By Amanda Durish Cook

CARMEL, Ind. — ‎After months of stakeholder discord surrounding MISO’s plan to incorporate external zones into its capacity auction and divvy up excess auction revenues, Entergy last week emerged with its own plan.

The proposal comes a month after the RTO announced it would delay creation of external zones until the 2019/20 planning year and asked stakeholders to come forward with ideas on hedging mechanisms that would distribute excess revenues to external resources. (See MISO Postpones External Zones Until 2019 Auction.)

During an Oct. 11 Resource Adequacy Subcommittee meeting, Entergy’s Rachelle Johnson offered a proposal in which market participants would request hedges for supply arrangements with an external resource once a year. To be eligible, those arrangements must be active during the upcoming delivery period, have a term of at least five years and not already be covered by a hedge, Johnson said.

MISO would then perform a feasibility test of requested hedges using auction estimates from its loss-of-load studies, and deny hedges if they exceed estimated funds. If the amount of surplus auction revenue was insufficient to fund all outstanding hedges, then the funding of those hedges would be reduced proportionally.

Market participants would receive hedges for the next five years in the event the resource did not clear in the auction, Johnson said.

WEC Energy Group’s Chris Plante asked whether the proposal intended to align hedging with firm transmission service. Johnson said it could.

Indianapolis Power and Light’s Ted Leffler wondered whether external resources with firm transmission service would stop promising capacity to a particular zone, and instead shop for the best zonal resource credit.

“Are you just going to look for the easiest, cheapest place to dump it?” he asked, adding, “Not that that’s a bad thing.”

Laura Rauch, MISO manager of resource adequacy coordination, said firm deliverability means to deliver load to anywhere within the RTO, not to any particular zone or load.

Plante, who is also RASC chair, asked for more stakeholder proposals on how to provide hedges to external capacity suppliers. “This is why MISO delayed this, to get more stakeholder input on this topic,” he reminded stakeholders.

Rauch said MISO will continue to hold discussions on external zones in upcoming meetings up until its planned filing with FERC in early spring. She said MISO would lead more discussion on external zone hedging, in addition to how pseudo-tied resources and fixed resource adequacy plans would interact with external zones and how it will define border resources.