MSC: Continued Reforms to Improve Scarcity Pricing (MSC-2019-1) (20230525)

WPPI offers the following feedback on MISO’s latest Knocked-off Asset proposal:

(1)    KOA entry/exit criteria and thresholds

• WPPI finds the proposed KOA entry/exit criteria and thresholds reasonable (below).

-        Entry: (i) extreme, unforeseen transmission/distribution outages occurring after DA clearing, resulting in KOAs AND (ii) large financial impacts to the RT market, resulting in revenue insufficiency and market-wide uplift

-        Exit: Once models used in DA and RT markets realigned.

-        Thresholds (Hurricane Laura, which would have qualified as a KOA event)

• Forced outages: >=10 (HL, 56)
• Change in # dead EPNodes (over course of the day): >=10% (HL, +32%)
• Revenue inadequacy (part of RNU): >=$20M (HL, $77M)
• RI to total settlement: >=5% (HL, 19.5%)
• However, we have a few questions re some details (s. 8):

-        (a) Which thresholds are calculated using data from only the KOA event area and which are calculated using data from the entire market?

-        (b) What’s included in RNU (Revenue Neutrality Uplift) that is not included in “Revenue Inadequacy?”

-        (c) Is “Net Uplift” the same as RNU?

-        (d) Can you relate the Hurricane Laura figures in the 5/25 MSC presentation, Revenue Inadequacy of $77m and Net uplift of $90m, to figures in either of two earlier Hurricane Laura presentations (20201001 MSC and RSC Joint Meeting Item 04 August 27 Max Gen Emergency Settlements Impact, 20201029 MSC and RSC Joint Meeting Item 04 August 27 Max Gen Emergency Settlements Impacts)? (We could not.)

-        (e) Confirm (or correct) “Total Settlement” is total real-time settlements (i.e., does not include day-ahead settlements).

(2)    Eligibility of load reductions

• WPPI finds the proposed eligibility of MISO directed load shed and LMRs/EDRs for compensation at RT prices reasonable, while all other load reductions would be compensated at DA prices. While it may be the case that some of the other load reductions are not “knocked off” but a Market Participant directed effort to reduce pressure on the system, we expect it would be challenging to estimate the Market Participant directed load reduction. So, despite the potential inaccuracy of compensating all other load reductions at DA prices (vs. some at RT prices), it simplifies the process and is equitable in the sense that all other load reductions are treated the same.
• Confirm (or correct): LMRs/EDRs would be compensated at RT prices only during the period of the Scheduling Instructions provided by MISO.

(3)    Eligibility of knocked-off generators, with DA positions

• WPPI finds the proposed eligibility of generators for financial adjustment (real-time deviation settled at DA vs. RT prices) reasonable: in the KOA event area, received a DA energy award, and RT output zero MW. It seems reasonable to assume most, and perhaps all, of these generators had no choice but to produce zero MW (e.g., prevent/suffered physical damage, disconnected from the grid).