FERC has allowed MISO to avoid eight years of resettlement work on certain manual dispatches dating back to early 2009.
The commission last week did not act on MISO’s longstanding Tariff violation. The grid operator may have miscalculated on some make-whole payments to resources that were manually dispatched from January 2009 to May 2018 (ER18-1611).
Commissioner James Danly concurred with the decision while castigating FERC’s multiple other waiver approvals.
MISO said that during a 2018 quality check, it discovered that its settlement system was not technically handling manual redispatch as outlined in its Tariff. It said its software was setting dispatch instructions to a specific level, rather than a range of acceptable dispatch levels as described in the Tariff. The RTO also said its software was checking for economic dispatch statuses in both the day-ahead and real-time markets, when its Tariff does not require such a check for economic status in the day-ahead market.
The financial fallout from the eight-year inconsistency totaled just $1.6 million, or $200,000 annually, MISO said. The grid operator said manual redispatch was necessary in a little more than 1% of all make-whole payment hours since 2009.
MISO also said its Independent Market Monitor did not find any generators “intentionally making inflexible offers … to gain excess margins from the system during intervals that a resource was manually redispatched.”
FERC said that while the discrepancy amounted to a nearly decadelong Tariff violation, the amounts were too small to be reopened, calling resettlement counter to public interest.
“We agree with MISO that, based on the circumstances here, market resettlement and refunds are not an appropriate remedy,” FERC said. “We are persuaded that, to the extent resettlement of the market transactions at issue would be feasible, requiring such resettlement and associated refunds could create inequitable results by unfairly punishing market participants that followed MISO manual redispatch instructions and could undermine confidence in market outcomes.”
The commission cited its “broad authority” to determine remedies for Tariff violations. It also said that because it was not directing resettlement or refunds, it was not required to address MISO’s waiver of its Tariff during the discrepancy.
Danly said he agreed with the decision, unlike the nine waiver approvals issued during FERC’s open meeting Thursday. He said that in this instance, FERC did not exceed its legal authority by granting a backdated waiver that could violate the filed-rate doctrine and rules prohibiting retroactive ratemaking. Instead, he said, the commission confirmed the violation between settlement software and Tariff language and disregarded the request for waiver.
“I agree with this holding. In my view, this is the approach we should take in all situations where a utility has violated its own tariff,” Danly said, noting MISO’s “relatively small error and the extreme difficulty in resettling bills back to 2009 support this decision.”
Danly also said FERC should have first denied MISO’s waiver request, then made the finding that the RTO violated its Tariff to keep the commission’s decision-making process uniform and orderly.
