By Amanda Durish Cook

MISO said last week it will not yield on a planned July filing for capacity auction changes in deregulated areas, but a filing to add seasonal and locational constructs will be delayed until later this year.

During a two-day meeting of the Resource Adequacy Subcommittee, Jeff Bladen, executive director of MISO market services, said the July 15 filing goal for a new auction design is unchanged and draft Tariff language will be in front of stakeholders in time for a special meeting of the RASC on June 13.

The Tariff filing planned for next month would introduce a bifurcated procurement using both the existing Planning Reserve Auction and a separate three-year forward model for deregulated areas that would use a sloped demand curve. MISO will allow regulated demand to voluntarily participate in the forward auction, but not regulated supply.

The RTO released business rules and an updated work plan on its proposal and has retained The Brattle Group to review it.

Bladen also addressed disagreements between MISO and the Independent Market Monitor over the proposed changes, saying the RTO was working to “close the gap.”

“I wouldn’t describe it as ‘at odds,’” Bladen said of the opposing viewpoints. “There’s a philosophical difference in how a sloping demand curve would be applied. We’re trying not to place any new rules on nonparticipating states.”

Last month, the MISO Board of Directors ordered the RTO and Monitor to negotiate their differences in a joint work session. (See MISO Board Orders Negotiation in Longtime Auction Disagreement.)

“This isn’t a summit meeting of Cold War adversaries,” Bladen reassured stakeholders. “MISO meets with the IMM regularly, and there are discussions between MISO and [Monitor David] Patton and his staff almost every day.”

Bladen conceded that if the talks result in major changes to the design construct, the July filing timeline would be “very hard” to accomplish.

Bill Booth of the Mississippi Public Service Commission asked what changes might result from the talks.

“I certainly wish I had an answer on what a compromise is going to look like, but we’re going to work through it … and find common ground,” Bladen said.

Other stakeholders repeated a desire for more time to review simulation results and vet Tariff language.

“We understand where your intentions are, but there are some that think the competitive retail solution isn’t necessary, and there’s a lot of work to be done in the Business Practice Manuals. I think the July Tariff filing is overly ambitious,” said Jim Dauphinais, counsel for Illinois Industrial Energy Consumers.

NRG Energy’s Tia Elliott asked if MISO would have a third party critique the Monitor’s proposed solution as well as the RTO’s. Bladen said that could be done.

MISO released 17 pages of business rules last week based on the prior presentations and asked for stakeholder response by June 8 so input could shape draft Tariff language, which is due in time for the June 13 special meeting of the RASC. Subcommittee liaison Renuka Chatterjee said the rules could be made into a new Business Practices Manual or inserted into existing BPM 11, which governs the Planning Resource Auction (PRA).

“This is very much a first draft,” Dauphinais said of the business rules document, pointing out that a demand curve shape hasn’t yet been settled on. “We’re concerned you’re not prepared to put out Tariff language on June 8.”

“I’ve heard a lot of opposition, but I haven’t heard a lot of support,” added Booth.

“Nothing is ever not contested at FERC,” Chatterjee offered in response.

Chatterjee outlined the work plan:

• June-July: Rewrite Tariff and BPM language
• July-January: Software development
• October-February: Internal and external auction training
• March: Launch (for 2017/18 planning year)

Study to Delay Seasonal, Locational Construct

While pushing ahead on the auction design, MISO has abandoned the July filing goal of seasonal and locational constructs and promised stakeholders an additional two months for the concepts to be vetted through the RASC. The delay will allow completion of a new seasonal loss-of-load expectation (LOLE) study and continuing talks on dividing capacity accreditation into winter and summer, according to MISO’s Laura Rauch.

The study will explore how lower capacity reserve margins in the winter would affect seasonal capacity accreditation and how separate summer and winter LOLEs would impact capacity import/export limits and planning reserve margins. Rauch said MISO does not expect to have specific numbers on transfer capabilities and seasonal reserve margins until the fall.

Rauch also said more time is needed to consider definitions of external resource zones.

“We don’t want to put a hard and fast timeline on this. Once we resolved these concerns, we will file, but we do want to file this year,” Rauch said. Pressed by stakeholders, she said MISO is envisioning a September filing but would make an October filing if discussion or study findings warranted postponement.

“We’ve had three filings dates out there, and we don’t want to keep moving things around,” Chatterjee added.

Rauch said an open question is how MISO should define forced outage rates and planned outage hours during critical hours: weekday hours ending 15, 16 and 17 during June, July and August; and weekday hours ending 9, 19 and 20 during December, January and February.

Rauch said a seasonal capacity accreditation process would begin next June.

Even with the seasonal and locational constructs paused for discussion, stakeholders were wary.

“I get the impression MISO just wants time to explain this better, but there’s opposition because other alternatives exist,” Customized Energy Solutions’ David Sapper said.

Dynegy’s Mark Volpe also said stakeholders don’t want to spend the next two months sounding like a “broken record” on recommendations.

Both Chatterjee and Rauch said MISO staff would take time to respond to new questions and recommendations in the coming weeks.

Monitor Outlines Approach on Avoidable Costs

Meanwhile, Market Monitor Michael Chiasson outlined an approach that relies heavily on PJM to develop default technology-specific avoidable costs for future PRAs. FERC mandated the defaults in its New Year’s Eve order to lessen the burden of verifying reference levels on a unit-by-unit basis (EL15-70 et al.).

A compliance filing is due June 28. Chiasson asked for stakeholder input in time for another review of draft Tariff language during the June 13 RASC conference call.

MISO and the Monitor agree that the RTO should use PJM default values for the 2017/18 planning year but without PJM’s 10% adder. Chiasson said MISO doesn’t have enough time to survey generators to develop its own default values before next year’s auction.

“The June 28 compliance filing deadline makes it unlikely that a MISO survey would receive a sufficient number of responses to produce representative results for the various technology types,” the Monitor explained. However, the Monitor said it would “consider expanding the IMM’s operating cost survey so the default values can be based on MISO participant data in future years.”

Because PJM doesn’t develop default values for nuclear and wind units, the Monitor is proposing a wind avoidable cost of $108.30/MW-day based on Energy Information Administration data and a nuclear avoidable cost of $454.79/MW-day based on a recent white paper by the Nuclear Energy Institute.

For all the avoidable cost values, the Monitor suggested using the monthly Consumer Price Index to update values. Chiasson said the Monitor considered using other indices that track power production costs, but they were either overly reliant on capital costs versus operations and maintenance expenses, their values were too volatile or the reports weren’t produced often enough. For planning years beginning more than six months after the latest CPI is released, the Monitor recommended using a 10-year average of CPI changes to escalate prices an additional year.

Dauphinais asked for more evidence supporting use of the PJM default values. “We’re very anxious to get those,” he said. “We’re missing some data here.” Chiasson said the Monitor would provide more information on PJM values at the next RASC meeting.