By Amanda Durish Cook

ST. PAUL, Minn. — MISO stakeholders last week continued their critique of the RTO’s proposed Competitive Retail Solution.

MISO’s proposal and the broader issue of resource adequacy were the “hot topic” at last week’s Advisory Committee discussion moderated by consultant Robert Gee.

Gee began by asking sectors if MISO’s separate forward auction for retail-choice zones was reasonable — or even necessary.

Dynegy’s Mark Volpe said the Independent Power Producers sector believes that a serious problem exists, pointing to the forecasted generation shortfalls in Illinois and Michigan and the 1.9 GW of generation that’s currently pseudo-tied out of Illinois into PJM.

5 GW Departing

“You’ve got 5 GW of generation in southern Illinois — if you count the retirements and suspensions — that’s departing MISO. That’s huge. … It’s clear evidence that a problem exists and has existed for years that needs to be addressed yesterday,” Volpe said.

The IPP sector submitted comments suggesting MISO conduct voluntary forward auctions for regulated states and a “mandatory auction for retail-choice load.”

The Transmission-Dependent Utilities sector has not reached consensus on whether MISO’s forward auction addition is necessary, WEC Energy Group’s Chris Plante said. “I think we have a plurality of members who are opposed to the Competitive Retail Solution,” Plante said. He added that incremental changes could be made, including raising the cost of new entry to two or three times its current amount.

Northern Indiana Public Service Co.’s Paul Kelly said the Transmission Developers sectors is not answering whether the CRS is needed anymore, as it’s clear MISO will file the auction redesign for FERC approval anyway.

“What we’re willing to say as a sector is that the concerns we had have been addressed by MISO, and we’re appreciative of that,” Kelly said. “It’s not as if a forward auction hasn’t existed in America, so we’re not blazing a new trail.”

‘Totally Dysfunctional’

Madison Gas and Electric’s Megan Wisersky, of the TDU sector, said just because a forward auction has been done elsewhere, doesn’t mean it’s been done correctly.

“The eastern forward capacity markets are completely, totally dysfunctional,” Wisersky said. “More and more people are dragged into it, kicking and screaming. We’re not solving it by chasing this ephemeral idea that changing capacity markets are the way to fix it. If you really want to think about it, capacity isn’t even a real product — energy and ancillary services are.” (See related story, Monitor: NYISO Needs Locational Focus, Flexibility — not Forward Capacity Market.)

The Illinois Industrial Energy Consumers’ Jim Dauphinais, speaking for the End-Use Customers, reminded the Advisory Committee that Lower Michigan and Illinois will pay for what is decided. Dauphinais said he was not convinced that a major market change was needed at all and that MISO’s current proposed market rules are “unnecessarily complicated.”

“It treats retail load like an outcast,” Dauphinais said. He said the Independent Market Monitor and MISO’s hybrid solution, which kept both merchant and regulated load on the same prompt auction schedule and applied a sloped demand curve to merchant load, was more reasonable.

Volpe said MISO’s Board of Directors and management should pay attention to the Monitor’s “deep-seated” concerns on price formation in a bifurcated market.

The Public Consumer Group sector voiced concerns that generators in regulated states could voluntarily bid into the forward auction, making them unavailable for local customers. The sector called on MISO to conduct annual testing to confirm actual available capacity amounts.

The Power Marketers sector said moving the auction for competitive areas three years out gives market participants time to plan and budget. The TDU sector countered that argument, claiming MISO has changed the capacity process so often year to year that it has become difficult for utilities to get their bearings. “MISO’s processes in this area have been changing every year since 2009, and the lack of consistency and predictability from year to year creates problems for utilities trying to do their own planning,” the sector wrote.

‘Slippery Slope’ Fear

After multiple stakeholders called the forward auction “a slippery slope,” MISO Director Paul Bonavia asked why stakeholders believed the forward auction construct would eventually cross into traditionally regulated areas.

Once filed with FERC, “I cannot imagine … the possibility that MISO … would apply this proposal to the entire footprint,” Volpe said.

“FERC is not shy about pushing jurisdictional boundaries,” Wisersky fired back.

Matt Brown, representing the Transmission Owners sector, said that while the risk of spreading applies to any new regulation, his sector wasn’t worried MISO would apply a PJM-style forward capacity market to the entire footprint.

“Last I checked, MISO wants to be an RTO five years from now,” NIPSCO’s Brown said, referring to the voluntary nature of RTO membership. “I think MISO has done a good job recognizing that what Michigan and Illinois needs is very different from what the rest of the market needs.”

Bonavia said that while the board wasn’t going to “jump in and start writing Tariff language,” it has heard the concerns.

“It doesn’t sound like — to nobody’s great surprise — that there’s a lot of accord on the Competitive Retail Solution. But I’ll say this as one director: It feels that there’s a pretty strong sense to assure it’s a regional solution that doesn’t bleed over or create the slippery slope that sucks other states into it.”

Awaiting the Details

Indiana Utility Regulatory Commissioner Angela Weber, representing the State Regulatory sector, said she is not sure whether the proposal is reasonable because details, such as the shape of the forward demand curve, have not yet been provided.

Weber said she wanted to make sure that the demand curve is shaped so both competitive and regulated areas in MISO achieve equal reliability and uphold the one-day-in-10-year loss-of-load expectation.

Comments from the State Regulatory sector urged the RTO to “keep in mind that resource adequacy within MISO is largely a state and local responsibility” and said it was “imperative that the current Competitive Retail Solution is shown not to impact existing state and local authority and processes.”

A day later at the MISO board meeting, Director Thomas Rainwater wondered if the problem in Southern Illinois was being “overstated” by the RTO.

Richard Doying, executive vice president of operations and corporate services, said that whether or not the predicted shortfall in the Organization of MISO States survey is accurate, new generation that “no one is building” will be needed in Zone 4. Efficient pricing achieved through the forward auction, Doying said, will encourage investment in new generation.