By Amanda Durish Cook

FERC on Thursday cleared a backlog of disputes over MISO’s revenue sufficiency guarantee (RSG), issuing a quartet of orders in dockets dating back to 2009 concerning intermittent resources, headroom, cost allocation and resettlement procedures.

The commission:

• Exempted intermittent resources from RSG charges when they respond to MISO curtailment orders (ER11-2275-003) but refused to rehear arguments that such resources should be exempt from RSG charges altogether (ER09-411- 005);
• Upheld MISO’s continued use of a real-time headroom definition in its allocation of RSG charges (ER11-2275-002); and
• Refused to rehear arguments about MISO’s RSG assessments on MISO customers making both virtual supply offers and electricity withdrawals (EL07-86-012, et al.).

Generation or demand response resources receive RSG payments if they are committed through the reliability assessment commitment (RAC) process after the close of the day-ahead markets and they receive insufficient real-time energy and operating reserve revenues to cover its production costs.

Intermittent Resources

FERC’s order exempting curtailed intermittent resources from RSG charges was made effective July 2, 2011, rather than the May 2011 date sought by renewable generators. E.ON Climate and Renewables North America and NextEra Energy Power Marketing protested the later date, saying it subjected them to extra months of revenue sufficiency guarantee charges for “no just reason.”

FERC ruled the extra 60 days were reasonable because MISO needed extra time to adjust its systems and procedures to incorporate the exemption.

In the second case, the commission reiterated a compliance order rejecting a request to exempt intermittent resources from all RSG charges.

The commission cited an “extensive record” documenting that “increases and decreases in the real-time output of intermittent resources, as well as the reduced forecasts or unavailability of such resources, may cause real-time revenue sufficiency guarantee costs.”

FERC said the rehearing requests from more than 15 companies only repeated arguments it previously rejected and that exempting intermittent resources from RSG charges “would unfairly shift costs to other market participants.”

The companies had claimed MISO’s Independent Market Monitor overstated intermittent resources’ contributions to the make-whole costs and a MISO analysis didn’t take into account several intermittent characteristics, including transmission de-rates, grandfathered transmission agreements, system topology and changes in loop flows.

FERC said that while it recognized changes between thermal and intermittent resources, the differences didn’t warrant an exemption.

Headroom Definition

In a third ruling, FERC upheld MISO’s definition of real-time headroom — the difference between the real-time economic maximum dispatch and real-time dispatch targets for resources — in its allocation of RSG charges.

Under methodology proposed by MISO and accepted by FERC in 2011, the headroom charge was calculated based on the lesser of headroom or the aggregate of the hourly economic maximum dispatch amounts of all resources committed in any RAC process. In the Thursday order, FERC clarified that the headroom definition isn’t limited to intra-day RAC commitments and includes commitments made in MISO’s forward RAC process.

MISO’s Transmission-Dependent Utilities sector had said MISO’s headroom cap should be eliminated or limited to include only headroom contributed by resources committed in the intra-day RAC. The commission said the forward reliability assessment commitment process is part of the real-time commitment process, and therefore should be included.

A group of six financial marketers said FERC headroom costs should be allocated to all market participants based on market load ratio, rather than assessed on virtual offers and deviations. FERC responded that headroom allocations are already based on market load share.

The order also upheld MISO’s allocation of exempted deviations, which were challenged by Westar Energy on the basis that too many costs are allocated to deviations than to load. FERC brushed the complaint aside. “As the commission has stated in previous revenue sufficiency guarantee charge proceedings, there is no such thing as an ideal and static proportion of costs that should be allocated to any activity. Rather, a reasonable allocation is one that reflects cost causation principles,” FERC said.

Virtual Offers

In the final order, FERC refused to rehear arguments about flaws in RSG proceedings first brought up nine years ago. In 2007, Ameren, Northern Indiana Public Service Co. and eight other utilities alleged discrimination in MISO’s RSG rate because it was assessed on only a subgroup of MISO customers making both virtual supply offers and electricity withdrawals. MISO was directed to modify its Tariff so the RSG applied to all cleared virtual supply offers. The RTO then began stakeholder discussions on refunds and resettlement for the period of Nov. 5, 2007, to Nov. 9, 2008.

Several companies requested rehearing on the matter. Tenaska Power Services wanted FERC to order MISO to issue refunds with interest. Seven financial marketers asked for MISO’s RSG to be recalculated by adding exempted deviations back into the formula. The bulk of the requests claimed that MISO didn’t hold any stakeholder meetings on the resettlement.

FERC refused all rehearing requests, saying the issues in the case were “strictly limited to the compliance requirements” and the companies’ requests were beyond the scope of the order. “The resettlement process undertaken by MISO, reflecting its interpretation of the MISO tariff with respect to exempted deviations, has been the subject of proceedings in docket no. ER04-691,” FERC noted.