During the July 19, 2022, Planning Subcommittee (PSC) meeting, MISO discussed proposed improvements to the Attachment Y Retirement Process. Draft redlines were posted with materials. Stakeholders were invited to provide feedback on the posted redlines.
Please provide feedback by August 2.
Transmission Owners Sector Feedback on Proposed Improvements to the Attachment Y Retirement Process
August 2, 2022
During the July 19, 2022, Planning Subcommittee (PSC) meeting, MISO discussed proposed improvements to the Attachment Y Retirement Process and requested stakeholder feedback on proposed tariff edits posted with the meeting materials. The MISO Transmission Owners Sector (Owners) provides the following feedback on the Attachment Y changes proposed by MISO.
The Owners generally support the improvements made by MISO, but suggest additional areas for improvement, consistent with feedback submitted by Stakeholders following the June 7, 2022 presentation to the PSC.
Transition:
MISO’s filing should include a transition period. As noted by other stakeholders in response to the June 7, 2022 PSC presentation, the retirement of a generating unit requires a good deal of advance planning and can include labor negotiations, regulatory approval, planning for replacement capacity, etc. Given that MISO proposes to add six months to the Attachment Y notice requirement, it would be reasonable to include at least a six-month transition period for implementation of the proposed 52 week notice requirement.
Cluster Studies
When several Attachment Y requests are made in the same geographic area and are in a similar timeframe, they should be studied as a cluster. The process should be comparable to the generator interconnection process. Studying each Attachment Y request in a single are individually may mask reliability problems associated with multiple retirements.
Additional Studies:
The Owners appreciate MISO’s indication at the July 29, 2022 PSC that the scope of System Support Resources (SSR) studies would be determined in scoping calls for each study, but would prefer that associated tariff and/or BPM language clearly specify that Transmission Owner input and/or Local Planning Criteria will determine the studies that will be required, this is important because the Transmission Owner is responsible for maintaining reliability when the generator has retired. For example:
Additionally, when there are other units in the study area that have submitted suspension requests, SSR studies should be performed both with and without that generation.
Other Recommendations
At the July PSC, MISO made a presentation on tariff and BPM Improvements to Attachment Y Retirement Process (PAC-2022-1). MISO is proposing two key changes to timing of generator retirement notice and studies:
ITC supports these changes which will provide more time for MISO to perform more in-depth studies and to establish a regular cadence of study kick-off on a quarterly basis to help MISO manage its workload. We understand these changes are just the first of a longer effort to improve the overall process of evaluating generation retirement requests. ITC supports further stakeholder discussion of other improvements and increasing stakeholder visibility into retirement requests.
Vistra Corp. (“Vistra”) appreciates MISO providing parties with the opportunity to submit feedback on the proposed changes to the Attachment Y resource suspension/retirement process. While Vistra understands MISO’s need to improve the Attachment Y retirement process in order to address the challenges associated with increasing retirements, Vistra does not believe MISO’s proposal will have the desired effect of improving stability studies and providing greater visibility on near-term generation resource changes. Vistra asks MISO to clarify the proposed tariff language as discussed below, and requests that MISO reduce the proposed time period prior to suspension or deactivation for submitting an Attachment Y notice. Vistra believes a study period of 26 weeks, in the context of MISO’s other proposed changes, is workable. If MISO believes it needs additional time, we strongly recommend that MISO limit that study period to no more than three quarters.
Vistra requests that MISO provide clarifications and changes to the redlined “Improvements to Attachment Y Retirement Process” language posted to the MISO Planning Subcommittee’s July 19,2022 agenda webpage. The existing MISO redlines to 38.2.7 state, “These Attachment Y Notices must be submitted at least 52 weeks prior to the start of (the) quarter for which they will be studied.” The redline language for the “Submission of Attachment Y Notice Following Non-Binding Reliability Studies” states that the Attachment Y must be submitted 52 weeks prior to the start of quarterly studies.” There appear to be several ways to interpret the new requirement. One interpretation is that MISO requires submission of an Attachment Y notice 52 weeks prior to the start of the quarter in which the resource seeks to suspend operations, so that a resource that wished to suspend operations in December 2023 would submit an Attachment Y notice by October 2022.[1] An alternative interpretation is that a resource must submit an Attachment Y notice 52 weeks before MISO commences the study period to evaluate the suspension request. Based on the latter interpretation, it appears that it’s not possible for a resource owner to receive a response from MISO regarding whether the resource seeking retirement is needed for transmission reliability, until: 1) the resource owner has submitted the Attachment Y Notice at least 52 weeks prior to the start of whatever quarterly study period the owner is seeking inclusion; and 2) MISO has launched the quarterly study period, at which point MISO will “use reasonable efforts to respond to the owner within 150 Calendar Days after the start of the quarterly study period…” This would mean a resource that seeks to start suspension in December 2023 would need to submit an Attachment Y in June 2022 (this is the calendar quarter that is 52 weeks prior to the June 2023 quarterly study that will have results completed by December 2023). Vistra interprets the language to mean that under no circumstances would a resource owner receive a response on their retirement request sooner than 52 weeks, and most likely would require a longer period because the study period will not begin until the start of the next quarterly study. Vistra asks MISO to refine the proposed tariff language to clarify which of the two interpretations described above is correct.
Under either interpretation, the proposed changes to the Attachment Y notice would have negative consequences for the Planning Resource Auction (PRA); both for the existing PRA process and the proposed seasonal capacity auction that FERC is currently evaluating. MISO’s Attachment Y proposal, which as previously noted, includes at least a 12-month and up to a 17-month evaluation period, will have the result that any resource considering suspension/retirement will be required to submit an Attachment Y notice before they know the results of a Planning Resource Auction, or, alternatively, they will be forced to accept the risk that the resource does not clear the PRA and must wait an additional 12 to 17 months before exiting the market. Because of this, resources may decide to submit a “placeholder” Attachment Y notice so they retain some type of optionality during the lengthy review process, and then wait to see if they are picked up during the PRA. If that resource is selected for the PRA, they would then withdraw their Attachment Y notice at the last minute, which could impact the results of the reliability studies MISO has already conducted. This would not reflect evasion of market rules, but rather a rationale action by generator owners of potentially marginal units facing retirement.
This concern is less relevant under the current rules for several reasons. First, the vertical demand curve and consistent low PRA clearing price have meant that resources could reasonably expect essentially no capacity revenue, so suspension of operations decisions were not necessarily dependent on the outcome of a PRA. Second, the current 26-week notice period means that if a resource does not clear the PRA in April, then makes the decision to submit an Attachment Y request, it could be approved to suspend operations by about mid-October of the delivery year. Such a resource would be available to provide energy, if not capacity, during the historically higher demand and higher priced summer and early fall months. The recent higher clearing price in the 2022/23 PRA, along with the possible implementation of a sloped demand curve, highlight the potential for the PRA to play a much more important resource retention role.
The proposed Attachment Y study process would also complicate the seasonal capacity approach MISO is seeking to implement. For example: under the seasonal construct, it’s possible that a resource bids into the capacity market and receives a summer only commitment when the PRA results are released in April, meaning that resource is not needed for capacity purposes in the fall, winter or spring. Because of this, the resource would only receive capacity payment for the summer months, but would be forced under the proposed Attachment Y changes to continue to operate uneconomically well after summer, even if continued operations are uneconomical in the absence of capacity revenue. Under the existing Attachment Y retirement process with a seasonal capacity approach, the resource could potentially retire by mid-October following their summer capacity requirement since the PRA results indicate it isn’t needed in the fall, winter or spring. The current 26-week notice period would require the resource to remain in service without capacity payments for a limited period of time. Under the proposed tariff amendments, the resource would be required to operate for at least 12 months and up to 17 additional months before receiving approval to suspend operations. During that time, the resource might only receive the summer capacity payment. This may result in resources choosing not to participate at all in a seasonal PRA, out of concern that they will only be picked up for one season, but then required to operate for up to 17 additional months once their seasonal obligation ends and they submit their Attachment Y notice.
The combined effect of these interactions with the PRA could result in situations where resources that are evaluating whether to continue operating or retire, submit an Attachment Y notification to essentially ‘hold their place in line’ because of the lengthy proposed review process. These resources might submit their Attachment Y notice 52 weeks in advance of the start of the quarterly study period, but then may withdraw their notice at some point during the 52 week wait (or longer), if they decide to continue operations once they know the results of the PRA. This ‘yo-yoing’ of applications, and the resulting uncertainty, places an additional burden on MISO Staff who may be overwhelmed managing a large number of Attachment Y notices for a quarterly study period, only to see a significant number of resources rescind their Attachment Y notice at various points during that 52 week wait period. This would also negatively impact MISO planners’ ability to study reliability. For example: if multiple resources withdraw their Attachment Y notice, MISO may be forced to adjust their reliability studies at the last minute which could harm the accuracy of those studies. It also seems that the Attachment Y notices being in a constant state of flux could harm the accuracy of the OMS-MISO survey. Because of the certainty and timeliness that the current 26 week evaluation process provides, these situations that could make it more difficult for MISO to analyze reliability are less likely to occur.
Finally, Vistra is concerned that MISO may view the proposed changes as necessary to address recent resource retirements and the associated resource adequacy shortfall. Vistra reminds MISO that FERC has traditionally been skeptical that resources should not be prevented from retiring to address a resource adequacy concern.[2] FERC noted to New York ISO that “if NYISO determines that its capacity markets are not procuring sufficient capacity to ensure resource adequacy, we expect that NYISO will first seek to make market rule changes before pursuing an RMR agreement.” [3] Prior to using the Attachment Y process to address a resource adequacy process, either directly or indirectly, we encourage MISO to focus on durable changes to the PRA.
Based on these concerns, Vistra has the following suggestions: