By Amanda Durish Cook

ST. PAUL, Minn. — While MISO “generally” agrees with all nine market improvement recommendations raised by its Independent Market Monitor in its 2016 State of the Market report, the RTO says it must first consult with stakeholders on any proposed market changes.

“There are a number of them where we agree, both on the notion behind them and the recommended approach,” MISO Executive Director of Market Design Jeff Bladen said during a Sept. 19 meeting of the Markets Committee of the Board of Directors.

That committee in July said Monitor David Patton had raised worthwhile issues in his latest report. (See MISO Board Hears State of the Market Recommendations.)

Higher Value of Lost Load

The RTO said it agrees with the Monitor’s idea of representing the value of lost load with a more sloped contingency reserve demand curve. Patton recommended a curve capped at almost $12,000/MWh, rather than MISO’s proposed $3,500/MWh cap, which the RTO filed in May to comply with FERC Order 831 (ER17-1571).

MISO’s flatter proposed curve generally hovers at $2,100/MWh, unless the market clears less than 8% or more than 96% of its requirement. The current curve is largely priced at $1,100/MWh.

“It seems like a fairly simple question: Why don’t we do this?” Director Paul Bonavia asked regarding the Monitor’s proposed curve.

Executive Vice President of Operations Richard Doying said that while MISO agrees with the more steeply sloped curve, the process for changing “isn’t as simple as filing” a new curve. The RTO must first put the change before its stakeholder community and gather consensus before turning to FERC with a proposal.

“We’ll get to a change. We’re not sure what the shape of the curve will look like, but [a change] is beneficial,” Doying said.

Market-to-Market Coordination

MISO officials are in the midst of developing a plan to transfer control of market-to-market (M2M) flowgates to neighboring RTOs. Bladen said MISO and SPP plan to begin swapping flowgate control soon — a goal first outlined in a June memorandum of understanding between the two RTOs — while MISO will look improve its control transfer process with PJM. (See MISO Interregional Plans with SPP Echo PJM Efforts.) The Monitor wants the three RTOs to become more active in transferring monitoring of constraints when the non-monitoring RTO has all of the transmission loading relief on a flowgate.

Generation Outages

MISO is also aware that it needs a greater say in the scheduling of planned generation outages, Bladen said. In his report, Patton asked the RTO to file changes with FERC to give itself increased authority to approve generation and transmission outages and the ability to coordinate outage schedules in order to lower costs.

“We think that generation outages will somehow be changed. That, I think, is not a question,” Bladen said. “How it’s going to be implemented, that’s an area where stakeholders, the Market Monitor and MISO will have to work together.”

About 16,000 MW of generation was offline for planned outages despite unseasonably warm forecasted temperatures during emergency conditions in MISO on April 4, and the Monitor maintains that the planned outages exacerbated the situation.

During a Sept. 20 Advisory Committee meeting, Citigroup Energy’s Barry Trayers said generators planning the outages should possibly bear some of the related congestion costs.

“By nature of our names, we are transmission-dependent utilities,” Wisconsin Public Service’s Chris Plante said. “What we found out real quickly when working with our transmission providers is that we have to coordinate heavily to align outages.”

“The consumers are bearing the burden of these costs. I still carry the concern of the ratepayer,” NRG Energy’s Tia Elliott said. “We have to consider the economics of these outages — and not the economics of filling our own pockets, but the economics of who bears these costs — because we can’t get the planning and the coordination down right. And maybe we can’t get it perfect, but there needs to be some coordination here.”

Entergy’s Matt Brown said he personally opposes scheduling wintertime outages for the sake of staggering planned outages in the interest of community safety.

“It’s one thing not to have air conditioning in April when it’s 70 degrees. It’s another thing not to have heat in December,” Brown explained.

Reliability Subcommittee Chair Tony Jankowski pointed out that MISO is not charged with evaluating outages based on cost. “If you want MISO to put a price on that outage, that’s a whole different thing. That’s not in MISO Tariff,” he said.

Two Separate Reserves?

Like the generation outage issue, Bladen said MISO faces a similar stakeholder process to create separate regional reserve requirements and cost allocation for its North and South regions, another Monitor recommendation. He pointed out that MISO is currently conducting a multiyear regional transmission overlay study that could identify a transmission solution for the RTO’s constrained interface between the two regions. Neither the Market Congestion Planning Study nor footprint diversity study, both conducted this year, have been successful in identifying a project that could meet cost-benefit requirements.

Other Recommendations Get a Look

The Monitor’s remaining recommendations also must undergo more review, according to Bladen.

A recommendation to improve the accuracy of MISO’s look-ahead commitment tool by modeling system conditions for a three-hour time frame could be folded into the RTO’s market platform replacement if the Monitor has provided compelling enough evidence for doing so, he said.

Officials also agree with the Monitor that the RTO could tighten qualification guidelines for day-ahead margin assurance and real-time offer revenue sufficiency guarantee payments in order to improve performance incentives and reduce gaming opportunities. Bladen said MISO plans to begin stakeholder discussions about the issue next month.

MISO may be willing to improve forecasting incentives for its wind operators by changing dispatch deviation thresholds and settlement rules, but it must first evaluate how other RTOs have handled wind forecasting, Bladen said.

“There’s a quote by Pablo Picasso: ‘Good artists copy and great artists steal.’ The concept of stealing as he was describing is building on what others have done. That’s what we want to do here; we want to build on and improve,” he said. (Whether Picasso actually said this is disputed.)

Bladen also said MISO still faces a full technical review in front if it undertakes a recommendation to disqualify from the Planning Resource Auction any resources expected to be unavailable during peak conditions. “We’ll be working through with our stakeholders to figure out how to do this,” he said.

Now What?

The Monitor’s recommendations are included for consideration in the current and upcoming Market Roadmap project lists. Patton’s recommendation to create regional reserve requirements was the only one to earn a “top 10” stakeholder ranking among 34 market modification proposals in the RTO’s annual Market Roadmap process. MISO has yet to provide its own staff weightings alongside the stakeholder scoring results to determine what market projects the RTO will eventually undertake. (See “Stakeholders Give Energy Storage Top Spot in Roadmap,” MISO Market Subcommittee Briefs: Aug. 10, 2017.) MISO will unveil a final project prioritization by December.

MISO said it plans to spend about $53 million in Market Roadmap market revisions over the next five years.

Director Michael Curran said that roadmap efforts are a sizeable endeavor when combined with the RTO’s day-to-day operations and multiyear effort to entirely replace its market platform.

“This is a big lift,” agreed Director Baljit Dail.