MSC: Continued Reforms to Improve Scarcity Pricing (MSC-2019-1) (20230420)

CFU supports WPPI's feedback.

I am happy to discuss.

David Sapper

dsapper@ces-ltd.com

WEC Energy Group supports MISO’s conceptual design to improve scarcity pricing during a Knocked-Off Asset (KOA) event. We believe that MISO’s proposal is largely consistent with the relief that WEC and others sought in response to the Hurricane Laura. That is, physically disconnected loads and resources resulting from a KOA event are unable to respond to market prices and should not receive a windfall or penalty based on those market prices. We agree with MISO that more work is needed to define a “KOA Event”, its boundaries, and its duration.

The top-down approach to identify KOAs and the amount of KOA MWs is reasonable. However, we believe that flexibility is needed to deal with situations where a MP took action, other than a MISO-directed load shed (which is already excluded from KOA settlement), to reduce load in real-time. Identifiable voluntary load reduction in response to a KOA event should continue to settle at the actual real-time prices because that load responded to real-time prices. Similarly, MPs with generation assets that are deemed KOAs should be prepared to demonstrate causality between the KOA event and the loss of a resource’s ability to respond to prices. Proposed KOA tariff language should not preclude post-mortem analysis if a dispute arises.

The proposal to unwind the RT financial impact of KOA MWs with a settlement adjustment also appears reasonable, including the proposal to zero-out virtual bids and offers within the KOA boundary. The MSC should seek feedback from the Settlements User Group on both of these components before developing draft tariff language.

WPPI offers the feedback below on the topics listed by MISO re the pricing/settlement of disconnected nodes under emergency conditions, which was discussed at the MSC on Apr 20, 2023 (Item 06 Continued Reforms to Improve Scarcity Pricing and Price Formation (MSC-2019-1)).

(1)    The simplified, top-down approach of computing KOA [knocked off assets] MWs

• This approach assumes all real-time load deviations below day-ahead in the KOA event area, excluding MISO-directed load shed, are the result of KOAs and thus should be settled at day-ahead Locational Marginal Prices (LMPs). This assumption gives WPPI pause in the context of a Max Gen Emergency (aka capacity emergency) to the extent public appeals to reduce demand (Event Step 2c) could be the primary reason RT load is below DA. HOWEVER, we expect a KOA event would result in the declaration of a Transmission System Emergency (perhaps a condition of a KOA Event), not a Max Gen Emergency.

(2) The treatment of Virtuals at CPNodes within the KOA Event area

• Under the proposal, such Virtuals are effectively cancelled. We understand the primary purpose of Virtuals is to better align DA and RT. Given the unpredictable nature of a KOA event area, we would not attribute any better alignment of DA and RT to Virtuals and, therefore, support the proposed treatment.

(3) The proposed KOA Settlement approach, which does not require after-the-fact adjustment of RT LMPs or DA cleared MWs

• Under the proposal, existing settlement calculations would play out and then there would be an after the fact dollar adjustment reflecting the proposed treatment of RT load below DA and Virtuals. WPPI thinks this approach has a lot of merit. It avoids further complicating the process of calculating LMPs (especially in the case of Load Zones) and settling day-ahead and real-time transactions.

The Missouri Joint Municipal Electric Utility Commission d/b/a Missouri Electric Commission supports the feedback submitted by WPPI on this issue.