RESA Protests MISO Capacity Market Compliance Filing for Lack of PLC Transition Plan

The Retail Energy Supply Association has protested a compliance filing from the Midwest ISO regarding the revised Module E capacity mechanism, as RESA said that the filing does not ensure that capacity obligations in all service areas will eventually be allocated based on Peak Load Contribution, as FERC intended.

As only reported by Matters, FERC's acceptance of the revised MISO Module E capacity mechanism was conditioned on allocating capacity obligations to load-serving entities (including retail suppliers) using a Peak Load Contribution (PLC) methodology, except in cases where the electric distribution company (EDC) did not have adequate data to allow for use of the PLC methodology.

In such cases, FERC directed that MISO use a daily peak load methodology for capacity allocation to load-serving entities, as proposed by Detroit Edison and Consumers Energy. Under the daily peak load default methodology, the daily capacity charges shall be apportioned on a pro rata basis to each LSE within an EDC area (as included in the EDC's coincident peak demand forecast), based on the daily load served by each LSE within the EDC's area for the peak hour of the Transmission Provider's region. Under this mechanism, the electric distribution companies will provide MISO with the daily peak load data for each retail choice provider.

FERC did state that, "[o]nce MISO has acquired sufficient historical data to develop peak load contribution for each LSE, MISO will begin to utilize the peak load contribution methodology," though FERC did not opine on how much time is required for "sufficient" historical data.

RESA protested MISO's compliance filing for, among other reasons, failing to require the collection of historical data to allow for the future use of the PLC allocation in territories which cannot currently accommodate the PLC methodology.

"Despite the clear Commission direction, Midwest ISO failed to incorporate Midwest ISO's obligations to collect data and to utilize the peak load contribution methodology associated with Midwest ISO's obligations under the default method," RESA said.

"Midwest ISO is silent on the obligations of entities to provide necessary data for the Midwest ISO to begin collecting to calculate the coincident peak load and to determine the daily forecast. Midwest ISO cannot calculate the default capacity obligation without having the right to collect the data. In fact, RESA believes that the data [currently] exists for the Midwest ISO to calculate LSE coincident peak loads in most cases, rendering less relevant the daily default methodology," RESA said.

"Midwest ISO must be ordered to modify its Tariff to require Midwest ISO to collect sufficient historical data to develop peak load contribution for each LSE and to require Midwest ISO to use the data to utilize the peak load contribution methodology," RESA said.

As an alternative, RESA said that FERC could order each LSE in a retail choice region, whether it is an EDC or a competitive retail LSE, to perform its own load forecast and provide it to Midwest ISO for review and verification, the same as the tariff requires of LSEs in non-retail-choice regions.

"The better solution to calculating the coincident peak load for LSEs is to have each LSE perform its own load forecast, including LSEs in retail choice regions. Because load data is available for retail choice customers, it is simply not necessary to rely on the EDC, especially an EDC that does not cooperate well with LSEs in its service area, to perform an area forecast, then divide up the forecast by LSE. By each LSE providing its own load forecast based on the customers it serves, Midwest ISO could then compile the forecasts and review and check forecast methods to make sure all LSEs are using reasonable forecasting methods, as MISO proposed to do for LSEs in non-retail-choice regions," RESA said.

"When load switches between/among LSEs, under the Midwest ISO Tariff, the Planning Reserve Margin Requirement of the former LSE and the new LSE would be adjusted by transferring the individual customer peak load contribution value from the former LSE to the new LSE. If each LSE provides its own load forecast for calculating the coincident peak load, transfer of customers between LSEs will work the same way whether the EDC is cooperating or not," RESA said.