The Midcontinent independent System Operator’s proposal to revise its resource adequacy rules drew mixed reviews Friday at the Federal Energy Regulatory Commission.
At the center of the late-September proposal is a “reliability based demand curve,” or RBDC, which is sloped compared to MISO’s vertical demand curve. It also includes a three-year opt-out provision. MISO asked FERC to approve the proposal with a June 3 effective date so it could be in place for the 2025–2026 planning year.
In part, MISO’s proposal was driven by the results of its April 2022 planning resource auction, which resulted in a capacity deficit of 1,230 MW in MISO’s northern and central regions where capacity prices jumped to $236.66/MW-day from $5/MW-day the year before.
Under MISO’s existing vertical demand curve, a minor capacity capacity shortfall can cause prices to be exceptionally high, while a similarly low surplus can cause auction prices to drop to near zero, according to the Electric Power Supply Association, which supports the proposal.
“The predominance of low capacity prices in the region has led to a failure to properly value incremental capacity above the target reserve margin, and has exacerbated the concerning pace of retirement of traditional resources which are needed for reliability,” the trade group said.
In support of the proposal, the Organization of MISO States, known as OMS, said a shift to a downward sloping demand curve, which the organization had previously opposed, was needed to ensure system-wide reliability.
“OMS believes that the RBDC will offer considerable improvements to long-term resource decision-making and will help MISO maintain reliability while still providing sufficient flexibility and deference to state and local regulators and MISO members,” the organization said, noting not all its members fully backed the proposal.
DTE Electric fully supports MISO’s proposal, including its opt-out provision, which includes a reserve margin “adder” that requires load-serving entities to have extra capacity beyond their reserve margin, the Detroit-based utility said.
Consumers Energy said MISO’s proposal will allow capacity to be better valued and help drive “proper investments” for a reliable grid.
However, the proposal faces opposition from Entergy, southern utility regulators, public power entities and a coalition of environmental groups.
The Mississippi Public Service Commission blasted the proposal. “MISO’s new characterization of the curve as being needed for reliability is false,” the PSC said. “The premise — that ‘incremental capacity above that needed to satisfy the one day in ten years loss of load expectation standard (0.1 LOLE) — is pure ex cathedra hokum.”
In joint comments, Entergy and Cleco Power said MISO failed to explain why it didn’t accept a proposal to allow load-serving entities to partially opt-out of the planning reserve auction. Entergy’s proposal garnered a majority of stakeholder support, the utilities said.
“The vast majority of MISO utilities … are properly planning and procuring resources to meet their capacity needs with their retail regulators, and thus, having a properly designed opt-out mechanism should allow these utilities and their customers to benefit from that extra market planning by having an effective total reserve margin that is potentially lower than the [planning resource auction] cleared reserve margin,” Entergy and Cleco said.
MISO’s proposed opt-out adder will lead load-serving entities to acquire more capacity than they need, according to a joint filing by the Sierra Club, Natural Resources Defense Council, and the Sustainable FERC Project.
The adder is a disincentive for using the opt-out provision and in cases will impose “significant artificial costs” on ratepayers of load-serving entities that opt out, they said.
The Texas Public Utility Commission and the Arkansas Public Service Commission as well as the Louisiana Public Service Commission also objected to elements of MISO’s proposal.
In a joint filing, American Municipal Power, the Missouri Joint Municipal Electric Utility Commission, the Southern Minnesota Municipal Power Agency and WPPI Energy urged FERC to reject the proposal.