By Amanda Durish Cook
DETROIT — MISO and its Independent Market Monitor have reconciled their differences and reached a compromise on a redesign of the capacity auction, CEO John Bear told stakeholders at the RTO’s Annual Meeting last week.
Bear made his remarks at Wednesday’s Advisory Committee meeting, which was originally planned to feature a presentation on the new competitive retail solution (CRS), a proposal to create a separate, three-year forward auction for retail-choice areas in the RTO’s footprint.
The delay gives MISO officials and the Monitor, which have disagreed on core aspects of the CRS, more time to work on their “hybrid” proposal. (See MISO: Auction Design July Filing Doubtful.)
Bear refused to give any details on the compromise, saying he preferred discussion to take place at the next Resource Adequacy Subcommittee meeting June 29-30, when the proposal will be officially unveiled. He also said further discussion would take place at a meeting in mid-July.
“If we need more time, we’ll take it. We’re not going to release something that’s half-baked,” Bear said.
MISO stakeholders, however, predicted a tough road to implementation regardless of what is released. Resource Adequacy Subcommittee Chair Gary Mathis told the board that “there’s a very big rift between those that think we shouldn’t be doing this, if ever,” and those in favor of varied approaches to redesigning the auction.
“It makes it hard to work through those issues,” Mathis said. He said he anticipates a “big stress level from stakeholders” as they sift through the revised proposal.
Board member Baljit Dail asked if it would be stalled to the point where it would still be under development in a year.
“No, I think we’ll have a big discussion, and then FERC will have to sort it out just like MISO has had to sort it out,” replied Mathis, who predicted challenges to whatever the RTO files.
Despite the predicted challenges in FERC, MISO board members put pressure on stakeholders to come up with a solution as quickly as possible. Board member Judy Walsh said she hoped MISO would come up with a filing in “some sort of short timeline.”
“The search for absolute consensus is going to lead us to endless delay,” board member Paul Bonavia agreed.
However, Kevin Murray, of the End-Use Customers sector, said any attempt from MISO to implement a hybrid solution in time for the 2017/18 planning year would be too hurried and “circumvent stakeholder process.”
Board Troubled by Forecast Generation Shortfall
At the Board of Directors meeting Thursday, board members said they were troubled by the possible generation shortfall in 2018, as predicted in this year’s MISO-Organization of MISO States Survey. (See OMS-MISO Survey: Generation Shortfall Possible.)
MISO Executive Vice President of Transmission and Technology Clair Moeller told the board that a redesigned capacity auction that sends better price signals could curb the rate of retirements.
“That’s why we continue to push the competitive retail solution and be aggressive, to solve this decline [in generation] before it becomes a reliability problem,” Moeller said.
OMS President Sally Talberg urged implementation of the CRS in time for the 2017/18 planning year.
In the survey, MISO identified 2.5 GW worth of planned retirements and 1.8 GW worth of potential closures in 2017.
Board member Michael Evans asked Moeller if he could provide reassurance that adequate reliability exists in the near future.
“We don’t anticipate significant problems in the local area as long as there is sufficient transfer capability. I am cautiously optimistic that things will be OK,” Moeller said. “In the construction world, we’d say that we used up all our ‘float.’ So we need to get to work, but there’s enough time.”
Evans also asked how many coal and nuclear plants that recently threatened to retire have actually filed for retirement study requests.
MISO legal counsel Stephen Kozey answered that the RTO could provide the total capacity that has filed for retirement but couldn’t name the individual plants.
“It is true that not everything [mentioned] in the press has gone through a [retirement study] request,” Kozey said.
“We may end up with a retirement queue,” Moeller added.
“It might be worthwhile to start doing some intensive ‘what-if’ studies,” Evans said.
Dail asked if the 800-MW increase in forced outages predicted in the survey would be a continuing trend. Moeller said the higher outage rates are the result of using coal plants for short cycles, for which they weren’t designed.
“Not to be an alarmist, but this makes me a bit uneasy,” board member Thomas Rainwater said.
The board then asked if MISO could simply deny generator suspensions and retirements.
“We have the ability to call resources back to maintain local reliability but not to protect resource adequacy,” Moeller answered. He said a market mechanism needs to be created to keep generators online for the sake of resource adequacy.
“So if you need them a day later, you can keep them. If you need them three years from now, you can’t keep them?” Walsh asked.
“That’s correct,” Moeller responded.
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