Page 1434 – RTO Insider

May 23, 2016

Berkshire Denied Rehearing on EIM Market Power

By Robert Mullin

FERC last week denied a request by NV Energy and PacifiCorp to rehear a previous decision that prohibits the two companies’ generating units from offering energy into the Western Energy Imbalance Market (EIM) at prices above default energy bids because of market power concerns.

Both companies are subsidiaries of Warren Buffet’s Berkshire Hathaway Energy — and currently the only major participants in the CAISO-run EIM outside of California.

The commission’s May 19 ruling also provided a key clarification: The companies’ future EIM market power studies must provide analysis of potential power in EIM submarkets stemming from transmission constraints — not just the market as a whole (ER15-2281-001, ER15-2282-002, ER15-2283-001).

That condition will apply to any new EIM participants as well, FERC said.

At issue in last week’s ruling was a November 2015 order that found the companies had provided a “deficient” market analysis that failed to disprove their horizontal market power in the EIM. The order also questioned CAISO’s ability to mitigate such power outside the ISO’s own balancing area.

“This is problematic because all of the EIM-participating generation in the NV Energy and PacifiCorp-East balancing authority areas is owned by the Berkshire EIM sellers,” the commission wrote in that order. “Therefore, when the interconnections between CAISO and the NV Energy balancing authority area are constrained, customers in the NV Energy and PacifiCorp-East balancing authority areas must take service from a Berkshire EIM seller for imbalance energy.”

FERC’s solution: to cap the companies’ imbalance energy offers at default bids and require that they facilitate CAISO’s enforcement of all internal transmission constraints throughout the NV Energy and PacifiCorp balancing areas — effectively bringing the ISO’s local market power mitigation measures into those territories.

While the companies did not oppose the first condition, they contested the second, arguing that the commission had veered from precedent by imposing bidding restrictions rather than relying on CAISO’s mitigation to address market power concerns.

In their rehearing request, the companies pointed out that generator participation in the EIM is voluntary — a fact recognized by FERC. They also argued that market power in imbalance energy did not present the same concerns as concentration in energy or capacity markets.

FERC shot down both arguments in its denial.

“The sufficiency of commission-approved market monitoring and mitigation to address market power concerns has never been invulnerable to challenge,” the commission wrote, noting FERC precedent of allowing intervenors to challenge the efficacy of an RTO’s monitoring regime.

The commission also reiterated its concern that the EIM could be subject to physical withholding precisely because it was developed and approved as a voluntary market.

“That concern is not to be overlooked simply because imbalance energy is a small part of an EIM entity’s reliability and load serving obligations,” the commission said.

The commission was also unconvinced by the companies’ contention that they have little incentive to manipulate a market in which they are among the largest buyers.

“The ability to exercise market power provides adequate justification to impose mitigation,” the commission said.

May 23, 2016

PJM General Session Focuses on Distributed Resources

By Suzanne Herel

CAMBRIDGE, Md. — Three experts examined the challenges of integrating distributed energy resources into electricity markets at the general session of PJM’s Annual Meeting last week.

L to R - Agate,Tabors, Hauser at General Session - PJM distributed energy resources — Left to right: Agate, Tabors, Hauser © *RTO Insider*

Richard Tabors, co-director of the Utility of the Future Study at the Massachusetts Institute of Technology, envisioned a platform market structure akin to the sharing economy of services such as Uber and Airbnb.

Such a construct, enabling multiple participants to buy and sell energy from each other, requires accurately valuing generation and demand response resources — including real energy, reactive power and reserves, he said.

“How far and how deeply can I take that pricing question? I can take the arithmetic all the way to the meter,” he said.

Tabors called the method distributed locational marginal price (DLMP). Tabors called the method distributed locational marginal price (DLMP). “There’s a huge number of hours when there’s a material difference between the nodal transmission prices and the nodal prices occurring on the attached distribution feeder,” he said.

It is a model that Tabors’ consulting firm presented for the New York State Energy Research and Development Authority under the state’s Reforming the Energy Vision initiative. (See related story, NY REV Order Revamps Utility Business Model.)

Gridwise Alliance CEO Steve Hauser focused on the challenge of encouraging technology while furthering the public good in developing the grid of the future.

The industry is moving from being utility-centric to customer-focused, he said, sparking an evolving business model to accommodate two-way power flow. The model must be adaptable and allow customers to provide services back to the grid, he said.

He noted that D.C. and PJM states Illinois, Maryland, Delaware and Pennsylvania ranked in the top 10 in the alliance’s annual Grid Modernization Index.

Like Tabors, Hauser said the industry must properly value, integrate and optimize DER — and provide better information to decision-makers.

Will Agate, senior vice president of energy operations and initiatives at the Philadelphia Navy Yard, outlined how the former military base has become a “Smart Energy Campus” with its own microgrid. Agate said the yard is one of the most successful Base Realignment and Closure (BRAC) projects in the U.S., with industrial and office tenants including the Aker Philadelphia Shipyard, a Tastykake bakery, Urban Outfitters and GlaxoSmithKline.

The Navy Yard invested $33 million in grid modernization to create what Agate called “one of the largest nonmilitary, unregulated electric systems on the East Coast.”

As part of its energy master plan, the Navy Yard is reducing demand while adding supply independence.

In addition to its 10-MW substation with a PECO Energy tie-in, the Navy Yard has on-site generation: a 6-MW natural gas peak shaver and 1 MW of solar generation.

Although the Navy Yard project is somewhat unique, Agate said it can provide “lessons learned” for other communities considering microgrid and smart grid solutions. Agate said it is important to bring stakeholders together to agree on a master plan and to not be afraid of getting something started.

May 23, 2016

Overheard at the NE Restructuring Roundtable

New England restructuring roundtable — Perez-Arriaga © *RTO Insider*

Massachusetts Institute of Technology professor Ignacio Perez-Arriaga, said the university’s Utility of the Future study, scheduled for release in October, will have two major messages: “One is we have to reduce the barriers that impede an efficient and effective participation by distributed energy resources … and all resources, including DERs, should be exposed to correct economic signals, to allow DERs to respond to system conditions.”

Judson © RTO Insider - New England restructuring roundtable — Judson © *RTO Insider*

Massachusetts Department of Energy Resources Commissioner Judith Judson said a comprehensive state study on energy storage will be released in the coming weeks, which will soon be followed by a request for proposals for demonstration projects. “Massachusetts has been lagging behind, currently ranked about 23rd in advanced storage (electrochemical and thermal), and we want to change that.”

New England round table — Sylvester © *RTO Insider*

Maryrose Sylvester, CEO of GE Current, a new General Electric company merging LEDs, energy efficiency services and the “industrial Internet,” discussed how data collection is driving optimal uses of energy efficiency. “Think of all the ways that people can make themselves more productive, when they have so much information. The challenge for a customer is how do you turn all of that data into something that is really usable, that tells them what to do, what to start doing, what to stop doing and to make it very actionable.”

Anthony Eggert, ClimateWorks Foundation - New England round table — Eggert © *RTO Insider*

Anthony Eggert, director of transportation for the ClimateWorks Foundation, said global electric vehicle sales reached about 1% of total sales in the fourth quarter of last year. “If we are going to meet our decarbonization goals, we have to have electric-drive vehicles as the dominant part, especially in the passenger vehicle market.”

Brostrøm © <em>RTO Insider</em> — Brostrøm © *RTO Insider*

DONG Energy’s Thomas Brostrøm said the company, which has had extensive experience developing offshore wind in Europe, sees opportunities in the U.S., where it holds federal leases for potential developments off Massachusetts and New Jersey. “We would have capacity factors in the high 20% to the low 30s [on the European projects], but that is trending upward as we’re seeing capacity factors in the higher 40s or low 50s as the newer turbines are coming online,” said Brostrøm, general manager of the Danish company’s North American operations.

May 23, 2016

Constitution Pipeline Appeals Rejection of Water Permit

By Ted Caddell

Arguing that New York’s denial of a crucial water quality certification was “arbitrary and capricious” and ran counter to FERC approval, Constitution Pipeline last week appealed the state’s decision to the 2nd Circuit Court of Appeals (16-1568).

Separately, the company also asked the U.S. District Court for the Northern District of New York for a declaration that federal law trumps state “permitting jurisdiction over certain other environmental matters” (1:16-cv-00568).

“We believe the court will agree that this permit denial was arbitrary and unjustified and improperly relies on the same failed arguments that the [New York Department of Environmental Conservation] made during the FERC certificate proceeding regarding the pipeline route and stream crossings,” the project’s sponsors said in a statement. “We are ultimately seeking to have the court overturn this veiled attempt by the state to usurp the federal government’s authority and essentially ‘veto’ a FERC-certificated energy infrastructure project.”

New York environmental officials denied the water quality permit for the 124-mile pipeline, which is designed to carry shale gas from Pennsylvania fields to markets in eastern New York and New England. (See New York Environmental Department Rejects Constitution Pipeline.)

It was the last regulatory approval needed for the project, which is backed by Williams Partners, Cabot Oil & Gas, Piedmont Natural Gas and WGL Holdings. It received FERC approval in December 2014.

The state said the application “fails in a meaningful way to address the significant water resource impacts that could occur from this project and has failed to provide sufficient information to demonstrate compliance with New York state water quality standards.”

The project sponsors charge that the state’s denial of the crucial permit will delay the necessary infusion of natural gas supply to the starved Northeast and block the estimated 2,400 direct and indirect jobs the project would bring to the region.

May 23, 2016

Brattle Study Sees ERCOT Continuing to Rely on Nat Gas, Renewables

By Tom Kleckner

A Brattle Group analysis of the potential effect of regulatory and market factors on ERCOT’s generation says the ISO will rely primarily on natural gas, wind and utility-scale solar power over the next 20 years, continuing recent trends.

ERCOT’s current monthly demand and energy report shows natural gas is providing 46.7% of its generation this year, followed by coal (19.6%) and wind (18.3%). Nuclear represents 14.6% of the ISO’s generation, but the Brattle study sees that dropping to 9% by 2035. Brattle said low natural gas prices could result in the retirement of 12 GW of coal-fired generation, 60% of ERCOT’s current fleet, by 2022.

Solar accounts for just 0.2% of ERCOT’s generation, but the ISO expects that to grow from 288 MW to more than 1,000 MW by the time summer begins, with another 6,700 MW of solar capacity under study in the transmission queue.

The Brattle Group study assumes that natural gas prices will remain below $4/MMBtu and that solar photovoltaic prices will continue to decline. That will result in reduced carbon emissions and inflation-adjusted wholesale prices equal to those of 2014, the report said, and make proposed federal regulations “largely irrelevant.”

The analysis was commissioned by the Texas Clean Energy Coalition, which has hired Brattle to conduct three previous studies.

ERCOT, Brattle Group — *Information for 2015 for this month has been updated based on final settlements. **Information for 2016 for this month has been updated based on final settlements.

Brattle built its study on four reference cases: low/high natural gas prices and low/high cost of utility-scale solar PV, based on natural gas futures and ERCOT and National Renewable Energy Laboratory forecasts. Analysts also explored three policy scenarios for each case: improved state energy efficiency programs, and mass- and rate-based emission limits under the Clean Power Plan.

This year, ERCOT said its monthly energy use is down 1.1% from 2015, though April’s peak demand was up 12.6% — the first time it has surpassed monthly demand from last year (50,920 MW versus 45,227 MW for April 2015).

Transmission Concerns

ERCOT spokesperson Robbie Searcy said while the Brattle study used “many of the same basic assumptions” as the ISO’s studies, its own analysis indicates “recent environmental regulations may accelerate the pace of unit retirements, potentially faster than the system can adapt to support reliability.”

Searcy said the ERCOT study focused on localized transmission-system reliability, which would be more susceptible to generation retirements. “It could take several years for the transmission system to catch up with these needs, in turn creating potential reliability challenges in the interim,” she said.

May 23, 2016

NY REV Order Revamps Utility Business Model

By William Opalka

The New York Public Service Commission on Thursday approved an overhaul of the way utilities will earn money as the state switches to more distributed and cleaner energy sources.

The so-called Track 2 order in the state’s Reforming the Energy Vision initiative intends to provide a framework for utilities to remain financially sound while offering customers greater choices to interact with third parties (14-M-0101).

The order was contemplated when New York embarked on the REV process two years ago. A part of that initiative continued last summer with the release of a staff white paper that offered a more detailed look at how a utility of the 21st century could operate. (See NYPSC Outlines Reforming the Energy Vision Changes.)

‘Energy and Financially Inefficient’

The current grid was based on utilities earning returns on investments in large, centralized power systems sized to meet peak electric demand that occurs only a few days each year, “an energy and financially inefficient system,” the commission said in announcing the order.

“Cost-of-service ratemaking has allowed regulated distribution utilities to be insulated from the opportunities and the competitive pressures of the modern information economy. As a result, gains in capital productivity remain low and the efficiencies made possible by information technologies and new business models have been slow to materialize in the utility sector.”

The rules will create a new business model with “earnings opportunities for utilities that are aligned with consumer value and with a more efficient and resilient distributed low-carbon electric system,” the 158-page order states.

The NYPSC said the “historic structural reforms” to ratemaking are “unprecedented in its breadth and scope,” an effort to accommodate the digital economy while also transitioning to New York’s clean energy goals of deriving 50% of its energy from renewable resources by 2030. (See Cuomo: 50% Renewables by 2030, Keep Nukes Going.)

“What we want is utilities to start thinking about the ability to use third-party programs, not as something that they have to do because we require them to do them, or they do the minimum to make us happy, but because they want to do this because the earnings they can get from using other resources that drive efficiency can give them as much opportunity as traditional cost of service,” PSC Chair Audrey Zibelman said at the meeting.

“The focus of this decision is to create a modern regulatory model that challenges utilities to take actions to achieve these objectives by better aligning utility shareholder financial interest with consumer interest,” the order states.

‘Transactive’ Grid

The order envisions a two-way “transactive” grid instead of the current one-directional flow.

It builds on traditional cost-of-service ratemaking with the addition of market-based platform earnings and outcome-based earnings opportunities.

The order states there are three principles to ratemaking reform:

The unidirectional grid must evolve into a more diversified and resilient distributed model engaging customers and third parties;
Universal, reliable, resilient and secure delivery service must be ensured at just and reasonable prices; and
System efficiency and consumer value and choice must be improved to achieve a more productive mix of utility and third-party investment.

Platform Service Revenues

Platform service revenues (PSRs) are new forms of utility earnings derived from distribution-level markets. The order contemplates early-stage earnings will come from displacing capital intensive infrastructure projects with non-wires alternatives, such as the Brooklyn-Queens Demand Management Program, which has allowed Consolidated Edison to defer building a $1 billion substation in Brooklyn in favor of less-costly distributed energy resources: solar, batteries and energy efficiency. (See NYPSC OKs Con Ed’s Demand Management Program to Relieve NYC Overloads.)

As markets mature, opportunities to earn with PSRs will increase, the order says. “Earning adjustment mechanisms” are for the design of new incentives earned under several categories:

System efficiency: Each utility will propose a peak reduction target and a load factor improvement target.
Energy efficiency: The Clean Energy Advisory Council will develop targets for energy efficiency beyond the existing energy efficiency transition implementation plan and Clean Energy Fund targets.
Interconnection: A positive earning opportunity will be developed based on satisfaction surveys of DER providers regarding utilities’ delivery of timely and cost effective interconnection approvals. Utilities will be required to meet standardized interconnection requirements (SIR) to earn positive adjustments. The commission will also consider on a case-by-case basis negative earning adjustments for failure to meet benchmarks.
Greenhouse Gas reductions: Utilities will have earning opportunities tied to reducing the cost of achieving the Clean Energy Standard’s (CES) target of 50% renewable generation by 2030. Those opportunities will be better defined in the CES proceeding. “Utilities will be required to develop a more efficient and cleaner network through retail markets for distributed energy resources such as solar, geothermal, wind, fuel cells, combined heat and power and battery storage, energy efficiency and other advanced energy services,” according to the order.

Unregulated utility subsidiaries are permitted to offer competitive value-added services, provided they create standards of conduct to prevent conflicts of interest.

Time-of-Use Rates

Customer participation in advanced rate design will be encouraged through opt-in time-of-use rates. The state will review successful programs adopted elsewhere and seek to improve promotion and customer education while creating smart-home pilot projects through collaborations with third parties or the New York State Energy and Research Development Authority.

Rate cases will examine the existing demand charges applicable to commercial and industrial customers to determine if they can be made more time sensitive.

Zibelman said an “overarching concern” is that utilities maintain their financial integrity because of the large capital requirements needed for initiatives such as vehicle electrification.

Each of the utilities will be required to file a system efficiency proposal by Dec. 1 to reduce high-cost energy generation during times of peak energy demand.

Implementation, with beginning steps from the utilities mandated to start later in 2016, will take much longer.

“I estimate there are at least 100 policy decisions in this item,” Commissioner Gregg Sayre said. “This is a process that will certainly take years. And if technology and markets continue to change at the same pace that they are changing now, we will never be done. And that’s OK, in fact, it’s even good.”

May 23, 2016

Energy Department’s ARPA-E to Join MISO for First-Ever Market Symposium

MISO will partner with the U.S. Department of Energy’s Advanced Research Projects Agency-Energy (ARPA-E) for the RTO’s inaugural Market Symposium Aug. 18-19 in Indianapolis.

ARPA-E staff will share insights on how technology is reshaping the electric grid. (See “MISO to Hold August Market Symposium,” MISO Market Subcommittee Briefs.) Other speakers have yet to be announced.

“MISO is excited to offer this event for our stakeholders as we explore the future of our energy markets,” said Jeff Bladen, executive director of MISO market services. “The Market Symposium will allow us to discuss challenges and opportunities around designing the energy market of the future.”

The event will feature experts speaking on industry trends and “how MISO’s wholesale market can adapt to future changes.” Topics will cover the market challenges that accompany a decarbonized wholesale fleet, commodity trends and distributed energy resources — including storage, distributed solar and other new technologies.

— Amanda Durish Cook

May 23, 2016

Federal Briefs

The National Academies of Sciences, Engineering and Medicine is calling for better fire prevention, more stringent anti-terrorist protections and better disaster preparedness at the nation’s sites for storing spent nuclear fuel.

In a recently released report, the organization, which studied the effects of the 2011 Fukushima Daiichi disaster in Japan, said that only luck kept that incident from being much worse.

“This should serve as a wake-up call to the industry and regulators about the critical importance to be able to monitor the condition of the pools, particularly in the event that something happens like Fukushima,” said Joseph Shepherd, an engineering professor at the California Institute of Technology and lead author of the report. The Nuclear Energy Institute, however, said the safeguards are already in place.

More: The Wall Street Journal

NRC Hits Oyster Creek With ‘White’ Finding

A 22-year-old hose linking a storage tank to a pump leading to an emergency generator failed during an inspection earlier this year at Exelon’s aging Oyster Creek Nuclear Generating Station in New Jersey, leading the Nuclear Regulatory Commission to assess the plant with a “white” finding.

It is one of the lowest safety findings the commission issues, but the commission said the failure was serious enough to merit the violation.

If the finding is affirmed, the plant would be subject to increased federal oversight. Oyster Creek is scheduled for decommissioning in 2019.

More: Micromedia Publications

Entergy, NRC Settle on 2011 Leak at Palisades

The Nuclear Regulatory Commission and the operator of the Palisades nuclear plant in Michigan have reached a settlement concerning a leak that allowed 80 gallons of radioactive water to escape into Lake Michigan in 2011. Instead of a fine, the commission said it is satisfied with Entergy’s decision to take corrective actions to ensure a leak does not happen again.

The leak, less than one drop per minute, came from a 3-inch pipe flange that showed signs of boric acid corrosion, according to documents. The commission characterized the inadequate reporting of the incident by four workers as “willful.” Entergy defined the problem as a failure of the plant’s “organizational safety culture.”

In lieu of a fine, Entergy agreed to prepare a report on the lessons learned and to upgrade training to include those lessons. It will also take steps to increase transparency with the public, agreeing to hold public meetings to discuss plant safety and to allow the public to ask questions at those meetings.

More: Nuclear Street

New York Senators Call For Stop to Algonquin Project

Democratic Sens. Kirsten Gillibrand and Charles Schumer are asking FERC to shut down construction of the Algonquin Incremental Market pipeline until health and safety reviews are conducted.

The pipeline is to run from Pennsylvania to the Hudson River Valley region in New York. The lawmakers say they are concerned about the safety of residents along the route, as well as the sensitivity because the route takes it close to the Indian Point nuclear station.

Construction on the project, which will nearly double the size of the existing 26-inch pipeline to 42 inches, has already started. FERC said it had not yet received the letter from the senators, but it does not comment on congressional correspondence anyway, according to a spokeswoman.

More: The Journal News

Eastern Shore Gas Applies To FERC for 33-Mile Expansion

Eastern Shore Natural Gas has filed with FERC to expand its natural gas transmission system, including the installation of 33 miles of looping pipeline in Pennsylvania, Delaware and Maryland.

The company would also install 17 miles of expanded line along with pressure equipment in Sussex County, Del. The system improvements would provide an additional 86,000 dekatherms of gas per day, according to the company.

More: Delaware Business Times

Seabrook Cited for Slow Response to Concrete Problem

The Nuclear Regulatory Commission cited NextEra Energy’s Seabrook nuclear plant for a low-level safety violation after a March 24 inspection.

The commission cited the New Hampshire plant because NextEra’s staff delayed completion of structure inspections after being told of an alkali-silica reaction in the plant’s concrete.

NextEra said procedures have been changed since the violation occurred. The commission and NextEra confirmed that the plant’s walls, some up to 4 feet thick, still meet federal structural safety standards.

More: The Daily News of Newburyport

EPA Issues Water Permit Even as Pilgrim Nears Closure

EPA issued a draft water use permit for Entergy’s Pilgrim nuclear generating station, updating a permit that was first issued in 1991. Although opponents of the plant have long argued that the water use permit expired in 1996, the agency said regulations allow the plant to use the original permit until a new one is issued.

The plant’s owner, Entergy, has said it will retire the plant in 2019. Most of the plant’s spent fuel is stored in pools inside, meaning the plant will still draw water from Cape Cod Bay even after it closes, opponents say. When operating at full power, the 680-MW plant draws more than 500 million gallons per day.

More: The Patriot Ledger

May 23, 2016

FERC OKs Settlement over SPP Tx Credits for MDU

FERC last week approved an uncontested partial settlement reached earlier this year among SPP, the Integrated System, MISO and Montana-Dakota Utilities.

The commission said its May 19 letter order resolves all seams issues raised by MDU stemming from the Integrated System members — the Western Area Power Administration-Upper Great Plains Region (Western-UGP), Basin Electric Power Cooperative and Heartland Consumers Power District — becoming transmission-owning members of SPP last October (ER14-2850-006, ER14-2851-006).

MDU said that by setting the seams issues for hearing, FERC recognized that utilities in the Integrated System area have highly integrated facilities “as a result of joint planning and ownership of transmission,” and that the arrangements should be reflected in their service arrangements with SPP (such as through transmission facilities credits under the RTO’s Tariff).

The settlement clarifies that MDU does not need to become an SPP transmission owner to receive credits in exchange for providing the RTO transmission service over its facilities. The value of MDU’s credits will be based on its annual transmission revenue requirement for the facilities in question under the MISO Tariff.

— Tom Kleckner

May 23, 2016

Board Orders Negotiation in Auction Disagreement

By Amanda Durish Cook

Carmel, Ind. — Independent Market Monitor David Patton last week asked MISO’s Board of Directors to suspend the RTO’s work on the proposed redesign of its capacity auctions, escalating a running disagreement over the issue.

“I regret we’re at this point,” Patton told board members. “We’re talking about carving out Zone 4,” referring to his concerns that a proposed forward procurement plan for retail-choice areas will isolate the Illinois region.

Patton’s request came shortly after RTO staff produced a handful of revisions to its competitive retail solution construct. The changes included transforming the proposed forward auction to fulfilling full — rather than partial — reserve requirements, eliminating a provision for optional participation among load-serving entities and adding forward-looking transmission modeling.

“The [forward auction construct] we’re proposing today is not that dramatically different from our March 18 proposal,” said Jeff Bladen, MISO executive director of market services.

“I feel like the last proposal was more reasonable than this one,” Patton said. “And, of course, I didn’t consider the last one reasonable — because you’re only pricing one capacity value of megawatts.”

Patton continued to oppose the proposal because forward procurement for competitive retail areas remains “a central piece.” He maintained that price “is going to be massively undervalued in Zone 4.” (See MISO Considering Changes to Proposed Auction Design.)

According to the Monitor, generating units in competitive areas cannot guess three years in advance what procurement offer prices will be outside of their areas. Such attempts at guessing would “dominate” the forward auction, he contended.

Patton offered to run simulations to show that a MISO-wide prompt auction with a sloped demand curve applied to deregulated areas would produce efficient price signals.

He argued that, by 2018, expansion of transmission capability will render Zone 4’s local clearing requirement essentially unnecessary and deliverability constraints would disappear.

Board Says MISO and IMM Need Dialogue

Board member Paul Feldman said MISO mixing auction constructs “is problematic” and asked whether the RTO was trying to guide Illinois into an integrated resource planning (IRP) process.

Richard Doying, MISO executive vice president of operations and corporate services, countered that no one in Illinois is offering a plan for resource adequacy in retail-choice areas.

“If no one is going through an administrative planning process … there needs to be a market planning process in place,” Doying said.

MISO board members questioned the use of the vertical demand curve in any of the auctions, saying both retail-choice and regulated states could implement a sloped demand curve. But the board ultimately declined to order MISO staff to pursue that option.

“Vertically integrated constructs do not avail themselves of efficient outcomes, [but] I don’t want to re-litigate the sloped demand curve,” Feldman said. “We need productive relationships with the states.”

Feldman added that he was not convinced that MISO had fully vetted the auction design with third parties. He asked MISO and the Monitor to “get back in the room” to rework the proposal.

Phyllis Currie, another board member, agreed: “I think we need to give more thought to this.” Currie also asked for a presentation to explicitly address price volatility.

Bladen said he was open to scheduling a mediated conversation with the Monitor and other consultants.

Patton’s response: There is no way to “remedy MISO’s proposal” without completely rewriting it.

The board asked both parties to attend a joint work session to run simulations on their respective recommendations and be ready to defend their results.

MISO continues to plan for a July FERC filing for the proposal. It is finishing work on a revised competitive retail solution paper and developing Tariff language for stakeholder review in June.

RTO staff is evaluating a tandem filing with seasonality and locational constructs currently under stakeholder review.

A new auction construct could be in place as early as spring 2017 for the 2017/2018 planning year, said Bladen. “That’s dependent on a lot of things falling in place in a straightforward way, but we do believe it’s feasible.”