FERC on Oct. 25 authorized MISO’s move to a capacity accreditation method that blends probabilistic availability with historical unit performance beginning with the 2028/29 planning year (ER24-1638).
The commission said that MISO had shown its new method “captures a range of risks in the planning and operations horizons, aligns operational needs with non-discriminatory market and planning requirements, and will result in transparent market prices that reflect marginal contributions to reliability during highest-risk hours.”
The new method stands to shrink most resources’ accredited capacity. MISO will use a two-step process that marries historical performance of individual generators with a probabilistic performance during simulated loss-of-load events. (See MISO: New Capacity Accreditation Filing Imminent.)
First, the RTO will calculate a probabilistic, resource-class average accreditation using its loss-of-load modeling. Then, it will tailor resource class-level accreditations to individual generators based on their availability during normal operating conditions and at high-risk hours, which includes hours containing low margins or hours with an emergency event in place. MISO plans to give a greater, 80% weight to hours that contain emergency or near-emergency conditions in the ensuing method.
The RTO said it targeted both a prospective and retrospective approach to accreditation.
FERC rejected stakeholders’ arguments that MISO’s methodology differs from NYISO’s and PJM’s effective load-carrying capability method, noting that it has the authority to accept a range of designs. It called the RTO’s design a “reasonable balance of a range of complex tradeoffs that are inherent to any capacity accreditation methodology that includes probabilistic and deterministic elements.”
The commission said it found no evidence that the new method will introduce too much volatility in capacity values year over year, as the Arkansas and Mississippi public service commissions alleged. It countered that MISO is moderating volatility by using 30 years of weather data over its multiple simulations and including ordinary and low-margin operating hours in addition to loss-of-load hours to inform its accreditation.
FERC said MISO’s method recognizes “the diminishing marginal returns of surplus resources as the resource mix changes over time, which should send accurate price signals that will prevent oversaturation of one resource type, as well as encourage investment in diverse resource types.”
The commission also dismissed the Organization of MISO States’ argument that the RTO did not demonstrate how its weighting of emergency, near-emergency and ordinary hours is an improvement over strictly using loss-of-load hours. FERC said MISO is responsible only for proving its method is reasonable, not that it’s superior to alternatives.
FERC also said it wasn’t concerned with MISO using its loss-of-load expectation modeling as a centerpiece of the accreditation. While some stakeholders criticized MISO’s LOLE modeling as not sophisticated enough, the commission agreed with MISO that it has been a ballast of the RTO’s resource adequacy requirements for more than 15 years.
The commission likewise found nothing unfair in MISO’s LOLE modeling of storage, which assumes storage is deployed only after thermal and renewable resources can’t cover needs. MISO’s modeling “reasonably captures the value and limitations of storage resources,” it said.
MISO has told stakeholders it will focus on improving its LOLE modeling in a separate effort.
The commission overruled clean energy groups’ arguments that the new method would undervalue contributions from wind and solar resources. FERC said the design uniformly assigns capacity values among resources “based on their expected ability to meet the system’s resource adequacy needs” while accounting for “the differing performance of all resources within a resource class using the same metric.”
FERC said that if, for example, a high penetration of solar resources pushes risky hours later into the evening, it’s appropriate for their accreditation to reflect their declining marginal value.
The commission said there seemed to be sufficient data transparency worked into MISO’s resource class aggregation calculations. It said the RTO’s proposed use of aggregated, masked and class average data is consistent with how it handles generators’ data in other applications.
“We note that MISO has committed to working with stakeholders to further address data transparency issues to find a mutually acceptable process that maintains confidentiality while providing stakeholders with the information they need to replicate accreditation values,” FERC added.
FERC also accepted MISO’s proposal to include its 11 current resource classes in its tariff: gas and oil, combined cycle, coal, hydropower, nuclear, pumped storage, storage, solar, wind, run-of-river and biomass. It rejected arguments that the categories were too vague and said MISO grouped resources fittingly based on fuel type and similar operating characteristics. FERC also waved away arguments that the RTO should create resource classes for hybrid and co-located resources, ruling that tailoring classes to numerous combinations would result in too many that contain too few resources to return stable accreditation figures.
MISO has said it will create a process under its Business Practices Manuals to indicate when it and stakeholders should consider adding resource classes or adjusting them.
FERC refused to grant stakeholders’ requests to delay the method taking effect until 2030 at the earliest. The commission said a three-year transition period should give generation owners enough time to prepare while respecting MISO’s need to “act in a timely manner to address changes in its generation fleet that are impacting reliability.”
Finally, FERC addressed the Mississippi Public Service Commission’s concerns that MISO’s stakeholder process leading up to the proposal had become “form over function” and a “check-the-box exercise, where MISO makes a presentation and requests feedback; stakeholders provide feedback; MISO responds to the feedback it chooses with generalized summaries; but MISO ultimately files whatever it wants because stakeholder opinions are advisory only.”
The commission noted that MISO began working with stakeholders on the new method in early 2022. It said MISO appears willing to take under advisement ways it could further improve its probabilistic modeling and said staff appear ready to help generation owners understand how the change in methodology will affect their capacity values.
