Saturday, March 23, 2019

MISO Directors Back Forward Capacity Auction Filing

By Amanda Durish Cook

After a brief discussion, the Markets Committee of the Board of Directors on Tuesday approved MISO’s forward auction proposal. The RTO expects a FERC filing in three weeks.

Director Baljit Dail said there was no reason not to go ahead with the filing date. “I think it was a very good piece of work,” he said.

MISO hopes the auction will ensure adequate capacity resources in Illinois and other retail-choice areas in the RTO’s footprint, most of which have traditional monopoly utility structures overseen by state integrated resource planning.

Director Michael Curran said he is “comfortable” with MISO’s plan for serving both structures. “I take a lot of comfort in the ability to look at metrics and adjust. I think as a community, MISO has adjusted a lot over the years, and it makes us successful,” Curran said.

Curran also thanked Independent Market Monitor David Patton for his recommendations and his “viable” alternative proposal. “I think he created a lot of healthy contention,” he said. Patton, who favors a prompt auction, has been sharply critical of MISO’s plan, calling it “fundamentally unsound.” (See MISO Backs Forward Auction Plan, Rejects Prompt Proposal.)

Bladen at MISO stakeholder meeting (© RTO Insider) - leading forward capacity auction discussion

Bladen | © RTO Insider

Director Phyllis Currie asked MISO staff how stakeholders view the proposal. Jeff Bladen, executive director of market services, said that while some stakeholders wanted more time for discussion, the majority “ultimately concluded they’ve had enough. … There remains some disagreement, as is expected in processes like these; consensus is nearly impossible to reach. The details of proposals like these are always ripe for disagreement.” (See “MISO to Move Ahead with Brattle Demand Curve for Forward Auction,” MISO Resource Adequacy Subcommittee Briefs.)

Bladen also said a “clear majority” of stakeholders agree that a problem exists in MISO’s retail-choice areas. He also pointed to the two years spent on the proposal. The RTO used 2015 to define the problem and gather ideas from members and the Monitor and worked to refine the proposal over 2016.

A few stakeholders, however, used the meeting’s public comment period to express concern.

David Sapper, representing the Transmission-Dependent Utilities sector, said MISO has only released draft — and not final — Tariff language. “With all due respect, I still think there’s some uncertainty on the proposal,” Sapper told the board.

Jim Dauphinais, counsel for Illinois Industrial Energy Consumers, agreed: “There are just going to be some details that have to be worked out by FERC.”

Curran asked about MISO’s ability to adjust the auction after it is fully implemented in 2019. Bladen said the RTO could consider changes as soon as the transitional auctions planned for 2018.

Dail asked if MISO was confident in The Brattle Group’s modeling, which left out MISO South. Bladen said while MISO South was “not explicitly modeled, it was implicitly modeled” through “stress tests” of various levels of non-merchant offers into a hypothetical forward auction.

Currie asked if the modeling anticipated future transmission additions. Bladen said while specific transmission projects or transmission topology changes weren’t modeled, greater and reduced import/export transmission capability was analyzed.

Director Paul Feldman asked if PJM’s forward auction might inform MISO’s, and if the RTOs plan to schedule their auctions at the same time.  Bladen said he wasn’t sure how the auctions would interact because MISO was still so early into the process. “We’ve got some time ahead of us for coordination with PJM. I’m not in a position to recommend something now,” he said.

1 Comment

  1. Tom Stacy on October 22, 2016 at 8:36 AM

    Capacity markets are needed, but remunerating them properly is a problem. Capacity markets should provide approximately the same percentage of total cost recovery that fixed costs represent of total cost (in LCOE, for instance). But the uniform clearing price construct in energy markets suppresses capacity market clearing prices, and offers very sloppy and volatile revenues to high fixed cost dispatchable generators such as nuclear. MISO should adopt a capacity market but at the same time should move to an energy auction design where cleared bids are paid their bid price, not the clearing price.

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