Stakeholders are asking if MISO’s new long-term generation outage policy played a role in driving up Michigan capacity prices in this year’s Planning Resource Auction.
While nearly all MISO local zones cleared under $7/MW-day in last month’s 2020/21 PRA, Lower Michigan’s Zone 7 cleared at the $257.53/MW-day cost of new entry price — 10 times the capacity price paid in the last planning year. (See Michigan Prices Soar in 8th MISO Capacity Auction.)
During a Resource Adequacy Subcommittee teleconference Wednesday, MISO Manager of Capacity Market Administration Eric Thoms told stakeholders that Zone 7 came up short of capacity to meet its local clearing requirement and had to import capacity, activating the CONE price.
Stakeholders asked if the Independent Market Monitor examined whether MISO’s new long-term outage rules might have been used as a façade by some Zone 7 resources to physically withhold capacity and drive up prices. The new rule stipulates that planning resources cannot offer into the auction if they plan to be on outage for longer than 90 days of the first 120 days of the planning year. MISO deems the first four, warm months of the planning year as the time when capacity availability is most critical. The RTO’s 2020/21 planning year begins June 1.
IMM staffer Michael Chiasson said the Monitor scrutinized long-term outages to make sure they were justified.
“We don’t want people to have outages in there that give them an excuse to not participate,” Chiasson said. “It’s kind of like a road with two ditches: Don’t participate if you shouldn’t, and participate if you should.”
Chiasson also said that some Zone 7 resources didn’t offer all the capacity they had, but the unoffered supply was below the Monitor’s conduct threshold of 50 MW per affiliated companies per zone. MISO’s 2017 rule applies a 50-MW physical withholding threshold to affiliated market participants collectively, rather than individually to each affiliated company.
Last year, the Monitor had to enforce market mitigation for economic withholding in Zone 7, resulting in a 1 cent/MW-day reduction in the Lower Peninsula. Zone 7 also cleared higher than all other zones last year, at $24.30/MW-day compared to $2.99/MW-day everywhere else.
Thoms said MISO will discuss how it approached its loss-of-load sensitivity analysis for Zone 7 at the June 10 RASC meeting. He said MISO would also investigate whether Zone 7 would have come up short in the last planning year had the long-term outage rule been in place at the time.
MISO’s 2020 Transmission Expansion Plan contains a special study into the increasingly tight capacity import and export limits (CILs/CELs) in Zone 7. The Michigan Public Service Commission requested the study, which will help the state “better understand the effects” of increasing either the CIL or CEL for Zone 7, according to MISO. (See Northern Focus for MTEP 20.)
Meanwhile, MISO says it wants to be more transparent in how it develops its loss-of-load expectation study.
“This is something we’re struggling with. … We’re trying to figure out how to get more stakeholder engagement earlier and up front. We want to make sure this process is meaningful,” RASC Chair Chris Plante said.
Customized Energy Solutions’ Ted Kuhn said the problem is that MISO makes a “fluffy,” introductory presentation one month, then comes back with LOLE study results in the next month.
“We never saw how this was being developed in the first place. … So something needs to change in how they’re developing their work products,” Kuhn said.
