By Amanda Durish Cook
MISO told FERC last week that it needs to adjust the formulas in its calculation of capacity import limits to avoid reliability problems.
The RTO made its case in a request for clarification Friday in response to FERC’s Dec. 31 order to change the way it conducts capacity auctions (EL15-70, et al.).
FERC said MISO’s $155.79/MW-day maximum bid was too high and that its approach to determining capacity import limits doesn’t take into account counter-flows. (See FERC Orders MISO to Change Auction Rules.)
MISO addressed the maximum bid issue in a compliance filing in which it submitted rule changes to set the initial reference level — part of the calculation of the opportunity cost of exporting capacity to PJM — to $0/MW-day. But it said it needs two adjustments to FERC’s order regarding its treatment of capacity imports.
Illinois Attorney General Lisa Madigan and the Illinois Industrial Energy Consumers also filed a clarification and rehearing request Friday.
New Year’s Eve Order
FERC’s New Year’s Eve order found that MISO’s calculation of local clearing requirements is unjust and unreasonable “because it could underestimate the impact that counter-flows from capacity exports have on the capacity import limit.”
The commission ordered MISO to adopt the Independent Market Monitor’s recommendation that adds back the amount of capacity exports included in base power transfer to eliminate the negative impact that capacity exports have on the calculation of the capacity import limits.
However, MISO said that two adjustments need to be made to comply with the order and maintain reliability.
First, the RTO proposes to remove the impacts of exports from the capacity import limit calculation. “If the full value of the exports must be realized exclusively through revisions to the capacity import limit, the capacity import limit calculation may overstate system capabilities, thereby causing a reliability problem,” MISO wrote.
MISO also asked to subtract the amount of exports from non-pseudo-tied resources from the local clearing requirement. In prepared testimony, Laura Rauch, MISO’s manager of resource adequacy coordination, said pseudo-tied units cannot be relied on because their “output is not directly available to the MISO region to relieve a constraint or in the case of an emergency.”
MISO said FERC should “recognize the benefits exports can make in terms of satisfying local resource requirements.” Rauch said that non-pseudo-tied resources that export their power outside of MISO can still meet local resource needs if needed during peak loads because MISO retains dispatch control over the resources. Rauch said the compromise would “accurately remove the impacts of exports from the capacity import limit calculations while acknowledging the support that these units may provide for their local resource zones.”
MISO’s position was supported by an affidavit from Market Monitor David Patton.
Should FERC refuse to clarify or grant rehearing, MISO asked the commission to allow it to employ its revised calculations to the 2016-2017 Planning Reserve Auction without an auction results resettlement. The auction is scheduled for April 1.
Illinois Wants ‘Going-Forward’ Costs Cleared Up
The IIEC and Madigan also sought clarification or rehearing on the Dec. 31 order, worried that “going-forward costs” could be interpreted to include sunk costs.
“The commission should clarify that the going-forward costs used to calculate facility-specific reference levels may include only prospective fixed costs that would be avoided by shutting down the facility during the forthcoming MISO planning year… The plain language of the term ‘going-forward costs’ implies that the only costs that may be included are costs that have not yet been incurred,” the two parties wrote in a joint filing.
The Illinois parties are also asking that FERC explain “the procedure to be employed by the Independent Market Monitor for calculating lost opportunity costs in establishing facility-specific reference levels.”
MISO Chief Operating Officer Richard Doying said during a Jan. 26 Markets Committee of the Board of Directors meeting that MISO will make a second compliance filing by March 30. To increase capacity supply and lower prices in the future, FERC gave MISO 90 days to develop default, technology-specific avoidable costs in time for the 2017/18 capacity auction.
In addition to FERC-ordered changes, MISO’s creation of a two-season capacity market could be filed by spring and help alleviate pricing concerns associated with the 2017/18 auction, Doying said. (See MISO Proposes Two-Season Capacity Market.) Doying said he would have more details on MISO’s response to PRA changes in June, after filings are made.
