Michigan PSC: Resource Adequacy Outlook Improves In Near-Term, Still Wary of Future
July 24, 2015 Email This Story Copyright 2010-15 EnergyChoiceMatters.com
Reporting by Karen Abbott • firstname.lastname@example.org
From a resource adequacy planning standpoint, Michigan is unlikely to experience outages due to a lack of supply in 2016/2017, the PSC has concluded, though the PSC remains wary about future prospects.
Prior studies had shown a 3,000 MW shortage in Michigan as soon as 2016-17.
The PSC noted that MISO survey results released in June 2015, now project a 1,200 MW shortfall in Zone 7 (lower peninsula) for planning year 2016/2017, with a surplus of 1,700 MW in the entire MISO footprint. The survey showed the MISO footprint is expected to experience a shortfall beginning 2020
Separately, PSC Staff found that Zone 7 is facing a shortfall of 520 MW in the 2016/2017 planning year, and faces anticipated shortfalls of between 620-690 MW in the planning years 2017-2020. However, the Staff noted that the additional needed capacity may be imported from elsewhere in MISO (or PJM) to satisfy the planning reserve margin requirements.
"While there is an apparent difference between MISO’s latest results for the 2016/2017 planning year (1,200 MW projected shortfall in Zone 7) and the Staff’s analysis (a 520 MW shortfall), these differences are attributable to some extent to the units used in calculating generation resources ('unforced capacity' or 'UCAP', in Staff’s analysis, and 'installed capacity,' or 'ICAP', in MISO’s analysis) and the inclusion of Wolverine’s planned 385 MW (UCAP) Alpine natural gas plant in the Staff’s analysis and not in MISO’s. When those differences are reconciled, the Staff and OMS/MISO essentially come to the same conclusion: Zone 7 is anticipated to experience a shortfall of approximately 520-565 MW in planning year 2016/2017 on a UCAP basis, relative to anticipated load plus a planning reserve margin, but should be able to cover the shortfall through importation of power from other regions," the PSC said.
"Looking forward to subsequent years, there is still uncertainty about the impact of additional federal environmental regulations on generation resources in Michigan and regionally. To the extent that additional plants are closed, and new resources are not developed to replace them, Michigan may have to rely more heavily on importation of out-of-state resources, and Michigan customers may be confronted with escalating capacity market prices or could be at greater risk of outages due to a lack of adequate supply," the PSC said.
"Neither the load serving entities nor the Commission have any control over the federally-regulated wholesale market structure or decisions by individual generators inside or outside of the state (e.g., who they contract with, whether they commit to MISO or another market). Thus, the MISO surplus does not mean that Michigan is guaranteed access to that capacity now or in the future," the PSC said.
"So, while the near term regional surplus is encouraging, now is not the time to rest on our laurels. The Commission concludes that it is prudent to proceed with considerable caution and stresses the continued need for close monitoring both at the state and regional level of capacity issues and proactive long-term resource planning. Michigan needs to remain focused on its efforts to ensure sufficient and cost-effective supply-side and demand-side resources to meet anticipated load requirements in future years," the PSC said.
"[T]he Commission notes that Michigan appears to be at risk for being the shortest state in the MISO region in 2020, when MISO as a whole is predicted to be short capacity. The lead times to develop different types of resources vary. In order for longer lead-time resources to be considered for 2020 implementation, planning for those resources should start in the near-term. All stakeholders need to remain vigilant in these endeavors by aggressively monitoring and planning for future resources given its importance to the state in terms of reliability and affordability," the PSC said