MISO said last week it will give stakeholders more time — but not much — to get comfortable with four seasonal capacity auctions and a capacity accreditation rooted in a generating unit’s actual performance during tight conditions.
The grid operator has not determined how many more weeks it may wait before making a FERC filing. Its current goal is to make the filing before October.
“My biggest concern is that if we take more time, it means we’re standing in a safe place. Past performance says we’re not,” MISO CEO John Bear said during Thursday’s Board of Directors meeting. “I do sympathize with the members … and I want to give you more time. But I want to make sure we file with enough time to get this in place for the 2023/24 planning year.”
At present, no one appears happy with MISO’s plan to embark on seasonal capacity auctions. Members have called for more supporting analysis and the Independent Market Monitor has criticized what he calls a too-lenient accreditation.
Bear said intensifying storms, escalating generation outages, and resources not performing to their accredited values means the RTO must change its resource adequacy design. He pointed out that while 2005’s Hurricane Katrine took out about 17,000 poles, Hurricane Ida took down 30,000 poles.
“We’re seeing more than 20% of the fleet unavailable on hot summer days,” he said. “With capacity continuously unavailable, we’re relying on non-firm resources.”
MISO management defended the need for four distinct capacity auctions and reserve targets with a performance-based accreditation after stakeholders overwhelmingly voted two weeks ago to delay the filing into the second quarter of 2022. (See MISO Stakeholders Vote on Seasonal Capacity Auction Delay.)
Richard Doying, the RTO’s executive vice president of market and grid strategy, addressed the vote and said that while stakeholders asked for a slowdown, none fundamentally disagreed with MISO’s proposal.
“What people said is, ‘This is complicated; can we have several more months to talk about it?’” he said during a Tuesday teleconference of the board’s Market Committee. “Unfortunately, I feel that the time for inaction is past us … We’re at the point where the time to file is upon us. We’re taking a directionally correct step.”
Doying said it’s imperative that MISO move away from the current resource-adequacy construct’s assumption that emergency events only occur in summer. He said until summer 2016, emergency declarations were virtually unheard of.
“It was an incredibly rare event in the control room,” he said.
But since mid-2016, MISO has had 39 maximum generation warnings and events, the majority of them outside summer months.
Doying said the RTO has been mulling a seasonal capacity method longer than some may realize. He said staff discussed the possibility years ago when a combined-cycle generator demonstrated poor availability in the summer but stable availability during the winter.
MISO Executive Director of Market Operations Shawn McFarlane said the grid operator is at the point where it may have a maximum generation event any day of the year during high-outage periods.
Consumers Energy’s Kevin Van Oirschot said MISO should provide an exemption to accreditation reductions when outages are planned sufficiently in advance. The grid operator’s current proposal would reduce unavailable generation’s capacity credits during tight operating hours, even if they’re on a previously scheduled outage.
Van Oirschot said members are struggling to understand how their fleets’ accreditations will be affected under the proposal.
WEC Energy Group’s Chris Plante said the proposal might cause members to submit several planned outage requests and then withdraw all but one to get better odds in landing an outage timeline that isn’t in the predefined risky hours.
Doying said MISO’s new availability-based accreditation concedes the new reality that emergencies are more unpredictable and likely to materialize at more points during the year.
“It’s much more difficult when none of us know the hour when the emergency will occur,” he said, acknowledging stakeholders’ concerns that the new accreditation makes outage scheduling without reducing accreditation a trickier process.
Travis Stewart, representing the Coalition of Midwest Power Producers, said MISO has yet to articulate how the seasonal capacity and accreditation design will improve the conversion of capacity to energy. He said while MISO offered a proposal to stakeholders several years ago, it didn’t have specific details firmed up until August.
Stewart also said the seasonal filing doesn’t address winter weatherization of generating units.
“I think the last thing my company wants is to have these debates in front of FERC,” Plante said.
“It is a fair concern that it’s more difficult to predict risk, but that doesn’t mean we shouldn’t try” to anticipate it, Doying said.
The proposal forces staff and members to confront reality, Doying said, and determine sooner whether new resources should be constructed when a local resource zone won’t have enough capacity to cover load. He also said the proposal has undergone a “lengthy stakeholder process.”
Not Far Enough for IMM
MISO IMM David Patton warned the RTO’s executives and the board that he would oppose the filing in front of FERC if it’s filed as-is.
“We’re at a point where we can’t support the filing, but we hope a second iteration of the filing might correct some of these concerns,” Patton said.
He said MISO began with a strong proposal but made several changes that were “diametrically opposed” to its objective of ensuring resource availability. The accreditation component was changed at the behest of members, Patton said, making the proposed accreditation impotent.
The grid operator originally proposed that a resource’s accreditation would hinge solely on availability during “resource adequacy hours,” or the year’s top 5% of hours that staff believes contain reliability risks. The plan now includes unremarkable hours in addition to RA hours and a 24-hour grace period for offline resources during tight condition hours, leading to more lenient accreditations. (See MISO Softens Capacity Accreditation Proposal.)
Patton said a transition to a more intermittent-heavy fleet demands that MISO have a stricter accreditation. “The right answer is not the popular answer,” he said.
Patton said he also opposes MISO’s minimum capacity requirement, where a member must demonstrate that it has procured at least 50% of the capacity required to meet its peak load ahead of MISO’s voluntary capacity auction. He said the rule was unnecessary and should be excluded from the seasonal capacity filing.
Doying characterized the minimum capacity requirement as “guardrails” and said it’s important that MISO’s tariff reflect its members’ obligation to plan. He said the rule wouldn’t impose new requirements on most members, who already must demonstrate that they’ve procured most of their capacity outside of MISO’s auctions. He called it “a stretch for a small number of entities.”
Close Calls in Summer
Punishing heatwaves in MISO’s North and Central regions have led to several emergency procedures this summer. The grid operator declared six maximum generation alerts: June 10, June 28 and 29, July 6, and August 24 and 25. MISO said temperatures in the northern footprint were about five degrees higher than the five-year summertime average.
“Eleven days this summer, we experienced tight periods where it was difficult to serve load,” Jessica Lucas, senior director of reliability coordination, told MISO board members.
The difficulties were reflected in MISO’s $35/MWh real-time average price, substantially higher than 2019’s and 2020’s average $24/MWh summertime price. The 119-GW summer peak on Aug. 24 didn’t top staff’s expectation of a 122 -GW peak.
MISO briefly entered a maximum generation emergency just once, on June 10. Greater than expected load-modifying resource (LMR) commitments and non-firm imports ultimately brought the emergency to heel before the situation could deteriorate. (See “MISO Defends June Emergency Declaration,” MISO Market Subcommittee Briefs: July 8, 2021.)
Patton asked that MISO become “more surgical” in LMR commitments during emergencies, asking specifically that it only ask for the megawatts it needs rather than calling on the entire 11 GW pool of LMR capability.
“Even if we could scale back a moderate amount, we’d become more efficient,” he said.
MISO believes that introducing a 30-minute energy reserve product before 2022 will help clarify when it requires an emergency.
MISO President Clair Moeller said the grid operator is “very much looking forward” to a reserve product that sets prices earlier and may tamp down out-of-market actions and pricing “turbulence” that take place ahead of emergency procedures.
The RTO reported that testing of short-term reserves is going well despite an interruption of some MISO South units during Hurricane Ida.
