Saturday, June 24, 2017

MISO IMM Recommends Tighter Rules for Constrained Areas

By Amanda Durish Cook

MISO’s Independent Market Monitor is again recommending the RTO expand mitigation measures on narrowly constrained areas by creating a new definition aimed at periods of temporary congestion.

At an April 13 Market Subcommittee meeting, Monitor staffer Michael Wander said the RTO should seek FERC permission to create dynamic narrowly constrained areas (NCAs) to address short-lived congestion and associated market power.

MISO currently has five NCAs with conduct thresholds — prices that indicate potential exercises of market power — that range between $22.31 and $100/MWh. NCAs are defined by FERC as chronically constrained where constraints that can limit competition bind for more than 500 hours annually. They can be defined in advance and are subject to tighter market mitigation thresholds than broad constrained areas.

MISO’s Independent Market Monitor is again recommending the RTO expand mitigation measures on narrowly constrained areas by creating a new definition aimed at periods of temporary congestion.

The Monitor says there are areas that do not meet the 500-hour trigger that also need to be covered by stricter thresholds, as they are “severely constrained areas with one or more pivotal suppliers.”

The dynamic NCA would be declared when conduct has occurred that would warrant mitigation on a non-NCA constraint, and that constraint has bound in 15% or more hours over at least five days. The new category, which would set a conduct threshold at $25/MWh, should only be used in “network conditions … that create substantial market power,” the Monitor said.

The Monitor first recommended creating dynamic NCAs in its 2012 State of the Market Report.

“We’re proposing to move on this as quickly as possible. I think we’ll propose Tariff language to stakeholders, and we have affidavits at the ready,” Wander said.

To create the category, MISO would have to expand its Module D mitigation provisions in the Tariff. Wander said moving the threshold will not require changes to the RTO’s automated mitigation procedures.

Dhiman Chatterjee, MISO director of market evaluation and design, said the RTO is “more or less on the same page” with the Monitor but needs time to review the recommendation.

Had the dynamic NCA definition been in place in 2015 and 2016, it would have been implemented 25 times for an average nine days each, Wander said. The impacts would have ranged from an average of $6.50/MWh to $424/MWh, with the highest price impact at $1,400/MWh. Wander said the simulation showed that dynamic NCAs would have occurred most frequently in MISO’s South and Central regions.

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