The Midcontinent ISO released results of its fourth planning resource auction late April 14, and while there is adequate generation to go around, MISO officials acknowledged that plant retirements have affected prices.
The results show that resources are available to reliably operate the electric grid and meet the planning reserve margin requirement of 135,483 MW.
There are several ways for load-serving entities to demonstrate they have sufficient capacity, either by owning resources, contracting for resources or by entering into MISO’s voluntary planning resource auction to secure capacity.
“The generation fleet across MISO is rapidly changing,” said MISO executive vice president of operations and corporate services Richard Doying. “While more generation is retiring, resulting in a tighter supply across the MISO region, the auction results show that there are sufficient resources to maintain reliability for this planning year.”
Cleared Planning Resources include 122,379 MW of generation resources, 3,462 MW of behind-the-meter generation, 5,819 MW of demand resources, and 3,823 MW of external resources.
Less supply in the MISO Midwest region due to retirements and capacity exports contributed to higher clearing prices in several zones. The decrease in available capacity is consistent with the 2015 OMS-MISO Survey. As a result of the continued changes in the fleet, several zones relied on imports from other zones to procure adequate capacity.
In the voluntary planning resource auction there were three clearing prices:
“-Local Resource Zone 1 cleared at $19.72/MW-day
“-Local Resource Zones 2, 3, 4, 5, 6, and 7 each cleared at $72.00/MW-day
“-Local Resource Zones 8, 9, and 10 each cleared at $2.99/MW-day
MISO’s Independent Market Monitor has reviewed the results and certified that the auction was properly administered. The IMM reviews all offers to ensure that attempts to exercise market power are appropriately mitigated and market outcomes are competitive.
This year MISO implemented several changes to the planning resource auction, pursuant to an order from the Federal Energy Regulatory Commission (FERC). Specifically, the order affected the determination of the initial offer reference price level applicable in the auction, which is the basis for a general offer price cap.
Previously, the reference level was calculated as the opportunity cost of foregoing the value of exporting capacity to neighboring regions. The order reduced the initial reference level to $0. As a result, any resource desiring to offer above the conduct threshold of 10 percent of Cost of New Entry had to obtain approval from the MISO IMM to support the offer.
Additionally, the order changed the manner in which MISO determines Capacity Import Limits, which generally expanded import capability into MISO Local Resource Zones and decreased Local Clearing Requirements for most zones.
The last major change since last year’s Planning Resource Auction resulted in a decrease in the transfer limit between MISO South and MISO North/Central regions from 1,000 MW to 876 MW.
Earlier this year, FERC approved a capacity sharing settlement between MISO and neighboring regions that formalized the allowable flow limits between these regions.
While this year shows adequate resources, industry forces are driving significant shifts to the generating fleet in MISO.
As fewer generation resources are available, MISO is working to address seasonal and locational issues while also ensuring that market signals provide incentives for investment where and when needed.
For example, MISO is discussing with stakeholders modifications to its resource adequacy construct that will provide greater operational certainty during both the winter and summer months.
Additionally, MISO is developing and has presented a related proposal to refine resource adequacy planning to better reflect locational issues. MISO expects to file both of these proposals with FERC in May 2016.
In addition, MISO is currently working on a proposal to address concerns from stakeholders in retail choice areas. In March, MISO introduced a proposal to address price formation and timing in retail choice areas, while still retaining the existing construct for the rest of the footprint. MISO is in the process of refining the proposal with stakeholders, and expects to file with FERC in July 2016.