Friday, December 14, 2018

MISO Concurs with Monitor Ideas, Pledges More Study

By Amanda Durish Cook

MISO officials say they will follow through on most recommendations in its Independent Market Monitor’s 2017 State of the Market report, although a few suggestions will require more investigation before the RTO can commit to solutions.

Jeff Bladen | © RTO Insider

“At the highest level, MISO generally agrees with the issues laid out in the report … but we do believe there’s additional evaluation required on three of the recommendations,” Executive Director of Market Development Jeff Bladen told the Market Subcommittee during its Nov. 8 meeting.

Issued in June, Monitor David Patton’s report called for MISO to make seven improvements to its markets. (See 7 New Recommendations from MISO IMM.)

MISO will provide a more detailed presentation of its response to its Board of Directors on Dec. 4.

“I don’t anticipate addressing individual recommendations today,” Bladen told stakeholders.

In an October memo to the board’s Markets Committee, MISO said it plans to work with the Monitor to include the impact of negative prices in its market power mitigation rules next year. The RTO also noted that it agrees that it should design clearer commitment classifications for operators and create a process to correct classification errors in determining make-whole payments, though it said that project is low-priority and might get a budget line in 2020.

Two recommendations — a 15-minute day-ahead market and better operator logging tools to describe decisions and actions — could possibly be added to the scope of MISO’s market platform replacement.

“MISO agrees that a more granular day-ahead market would likely deliver some reliability and efficiency benefits through improved unit commitment and scheduling, reduced uplift, and more effective procurement of required system capabilities including ramping,” MISO said, noting that the evaluation of intra-hour day-ahead market is included in a draft of business requirements for the new platform.

Bladen said that some of this year’s State of the Market recommendations are “intrinsically tied” to the new platform.

MISO-PJM CTS

The Monitor also recommended that MISO remove transmission charges from coordinated transaction scheduling (CTS) transfers with PJM, but MISO thinks a more comprehensive reworking of CTS might yield better results.

Dustin Grethen | © RTO Insider

Dustin Grethen of MISO’s market design team said the RTO is currently investigating its own price forecasting and other fees before simply adopting the Monitor’s solution.

MISO and PJM launched CTS last October to allow market participants to schedule economic transmission transactions based on forecasted energy prices. While CTS had the potential to lower the cost of serving load in both regions, it has rarely been used since mid-February because MISO has been applying transmission reservation fees to the transactions both when they are offered and scheduled — a double charge.

On Thursday, MISO acknowledged that “CTS isn’t producing material benefits and is unlikely to do so without significant changes.”

Grethen said CTS activity peaked last November, averaging 5 MW per 15-minute interval.

“It’s trailed off to basically zero,” Grethen said. “There really aren’t benefits being realized from the CTS process because the offers have dried up. I think in the last couple of months we’ve only had three unique bidders.”

MISO charges about 90 cents/MWh for reservations to the PJM seam, while PJM charges about 83 cents/MWh. MISO also charges cleared CTS exports an extra $1.70/MWh in a multi-value project transmission fee, and PJM allocates uplift charges to CTS.

Grethen called the fees a “pretty significant disincentive.”

“Any of these fees can affect traders’ revenue and profitability,” he said.

Grethen also said the fees CTS traders incur when their offers don’t clear lead to subsequent higher offers so traders can recoup lost revenue from unsuccessful offers. He also pointed out that both RTOs offer “essentially free” hourly spot-in transmission service.

MISO could also improve its LMP forecasting in the CTS engine for the MISO-PJM common interface, Grethen said. Since June, the CTS engine has forecast prices about 30% below the actual LMP and it remains unclear why.

Capacity Auction Recommendations

MISO is receptive to two recommendations related to its annual Planning Resource Auction, though it said one needs further work.

The Monitor has advised MISO to require the installed capacity of planning resources to be deliverable over the transmission network. While the Tariff already requires all resources to be deliverable to load to qualify as capacity resources, the Monitor says MISO’s deliverability requirements are too relaxed because resources with energy resource interconnection service (ERIS) must only secure firm transmission for its unforced capacity values, which tend to be about 5 to 10% below full installed capacity levels.

IMM staffer Michael Chiasson said it’s problematic that MISO’s loss-of-load expectation (LOLE) study assumes that all installed capacity megawatts are deliverable when they’re not.

“That’s really a disconnect between the LOLE and the deliverability,” Chiasson said during a Nov. 7 Resource Adequacy Subcommittee meeting.

Laura Rauch, MISO director of resource adequacy coordination, said the RTO will likely adopt the Monitor’s suggestion, but it must first address additional details that would allow it to apply the rule to intermittent resources.

“We’re going to have some discussions with stakeholders and see what we can do for the 2020/21 PRA,” Rauch said.

MISO does not yet have a timeline for the Monitor’s other recommendation to create unique capacity credits in the PRA for emergency-only resources, though Rauch said the RTO will likely address that as part of its bigger initiative on resource availability and need (RAN).

“We are looking for solutions in the RAN process,” Rauch told stakeholders. She said MISO will finalize a timeline later this year and suggest changes on capacity accreditation in 2019.

Market Improvements Wait on New Platform

The Monitor’s report also emphasized a three-year-old recommendation to allow day-ahead committed peaking resources to set prices in MISO’s extended locational marginal pricing (ELMP).

Bladen said that while MISO agrees with the 2015 recommendation to expand ELMP, it must research the impact of the change on its outgoing market platform.

“The Market Monitor believes this could be done by changing a few lines of code, but our platform is of a vintage where changing a few lines of code impacts the entirety of the system,” Bladen said.

Bladen said MISO has arrived at “the raw judgment” that it should move ahead with the new platform while some market improvements wait in the wings, including plans to create a 30-minute capacity reserve product. (See “Limited Improvements for Old Platform,” MISO Platform Replacement Risks Delay, Budget Overrun.)

“At this stage, the potential of a new platform delay is too great,” Bladen said. “There are meaningful performance issues, and cyber risks are increasing every day.”

MISO expects the first components of the new platform to be operational in 2021, with complete swap-out by 2023.

“It’s not a forklift replacement. It’s a component-by-component replacement,” Bladen said.

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