Wednesday, January 23, 2019

MISO to Address Growing Supply Shortage in New Year

By Amanda Durish Cook

MISO will spend much of 2019 working on how it can prevent the increasingly frequent emergency conditions it experienced in 2018.

In spring, CEO John Bear said 2018 marked “13 years in standing up what is one of the world’s largest energy markets.” But that undertaking didn’t come without challenges, and the RTO zeroed in on efforts exploring how it can temper them in 2019.

Last year roared in with an extreme cold snap and multiple generation outages in MISO South that forced the RTO to call a maximum generation event, later prompting FERC and NERC to open a joint investigation into its causes. (See FERC, NERC to Probe January Outages in MISO South.) South was also subject to a second maximum generation event in September. (See MISO: Sept. Emergency Response Improved by Jan. Event.)

MISO Board of Directors in December | © RTO Insider

Stopgap Filings

By then, MISO had decided to file expected Tariff changes earlier than planned, hoping to free up an additional 5 to 10 GW of capacity in time for the spring 2019 outage season. (See MISO, Stakeholders at Odds over Resource Availability Filings.)

“There’s some discomfort with where we are, so some were asking what we could do before … the spring outage season,” Director of Resource Adequacy Coordination Laura Rauch said during a Nov. 7 Resource Adequacy Subcommittee meeting.

MISO made two FERC filings Dec. 21 that will require load-modifying resources (LMRs) to produce seasonal availability documentation and subject demand response to annual capability testing (ER19-650, ER19-651). A filing for a new 120-day notice time for planned outages will follow in January.

“The MISO region is transitioning from a generation portfolio dominated by coal and nuclear generation resources to a portfolio that relies on an increasing quantity of intermittent and emergency-only resources — even to meet MISO’s planning reserve requirements,” the RTO explained in both filings. “Baseload generation retirements have increased the pace of this transition and have caused MISO to operate with actual capacity margins that have consistently been decreasing towards minimum resource requirements. … Operating at or near minimum reserve margin requirements exposes the MISO region to greater impacts from correlated risks (e.g., extreme weather events and natural gas availability).”

Almost 12 GW (about 9%) of MISO resources are classified as LMRs, accessible only as part of emergency load management. The RTO had not called on LMRs for a decade after a localized Wisconsin emergency in February 2007 but has relied on them three times since 2017.

Independent Market Monitor David Patton has suggested “deep-sixing” the RTO’s current forced outage calculations in favor of a four-season capacity auction that will use generators’ averaged economic maximums during a season. That way, he argued, outages will be better anticipated, and MISO can dispense with members’ questionable outage reporting.

“Outage reporting is just not that reliable,” Patton said during an Oct. 11 Market Subcommittee meeting.

In addition to the three smaller FERC filings, MISO will this year focus on developing long-term fixes to keep its fleet more available during peak demand times. The RTO aims to implement the longer-term solutions throughout the first half of 2021.

MISO will also dedicate time in 2019 to devising a new load forecasting process. The RTO hopes to implement an approach that would have both Purdue University’s State Utility Forecasting Group and consulting firm Applied Energy Group working with 20-year forecasts provided by load-serving entities. (See MISO Presents Load Forecasting Compromise.)

Low Capacity Prices

In his 2017 State of the Market report issued last June, Patton said the “fundamental problem” with diminishing capacity can be traced to “the relatively low net revenues generated in MISO’s markets.” (See MISO Clears at $10/MW-day in 2018/19 Capacity Auction.)

By Patton’s count, MISO lost 3.8 GW of resources in 2017, mainly comprising gas-fired resources in MISO South and coal-fired resources in the Midwest. In contrast, the RTO added just 1.2 GW of new resources.

Patton continues to call for a more “functional” capacity market in MISO and has also blamed FERC for not issuing a rule set on RTO capacity markets.

“I think we may have to wait for this to play out in court,” Patton said during a June meeting of the MISO Board of Directors’ Markets Committee, predicting that competitive asset owners would soon sue. They have just as much right to recover costs as regulated utilities, he contended.

“I don’t think it’s right to ignore the competitive suppliers and think their issues are immaterial,” Patton added.

Some stakeholders have said MISO’s recent auction clearing prices do not reflect the tighter operating conditions that it claims, with many pointing out that for the past three years, clearing prices never come close to the RTO’s $25/MW-day conduct threshold. The 2019/20 capacity auction will be the first to use external capacity zones. (See FERC OKs MISO External Capacity Zones, Dispute Deadlines.)

Packed Queue and Storage Beginnings

MISO fuel mix under MTEP 18 futures | MISO

MISO might find some future capacity relief in its brimming interconnection queue and new rules that will open its markets to storage resources.

But the interconnection queue poses its own complications, as most of the proposed assets are intermittent resources.

Clair Moeller | © RTO Insider

During the June board meeting, MISO President Clair Moeller said that bringing on all the 90 GW then in the queue would lead to 40% renewables in the RTO’s resource mix. According to an ongoing MISO study on renewable penetration, such a mix would result in an “inflection point” where it becomes more difficult to manage the system.

“We’re going to need some pretty significant transfer capability or we’re going to be curtailing,” Moeller said.

Since then, the queue has shrunk to about 82 GW because of drop-outs.

MISO also filed to comply with FERC Order 841 in early December, outlining a participation model requiring storage resources commit to the market through four main modes: discharging, charging, continuous and outage status (ER19-465).

The first three modes carry must-run designations and will be cleared between a resource’s minimum and maximum discharge limits. The plan also allows for emergency commitments. For metering purposes, withdrawals will be treated as negative generation and categorized as wholesale. (See MISO Offers Storage Proposal, Promises to Exceed Order 841.) MISO is requesting its plan become effective Dec. 3, 2019.

“Allowing electric storage resources to participate fully in MISO’s markets will enhance competition, promote greater market efficiency and help support the resilience of the bulk power system,” Executive Vice President Richard Doying said in a release.

Meanwhile, MISO is accelerating storage-as-transmission rules. So far, the RTO is only considering pared down rules that would allow storage to function simply as transmission into the MTEP 19 cycle, buying it time to consider broader rules for resources that serve both market and transmission functions. To include storage projects in its 2019 Transmission Expansion Plan, MISO will make a limited Tariff filing in February — if it is “aggressive” enough to meet the timeline, Director of Planning Jeff Webb said during a Nov. 14 Planning Advisory Committee meeting.

“If we have storage projects in the MTEP, but no rules for them, then we won’t accept them because there is no policy,” Webb said.

MISO interconnection queue as of December 2018 | MISO

Hartburg-Sabine in the Books

MISO this year bid out its second-ever competitive transmission project, awarding construction of the proposed Hartburg-Sabine line in East Texas to NextEra Energy.

NextEra proposes to spend $115 million on a new 23-mile 500-kV line, four short 230-kV lines and a new Stonewood 500-kV substation, crossing Orange, Newton and Jasper counties in East Texas. The company estimates the project will have a 2.2:1 benefit-cost ratio and will be in service by June 2023. It said NextEra’s proposal had the third-lowest cost per mile of 500-kV line at $3.2 million. (See NextEra Wins Bid to Build MISO’s 2nd Competitive Project.)

“NextEra thoroughly identified, considered and discussed environmental risks and mitigation and was among the most thorough in completion of supporting design studies for the project,” MISO said in a selection report. The company took into account the high-water mark during Hurricane Harvey and ensured the substation site will not be within a 100-year or 500-year floodplain, according to the RTO.

So Long, and Thanks for the Metairie

By the end of 2019, MISO will have shuttered one of its four office spaces, closing its Metairie, La., office late in the year at a cost of about $900,000, saving the RTO about $500,000 every year thereafter. (See MISO to Turn out Lights on Louisiana Office.)

The RTO is also one year closer to overseeing market operations on a new modular market platform. By the end of 2019, it will announce its chosen vendor to construct the platform, which will be pieced in gradually from 2020 to 2024. (See “Market Platform Replacement Enters Year 3,” MISO Board of Directors Briefs: Dec. 6, 2018.)

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