MISO told stakeholders Wednesday that it plans to add a sloped demand curve in its capacity auction and will make a FERC filing in the second quarter of 2023. 

The RTO’s Mike Robinson likened a sloped demand curve to his attempt to make an avocado-and-jalapeño-based gazpacho, but not having enough avocados to make the soup. He said when he went to the grocery store, he found surplus avocados priced at a quarter apiece and bought extra for the next night’s poke bowls.

That behavior showed that extra items beyond what is necessary still hold value. 

“We’re trying to recognize the value of that additional capacity beyond the planning requirement,” he said during a Resource Adequacy Subcommittee (RAS) meeting. “The additional 100 MW have reliability value beyond the reliability target, and we should reflect that in a cost-effective manner.”

Robinson said a sloped curve will make the auction more “sustainable” in the long run, sending price signals to plants to keep operating or reflecting the additional risk if capacity doesn’t cover their requirements. He said staff and stakeholders must figure out how to translate marginal reliability into dollar values. 

MISO says the incremental value of capacity might consider the avoided value of lost-load pricing and avoided high-priced emergency purchases.

Robinson said that over the last 10 years, the grid operator has been experiencing a “significant decrement” in its supply, which could have been helped with “some elasticity” in the demand curve. 

“If we’re going to do this auction, let’s do it right with prices that value capacity,” Robinson said. “We can do better than having a straight line, vertical demand curve.” 

Staff in July committed to a series of discussions with RAS over how the RTO might restructure its capacity auction with a sloped demand curve, among other changes. Some stakeholders said MISO needs to issue more detailed supply and demand data on a regular basis ahead of capacity auctions. (See MISO Promises Stakeholder Discussions on Capacity Auction Reform.) 

The RTO is holding auction-reform discussions as it begins organizing its first seasonal capacity auctions. In late August, FERC approved the grid operator’s plan to hold four simultaneous auctions for the 2023-24 planning year using an availability-based resource accreditation that relies on the presumptive riskiest hours in a season. (See FERC OKs MISO Seasonal Auction, Accreditation.)

MISO’s Durgesh Manjure said “some of the parts and plans are evolving” in implementing a seasonal auction and accreditation. Staff plans to publish draft accreditation values — based on a unit’s availability over the past three years and filtered by the RTO’s preselected, predicted risky hours — in November, with final numbers by mid-December. The grid operator has also scheduled office hours to answer questions about the new auction process.

At stakeholders’ request. MISO will allow mid-year capacity accreditation for new resources that will serve as replacement capacity.

CONE Goes Up

MISO has upped its cost-of-new-entry (CONE) for generators heading into the 2023-2024 planning year.

The highest CONE value is in eastern Missouri’s Zone 5 at a little more than $300/MW-day, the first time it has crossed that threshold. The lowest value can be found in East Texas and Louisiana’s Zone 9, at $257.75/MW-day.

MISO said CONE values swelled on “significant increases in base project capital costs and the weighted average cost of capital.” It said it used actual and expected inflation estimates to calculate the estimates.