By Chris O’Malley
MISO is proposing to modify its Tariff so that generation owners retiring coal plants to meet looming environmental rules can avoid capacity deficiency penalties.
The Tariff revision (ER15-918) filed with the Federal Energy Regulatory Commission on Jan. 28 would apply to generation operating during the Planning Resources Auction offer window that will retire or suspend operations between the March 31 end of the window and the end of the 2015-2016 planning year on May 31, 2016.
Last year, several generators asked the Federal Energy Regulatory Commission for a waiver from MISO’s Tariff. They complained there was no clear mechanism within the MISO Tariff that would permit them to buy replacement capacity through the auction to cover the six-and-a-half-week period between the planned retirement of the coal units and the end of MISO’s planning year.
Only Where SSR is not Necessary
The proposed Tariff revisions would allow generators the option of not making offers into the PRA without facing liability for physical withholding.
It would apply only to the 2015-2016 planning year and only to generators for which MISO has determined a system support reliability agreement (SSR) is not necessary.
In testimony included with its filing, MISO said the proposal will not cause reliability concerns, explaining that a “critical condition” of the proposed change includes a determination by MISO that the retiring or suspending unit is not needed for reliability.
Also, the Tariff change will not relieve load-serving entities from obligations to meet the planning reserve margin requirements for a full year.
The proposed change “will allow market participants greater certainty and flexibility by providing a clear option to avoid risk by not being forced to make the difficult choice between making [zonal resource credit] offers for generation resources that MISO has determined may retire or suspend during the 2015-2016 planning year or being faced with the potential of physical withholding mitigation,” MISO said.
MISO’s Independent Market Monitor had expressed concerns that the change would “limit retrospective physical withholding mitigation” for generation resources.
MISO said the change is appropriate to provide certainty to market participants regarding generating units for which the RTO has determined that retirement or suspension does not present reliability issues.
Different Fates
One utility that was successful in obtaining a waiver was Indianapolis Power & Light. FERC approved its request last October after MISO said its analysis showed that Zone 6, in which IPL is located, has sufficient planning reserve margins even after accounting for the planned retirement of the company’s Eagle Valley coal-fired units.
FERC denied a similar request from Consumers Energy, however. The company plans to retire its “Classic Seven” coal units on April 15, 2016, due to the Environmental Protection Agency’s Mercury and Air Toxics Standards.
Consumers told FERC that purchasing replacement capacity for the entire year could cost up to $84.8 million. MISO opposed Consumers’ waiver request, saying it could cause MISO’s north and central regions to fall below the planning reserve margin. FERC denied Consumers’ request in November.