By Amanda Durish Cook

CARMEL, Ind. — Signaling a newfound sense of urgency, MISO officials last week proposed a switch to a two-season capacity market procurement and appointed a team to consider ways to retain merchant generators in Illinois.

Under a draft proposal outlined to stakeholders last week, MISO would obtain capacity based on a four-month summer season (June-September) and eight-month winter (October-May), with separate seasonal resource accreditations, reserve margins and capacity import/export limits.

“We do see the value in two seasons and providing resource adequacy in both summer and winter. This felt like a place that is justifiable,” Laura Rauch, ‎manager of resource adequacy coordination, told stakeholders at a two-day joint meeting of the Supply Adequacy Working Group and the Loss of Load Expectation Working Group.

Officials said the proposal was driven by concerns over the year-round availability of resources such as demand response and generation imports. The RTO, which sets its reserve margins based on a summer loss-of-load probability of one day in 10 years, was awakened to its winter reliability risk in the 2013–2014 season, when forced generation outages peaked at 22 GW, almost 50% above the expected 15 GW.

The two-season proposal, which retains the current June 1-May 31 planning year, appeared to be a compromise between those who favored a four-season procurement, including the Organization of MISO States and the Independent Market Monitor, others who wanted monthly auctions and those who favored the status quo. (See MISO Seasonal Procurement, Site Auctioning Proposals Face Opposition.)

Task Team

The two-day stakeholder meeting also resulted in the announcement of a SAWG “task team” to recommend ways to accommodate merchant generators in MISO Zone 4 in Illinois, which unlike most of the RTO, allows retail choice.

The move followed an Oct. 20 FERC technical conference and a Nov. 19 policy session of the Illinois Commerce Commission on the problems in Zone 4. (See MISO Stakeholder Process Under Scrutiny.)

The formation of the team came over the opposition of some stakeholders who said the RTO should delay action until after the ICC’s second session on the subject, scheduled for this Thursday.

But Jeff Bladen, MISO’s executive director of market design, told stakeholders Wednesday, “These issues are ripe whether we like it or not.

“If there was agreement on anything [at the Nov. 19 session], it was that Illinois is depending on MISO’s markets as the primary mechanism to ensure resource adequacy,” he said. “The process of asking for a task team was a dynamic one. It was a result of Illinois moving forward and describing that MISO needed to more proactively address the issue.”

Bill Booth, of the Mississippi Public Service Commission, asked if MISO will develop rules that would work for both retail choice states and traditionally regulated states.

“Our goal would be to find solutions that are tailored and meet the needs of the states like Illinois with retail choice, but at the same time, we need to ensure that we … meet the needs of non-retail states,” Bladen said.

He said MISO is not looking to change states’ planning processes. “I think what’s been identified in Illinois is a gap,” he said. “It is a very targeted, surgical matter that needs to be tackled.”

Illinois Senior Assistant Attorney General Susan Satter told stakeholders that the creation of a team could be “somewhat premature.”

“It sounds like Illinois has directed MISO to address this … I think there were several avenues that were being discussed and explored. So I think it needs to be kept within that perspective,” Satter said.

Kevin Murray, chair of MISO’s Advisory Committee, objected to the creation of a task team, arguing that stakeholders should have been given advance notice of a vote to create a group.

Supporters cited SAWG rules, which they said do not require a vote to form a task team. “This is a topic that pretty well suits the business for what a task team does,” said SAWG Chairman Brian Glover, markets compliance and policy analyst for Great River Energy.

Urgency Needed

Glover said he favored “reaching a productive end” instead of inaction and delays.

Marka Shaw, director of wholesale market development for Exelon, also called for urgency. “There are retirements occurring in southern Illinois,” she said. Dynegy cited a poorly designed capacity market in Illinois when it announced last month that it would close its 465-MW Wood River Power Station in 2016.

The task team is expected to have an approximate six-month lifespan and convene in time to deliver preliminary recommendations at the next SAWG meeting in January.

Shoulders Ignored?

Shaw was among several stakeholders who complained that the proposed two-season capacity structure ignores the spring and fall shoulder periods, when peaks are much lower.

Shaw said a planning auction modeled after two seasons isn’t feasible in states with deregulated markets. “What MISO’s doing here just won’t work for what we’re doing in Illinois. We’re going to be requesting something different,” she said.

The draft plan says MISO’s current structure does “not explicitly ensure transparency or sufficiency of resource adequacy throughout the year. In addition, stakeholders expressed an interest in a less-than-annual requirement to account for the seasonal diversity, thus providing additional flexibility to meet load and reserve obligations.”

MISO noted that several other regions also have addressed concern about winter reliability, citing ISO-NE’s Pay-for-Performance and PJM’s Capacity Performance programs.

Only New York currently uses separate summer and winter capacity periods, although Ontario is considering such a move, the report says. (See Ontario Grid Looks Like the Past — and the Future — of the US.)

MISO’s recommendation calls for retaining the system-wide summer reserve margin (0.1 day/year LOLE risk) while setting the winter requirement based on a “negligible” one day in 100 years or 0.01 day/year LOLE.

The same targets would apply for local resource zones “if the zone’s base model indicates zero LOLE risk in the winter season. If a zone’s base model annual LOLE risk results in winter LOLE risk, then the annual LOLE will be driven to 0.1 day/year LOLE risk without deterministically dictating where the LOLE risk is distributed.” The analysis would include seasonal capacity import and export limits.

MISO said it was unaware of other regions using season-specific reserve margin requirements.

The RTO would accredit resources based on continued use of the single real power test but using seasonal interconnection service for capacity accreditation, and with seasonal ratings for load modifying resources and intermittent generation. It also would reflect outages through a total capacity availability rate (“seasonal EORp”).

Stakeholder feedback on the draft proposals is due Dec. 17. Design review of the constructs will begin in February with MISO unveiling proposed Tariff language. Tariff filings with FERC are targeted for March.

[Editor’s Note: A prior version of this article contained an incorrect link to the draft document mentioned in paragraph 2.]