By Tom Kleckner

The MISO board’s Markets Committee met at Potomac Economics headquarters in Fairfax, Va., last week to review the Independent Market Monitor’s quarterly metrics report and its monitoring procedures.

Monitor David Patton, president of Potomac Economics, also provided a preliminary evaluation of extended locational marginal pricing (ELMP), which he said had resulted in very small price changes for most locations.

Patton recommended MISO use more online peakers under ELMP, which he said would increase their price impacts. Only about 1% of the resources are eligible to set prices under ELMP. The program, which was implemented in March, is designed to reduce uplift charges by incorporating all offer costs into the market clearing price.

“Real-time prices should fully reflect the cost of dispatchable resources, but ELMP allows offline units to set the price when you have congestion,” Patton said. “This could be resolved by quick-starting offline units.”

Summer Performance Competitive and Reliable

Patton said the MISO market performed “competitively and reliably” during the summer, despite record peak loads in MISO South in July.

Considerably lower gas prices than a year ago drove down MISO’s average system-wide energy prices for the June-August period. Real-time prices fell 17% from last year’s $28.78/MWh, and day-ahead prices fell 19% to 29.26/MWh.

Congestion was typical for the summer, with both day-ahead and real-time congestion similar to last year. Patton said the market’s price convergence was generally good, with the exception of congested areas in Texas and Louisiana.

“We’re seeing people put in virtual load on one side of the constraint,” he said, “and a virtual bid on the other side.”

The market continues to respond slowly to congestion-related price differences in the day-ahead and real-time markets, Patton said.

The Monitor said “growing pains” in market-to-market coordination with SPP have resulted in some inefficiency and settlement disputes. When the non-monitoring RTO dominates the flows, MISO and SPP have seen swings in dispatch flows over M2M constraints.

“The SPP constraints move so fast,” Patton said. “I’d like to see the two RTOs develop protocols to determine who is in charge of the constraint.”

The summer’s above-average temperatures in MISO South resulted in the extensive commitment of peaking units in the day-ahead and real-time markets.

Some day-ahead hourly commitments exceeded 700 MW per hour, three times the typical rates. Additional real-time commitments resulted in more than 1,100 MW of peaking units running each hour during the quarter, double the amount from last summer.

MISO Monitor’s Procedures

Patton also reviewed with the committee Potomac’s scope and processes as MISO’s Monitor.

The Monitor downloads market data every 30 seconds to allow it to observe market participants’ actions in the market, identify flaws in market rules and support the RTO’s market power mitigation. Potomac develops and maintains the production software that does all the work, but that software is owned by MISO.

“You can only do efficient monitoring if you have highly automated systems,” Patton said, noting Potomac’s ability to run tests and screens in the background and to send automatic notifications. He said he partly attributes the costs between different markets to RTOs’ varying reliance on automated systems.

Potomac also performs monitoring duties for ERCOT, ISO-NE, NYISO and the Regional Greenhouse Gas Initiative. Its 24-member staff includes four Ph.D. economists and a half-dozen software engineers.

Operations Report

MISO staff delivered a positive monthly operational report at the meeting, saying the RTO’s reliability, markets and operational functions all performed well in August.

MISO South set a new peak load of 32.7 GW on Aug. 10, surpassing the previous record of 32.6 GW on July 29. However, system-wide average and peak loads declined 3.6% and 4.2%, respectively, compared to July’s numbers.

Energy prices (based on the average of MISO’s active hubs) for the summer months were below $30/MWh and were at the lowest levels in recent summer months.

Wind production — 2,362 GW in August — increased nearly 20% from July and 75% from August 2014 (1,348 GW). Though wind output typically is at its lowest levels in August, it reached its highest level as a percentage of total generation in five years, at 4.3%.