MISO plans to file a waiver with FERC on its winter energy offer cap policy while it waits for the commission to work out whether a soft cap will replace the current $1,000/MWh hard cap, RTO officials told the Market Subcommittee last week.

The waiver, to be filed Sept. 30, is the same approach used in the last two winters since natural gas prices spiked and drove energy offers above the cap during the polar vortex in early 2014. Cost-based offers above $1,000/MWh will be verified by MISO’s Independent Market Monitor, and the costs above the cap can be recovered via the RTO’s Revenue Sufficient Guarantee payments.

Chuck Hansen, of MISO’s market evaluation design group, said it was unlikely that offers would climb above $1,000/MWh from Dec. 1 to April 30, the length of MISO’s requested waiver. “Given the current low prices and the improved understanding of gas and electric coordination, it seems remote that offers will exceed the cap this winter,” he said.

MISO said it continues to wait on FERC before filing revised Tariff language and new Business Practices Manuals. “Until that point, we’ll just repeat the approach we’ve used over the last two winters,” Hansen said. Last year, MISO said it would have a permanent offer cap solution worked out in time for the 2016/17 season. (See MISO: No Change to Energy Offer Cap this Winter.)

In January, the commission proposed that offers in all RTOs be capped at the higher of $1,000/MWh or an RTO-verified cost-based offer. (See FERC Proposes Uniform Offer Cap Across All RTOs.)

MISO Developing Make-Whole Payments for Pseudo-Tie Units

John Weissenborn, MISO’s director of market services, said the RTO is seeking to develop a market mechanism to make pseudo-tie units whole when they contribute to local reliability needs.

“We’ll start investigating approaches for compensation and cost allocations for commitments of certain pseudo-tie units,” Weissenborn said.

Weissenborn said MISO doesn’t have any provisions in its Tariff to determine appropriate compensation of make-whole payments to pseudo-tie units. “So we really need to think about an appropriate level of compensation for the commitment,” he told stakeholders.

MISO says offline pseudo-ties can be used to relieve congestion, particularly at market-to-market coordinated flowgates. MISO’s research will include commitments outside of market-to-market congestion, Weissenborn said.

“We haven’t really faced this issue to date, but it’s a possibility and something we need to look at,” Weissenborn said.

MISO is in preliminary discussions with PJM on how to coordinate the effort. Weissenborn said he would return later in the year to the Market Subcommittee with a draft approach.

American Electric Power’s Kent Feliks said the issue would open up “a very large can of worms” and asked if there would be cost responsibilities when pseudo-tie units don’t meet commitments. Weissenborn responded that MISO would have to further define the issue before drafting a mechanism.

— Amanda Durish Cook