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MISO Transmission Customers Seek FERC Order Allowing Load To Exit System Without Paying Capacity Charges From Current Tag

May 27, 2022

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Copyright 2010-21
Reporting by Paul Ring •

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The Coalition of MISO Transmission Customers (CMTC) filed a complaint at FERC asking FERC to direct the Midcontinent Independent System Operator to allow load to exit the MISO System without being charged Planning Resource Auction (PRA) capacity costs

Normally, a prior-year capacity tag establishes the current PRA obligations of a customer, regardless of their actual capacity demand in the current planning year. Thus, customers with no current load are still charged for capacity.

Given the excessive capacity prices in MISO and, "the shortage of capacity procured in the 2022/2023 PRA," CMTC said that allowing customers to exit the system without having to pay the capacity charges associated with their tag would provide needed reliability benefits

"In light of the high PRA prices and the sudden escalation in forward electricity prices," CMTC said that a member Customer in mid-to-late April and throughout May began evaluating the possibility of substantially reducing operations during Summer 2022 and lasting at least through May 31, 2023. "If Customer reduced its operations, more than 200 MWs of load would exit the MISO system as early as July 1. The Commission’s decision on whether or not to grant the relief requested in this Complaint directly impacts the Customer’s decision to substantially reduce operations and any subsequent resumption in those operations. Importantly, when MISO, Customer’s LSE, and Customer’s EDC were finalizing PRMR and PLC requirements in January 2022, and prior to the release of the PRA results and the dramatic escalation in electricity forward prices, Customer expected to operate at current levels for the entire 2022/2023 Planning Year ... However, a significant factor in the Customer’s operational decisions is the ability of the Customer to avoid the PRA charges that it would otherwise incur. If the PRA charges are avoidable and if the operations are reduced, a subsequent resumption in operations becomes more likely. 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. As things currently stand, MISO will charge a customer’s LSE a capacity obligation for the remainder of the 2022/2023 Planning Year until May 31, 2023, based on demand and consumption from last year’s operations."

CMTC said that the Commission should order MISO to accept nominations from load (via elections of the loads' respective LSEs) to exit MISO's system when the PRA fails to procure enough capacity for the upcoming Planning Year and specifically proposed as follows:

• MISO may accept elections from LSEs, up to the amount of deficient capacity and PRMR [Planning Reserve Margin Requirement] shortfall (e.g., 1,230 MWs in the 2022/2023 PRA) on a first-come, first-served basis.

• An LSE shall indicate the amount of MWs it desires to withdraw from the MISO system and verify such withdrawal in an affidavit executed by a corporate officer of the customer that is reducing operations and, thus, reducing load for the balance of the Planning Year.

• The PRMR obligations for the LSEs would be adjusted, consistent with the nominations from load.

• If that load is cleared PRA load, the load would avoid the PRA charges.

• Elections from load would be limited to MISO zones where MISO's PRMR exceeded ZRCs [Zonal Resource Credits] (e.g., all of MISO North/Central, Zones 1-7, for the 2022/2023 Planning Year)

• To avoid any retroactive rate issues and retroactive billing issues, the effective date of the replacement rate would start on the date the Commission issues an order approving the replacement rate.

CMTC specifically requests the addition of the following tariff language: "For the 2022/2023 Planning Year, an LSE shall have an opportunity to elect, on a first come, first served basis, to decrease its PRMR by submitting to the Transmission Provider an affidavit from a retail customer's corporate officer attesting to the decrease of a retail customer's peak load contribution for the balance of the 2022/2023 Planning Year. LSEs may make such election only for load that was subject to the PRA prices for the 2022/2023 Planning Year in Local Resource Zones where the PRMR exceeded ZRCs. If the LSE cleared LMR [Load Modifying Resources] for that retail customer's load for the 2022/2023 Planning Year, such LMR obligation shall be eliminated and neither the LSE nor the retail customer shall receive any LMR capacity payment for that retail customer's LMR. The Transmission Provider shall adjust the LSE's PRMR, for the balance of the 2022/2023 Planning Year, to reflect any decrease in a retail customer's peak load contribution that is accepted by the Transmission Provider. The Transmission Provider shall perform settlements, adjustments to the Zonal Deliverability Benefit, and any other actions under its Tariff that are necessary to carry out the election process described in this provision. The Transmission Provider shall accept such elections unless and until the amount of PRMR equals ZRCs for the 2022/2023 Planning Year."

CMTC noted potential impacts on other market participants, including LSEs, by stating, "To implement the relief requested herein, MISO will need to undertake slight modifications to its billing adjustments and settlements. Specifically, MISO will need to adjust its billing to account for the changes to the impacted LSEs' PRMR and MISO's overall Planning Reserve Margin and ZRCs. MISO is currently in the process of calculating the ZDB [Zonal Deliverability Benefit] -- the provision of a credit due to price separation and excess revenues from the PRA – to the benefitting LSEs and zones. The calculation and availability of that credit will be impacted if this Complaint is granted; however, MISO has determined there will be a revenue surplus at a ZDB rate of $6.50/MW-day. Other LSEs and Market Participants may express concerns about the PRMR adjustment and associated billing adjustment because they will receive less ZBD. However, the reliability benefits should outweigh the slight reduction in ZBD credit that would result from granting the Complaint. Importantly, granting the Complaint would not require any re-running of the 2022 PRA and would not impact the payments that are due to resources that cleared in the PRA, other than any LMR associated with exiting load as discussed above."

CMTC said, "Requiring load that is exiting the system to remain financially responsible for a capacity obligation that is no longer necessary is inequitable, creates perverse incentives, and is bad policy when the exit of such load could benefit the grid operator that is facing supply shortages and reliability issues in its footprint."

CMTC said, "In instances when MISO does not procure enough capacity in the Planning Resource Auction, MISO's Tariff should enable load to exit the MISO system without incurring unnecessary, excessive capacity obligations that do not reflect the actual load/demand at the customers' facilities. Understandably, expected load, determined in the prior year before the actual MISO Planning Year will not always mirror or be entirely indicative of actual load/demand in the respective Planning Year for which the capacity obligation is established. However, the Tariff should allow for an adjustment in load, after the January deadlines for establishing PRMR, in extraordinary circumstances where there is a substantial deviation from expected load in a MISO Planning Year and when MISO does not procure enough capacity in that Planning Year. Importantly, MISO's Tariff emphasizes that the January determination of the LSE's PRMR is for 'the LSE's proportion of the EDC's forecast Demand that it expects to serve on June 1 of the next Planning Year.' Expectations have changed, and so an adjustment to the PRMR responsibility for Customer's LSE to reflect the change in actual load/demand is warranted under these circumstances when the PRA does not procure enough capacity."

Docket EL22-60

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