By Amanda Durish Cook

MISO officials said last week they are still finalizing their forward auction proposal for competitive areas, but the changes won’t be significant and won’t affect a late fall FERC filing. Meanwhile, simulations including the new proposal suggested it could result in large price disparities.

Jeff Bladen, executive director of market services, said MISO is now targeting a Nov. 1 filing, with implementation in the 2018/19 planning year. The RTO plans to release another version of draft Tariff language at a Sept. 19 Resource Adequacy Subcommittee meeting and collect stakeholder feedback by the Oct. 6 RASC meeting. The Brattle Group will also present more forward auction findings at the September meeting. (See MISO Delays Forward Auction Filing; Issues Draft Tariff and Business Rules.)

“At this point, we’re not anticipating any meaningful changes,” Bladen said at a two-day RASC meeting last week.

Bladen said MISO is still working on a materiality clause to determine which retail choice load participates in the forward auction in Michigan and Wisconsin, where the zonal boundaries straddle state lines.

The RTO also is considering changes to its cap on the safe harbor provision that excuses supply from having to offer capacity.

The current cap is based on historical planning reserve margin requirements (PRMR) and an “open-ended” exception process. MISO is considering a cap based on projected PRMR and a “prescriptive” exception process, and one based on projected PRMR plus additional prescriptive adjustments with no exception process.

Based on stakeholder feedback, MISO is reworking transmission modeling compatibility between the forward and prompt Planning Resource Auction and a simultaneous feasibility test, which judges the system’s ability to handle all megawatts of capacity dispatched during a maximum generation event. Bladen said MISO is still refining a possible congestion charge to remedy infeasible capacity delivery through cost allocation.

“We want to make sure that anything that clears in the FRA [Forward Resource Auction] will be feasible with the rest of the footprint,” Bladen said.

Finally, the RTO is mulling over which demand curve shape to pursue. (See MISO Backs Forward Auction Plan, Rejects Prompt Proposal.)

Split with Market Monitor

Mark Volpe, senior director of regulatory affairs for Dynegy, asked if MISO is still working with Independent Market Monitor David Patton on his concerns over price formation.

“We speak with the Market Monitor on a regular basis. While we continue to have a difference of view, we are open to his advice and feedback on how and when to improve the FRA, [but] the price formation concerns that he’s raised are not what we’re seeing,” Bladen said. “I think the nature of his role as an adviser is not in question. But at this point, we have a difference of view in what the data shows, and that’s not uncommon with topics like this.”

When pressed by stakeholders on how much of the Monitor’s advice would be incorporated, Bladen became less conciliatory, suggesting the RTO would rely on Brattle’s suggestions. “There’s nothing [in the Tariff] to suggest that Potomac Economics is the sole [adviser] for MISO,” he said. “And FERC is the ultimate arbiter.”

RASC Chair Gary Mathis asked if MISO could leave certain details out of the filing to work out later. Bladen said he expected the filing to include all relevant details.

“Like most FERC filings, everything is up for grabs once FERC gets its hands on it,” Bladen added.

Michael Chiasson of Potomac Economics asked if MISO would leave any details out of the filing in favor of providing a reference to the accompanying Business Practices Manual. Bladen said MISO would not.

MISO-IPL Analysis Produces Disparities

MISO also collaborated with Indianapolis Power and Light on a forward auction pricing analysis, which used results from last year’s Planning Resource Auction in a forward auction and PRA simulation.

The two simulations yielded disparate results. A first simulation that used a sloped demand curve produced clearing prices of $1.99/MW-day for MISO South, $1/MW-day for Zone 1 and $222/MW-day for the remainder of MISO North in the prompt auction, and $110/MW-day in the forward auction, which will be limited to retail choice areas. IPL said the PRA demand curve moved to the right during its simulation, noting “cleared FRA resources offered at zero … in the PRA are not a direct offset to the shift in demand curve.”

On a second simulation using a demand curve shaped closer to what Brattle used in its analysis, IPL results produced $210.10/MW-day in the forward auction, and a $2.99/MW-day clearing price in MISO South and a $5/MW-day clearing price in MISO North. (See chart.)

IPL analyst Ted Leffler said the outcomes of the auction are “in line with expectations” even though the forward clearing prices were disproportionately higher than PRA prices.

“Should we be concerned that we’re going to be introducing more volatility? I don’t know. It’s something we need to think about,” Leffler said.

Leffler said IPL used the Zone 4 PRMR as a representation for all competitive zones and didn’t change any offers or capacity import or export limits. The analyses only used the most expensive offers in Zones 1, 2, 8 and 10. For the second analysis, he said, IPL assumed just 78% of Zone 4’s resources were offered in the forward auction, as that was the percentage considered competitive.

Leffler also said the simulations’ use of 2015 PRA results was “imperfect” because it was a “sold-out” auction, with all supply megawatts clearing except for some in Zones 4 and 7.

Count External Resources Toward Clearing Requirement?

While a seasonal and locational auction filing is also on hold until the 2018/19 planning year, MISO said it could consider implementing pieces of the locational construct in the 2017/18 planning year. Namely, said Executive Director of Resource Adequacy Renuka Chatterjee, MISO could apply external resources toward local clearing requirements in next year’s auction if the RTO can file with FERC and get approval in time.

South-North Limit

Meanwhile, MISO continues to solicit stakeholder opinion on whether the 876-MW South-North transfer limit should be adjusted in planning for next year’s auction. (See “South-North Transfer Limit in 17/18: Higher or Lower? Firm or Non-Firm?” MISO Resource Adequacy Subcommittee Briefs.)

The RTO brought six days’ worth of 2016 summer data to the RASC to illustrate peak usage on the sub-regional transfer. The data showed North-South flow averaging 2,446 MW on June 17 (with a peak of 2,840 MW) when a maximum generation alert was issued in MISO South, and an average 1,618-MW South-North flow (peak 2,225 MW) on July 22 when Midwest load peaked at 88 GW.

Volpe said the results show that MISO should continue to be “somewhat conservative” for constraints on real-time flows between the regions. Dynegy, which independently examined flows during two peak summer days this year, concluded MISO should continue to subtract firm reservations from the 2,500-MW South-North limit.

Other stakeholders agreed, saying MISO should account for all firm reservations across the interface, as only non-firm reservations could be guaranteed after all firm flows were granted, even if the firm flows weren’t in use.

MISO said of the 10 respondents that provided feedback on the regional transfer limit, seven supported using the maximum 2,500-MW limit as a starting point. Two others opted for a 1,000-MW starting limit. The final stakeholder to provide comment asked for a study of firm-flow reservations before a decision is made.

The RTO is expected to present a draft proposal on the 2017/18 sub-regional limit at the Oct. 5 RASC meeting.