MISO to Allow Additional Resources to Set Prices for Energy, Ancillary Services

The Midwest ISO has submitted tariff revisions which it said will enable block loaded Generation Resources, Generation Resources dispatched at limits, and Emergency Demand Response (EDR) resources to be eligible to set Day-Ahead and/or Real-Time prices for Energy and Ancillary Services.

All of the listed resources are currently unable to participate in setting Locational Marginal Prices since these types of resources are not able to move incrementally up or down in response to small changes in dispatch conditions.

Allowing such resources to set prices, under what MISO called Extended Locational Marginal Pricing (ELMP), will "improve pricing signals, in part, by having Energy and Ancillary Service prices more accurately reflect the costs of actions that MISO would take to meet Energy and Ancillary Service requirements, or ... reflect actions that MISO could take to alleviate transient shortages that MISO may encounter when the MISO system is not actually short of Resources."

"Proposed ELMP pricing would tend to 'smooth out' Energy and Ancillary Service prices by considering the actions that MISO could take to address transient problems by committing Resources that can respond quickly, even if such Resources are not yet on-line at the moment. In contrast to the existing LMP methodology, the ELMP proposal is designed to more accurately reflect the full cost of an action taken to meet requirements by taking into account the commitment of Fast Start Resources, as well as adjusting the incremental output of an on-line resource," MISO said.

MISO noted that a "side benefit" to adoption of the proposed ELMP methodology is that it would reduce some Revenue Sufficiency Guarantee (RSG) costs

Under its proposed tariff, MISO would define a "Fast Start Resource" as, "a resource that can be started, synchronized and inject Energy, or a Demand Response Resource that can reduce its Energy consumption, within 10 minutes of being notified and that has a minimum run time of one hour or less."

MISO said that it will work with its stakeholders to consider extending the Fast Start Resource definition to 30 minutes after Look Ahead Commitment (LAC) and Look Ahead Dispatch (LAD) are in production, in part, because these initiatives will enhance the ability of MISO to utilize 30-minute resources.

MISO said that the proposed ELMP methodology will not involve any changes to the current methodology and procedures that MISO uses to physically operate the MISO system and to dispatch resources to reliably meet load demands. The proposed ELMP provisions will only improve the pricing signals for Energy and Ancillary Services; it will not modify MISO's Operations, or the order in which MISO will dispatch available resources.