retiring in the middle of a planning year from the must-offer requirement. FERC did not say whether or not it agreed with the companies’ reading of the Tariff.
Instead, the commission ruled that unlike with IPL, Consumers Energy hadn’t adequately demonstrated that a waiver would not cause undesirable consequences.
“We find it significant that the Classic Seven comprise 940.7 MW of generation in Michigan, which represents approximately 14.5% of Consumers Energy’s total capacity,” FERC said.
Consumers had not identified whether the utilities in MISO Zone 7 have coordinated to provide generation outage schedules for April-May 2016.
In contrast, Indiana utilities did provide MISO with their generation outage schedules far in advance so that MISO could conduct a maintenance margin study for future years, FERC said. MISO’s analysis showed that MISO Zone 6, in which IPL is located, has a sufficient planning reserve margin even after accounting for scheduled outages.
FERC Chairman Cheryl LaFleur seemed to invite Consumers to refile to address the deficiency, noting in a concurring opinion that the order was made without prejudice.
Consumers spokesman Dan Bishop said yesterday that the company was studying the ruling and hadn’t decided whether to refile.
Consumers plans to replace lost generation from the Classic Seven retirement in part with a 540-MW gas generating unit it will acquire in Jackson, Mich. The company will also make wholesale purchases, Bishop said.
Commissioner Norman Bay dissented on the IPL waiver request, saying a one-time waiver “creates an unfortunate precedent that erodes MISO’s capacity construct, undermines the bilateral market for capacity and blurs, unnecessarily, a line that had once been bright.”