With the Midcontinent Independent System Operator facing an elevated risk of blackouts this summer, customers should be able to avoid capacity charges when they cut back their operations, a group of industrial companies said in a complaint filed Thursday at the Federal Energy Regulatory Commission.
The Coalition of MISO Transmission Customers, or CMTC, contends that reduced load would provide reliability benefits to MISO as the grid operator addresses a 1,230-MW shortfall in its northern and central areas.
“Load should have an opportunity to exit the system without being charged, when the exit of significant load will provide tremendous operational benefits to MISO and MISO market participants,” the coalition said. It asked FERC to make a decision on the complaint by early July.
The complaint at FERC comes about six weeks after capacity prices in MISO’s annual Planning Resource Auction, or PRA, jumped to $236.66/MW-day from $5/MW-day a year ago across its Northern footprint, driven by a supply shortfall. Load serving entities must pay the PRA price if they fail to line up enough capacity to cover their requirements.
And in mid-May, the North American Electric Reliability Corp. said MISO faces a high risk of energy emergencies during peak summer conditions. The possibility of extreme temperatures, higher than expected power plant outages and low wind conditions expose MISO’s North and Central regions to higher risk of temporary blackouts, NERC said.
At the same time, wholesale power prices are soaring across MISO's footprint, which extends from Louisiana to Manitoba, according to the coalition. Forward electricity prices for July at the Indiana Hub, for example, jumped to $121.76/MWh from $51.82/MWh at the end of January, the CMTC said.
“While the 2022/2023 PRA prices have impacted CMTC members differently, all CMTC members have been impacted by the surge in energy prices and are especially concerned about forward electricity prices,” the group said.
Driven by the sky-high capacity price, combined with soaring natural gas and electricity prices, at least one CMTC member with roughly 200 MW of load is considering cutting its operations through May 2023, the coalition said, noting other companies could also reduce their operations.
However, a significant factor in the company’s operational decisions is the requirement it pay the PRA charges, even if it shuts down facilities, according to the complaint.
“If the PRA charges are avoidable and if the operations are reduced, a subsequent resumption in operations becomes more likely,” the CMTC said. “Conversely, if the PRA charges are unavoidable and ‘sunk,’ as they are under current MISO tariff provisions and practices, a subsequent resumption in operations becomes more difficult.”
MISO’s tariff is unjust and unreasonable because it contains no mechanism for load to exit the grid operator’s system without charge when that would help MISO address resource adequacy issues, the CMTC said.
The CMTC asked FERC to direct MISO to allow load to exit the grid operator’s system for the rest of the planning year when there is a capacity shortfall in exchange for avoiding PRA charges. In the upcoming planning year, which starts June 1, the exit process would end when the 1,230-MW shortfall is filled by reduced demand.
The coalition said it discussed its proposal with MISO officials.
Some load-serving entities and market participants might express concerns about the proposal because they could see reduced “zonal deliverability benefit,” or ZDB, payments, according to the CMTC.
“However, the reliability benefits should outweigh the slight reduction in ZDB credit that would result from granting the complaint,” the coalition said, noting that under the proposal, MISO wouldn’t have to re-run its capacity auction.