PAC: Generator Replacement Proposal Tariff and BPM (20230830)

The Environmental Sector appreciates MISO’s efforts to improve the generator replacement process and the opportunity to provide this input. We agree that the ongoing pace of retirements and potential replacement warrant process changes to ensure both reliability and a process that is manageable by MISO and its stakeholders. From the perspective of the Environmental Sector, the focus should be to ensure a reasonable amount of flexibility in the generator replacement process, to avoid any unreasonable or unnecessary barriers to timely generator replacement, and to protect against hoarding or holding onto interconnection rights for an unreasonable amount of time without using them. 

Based on the August 30th presentation and stakeholder discussion, we understand that MISO is going to allow for unit-by-unit replacement for all relevant GIA, not for just a subset of grandfathered GIAs. We strongly support this approach as it maintains significant flexibility for GIA holders while providing some structure and certainty to MISO. A reasonable level of flexibility is also warranted in how MISO defines “unit” for purposes of splitting a GIA. Developers of replacement resources must be able to pursue resources that efficiently meet the needs of the system and respond to market drivers.  

We also encourage MISO to reconsider its proposed requirement that all partial replacement requests be submitted prior to the first replacement GIA being signed. It is still unclear to us exactly what justifies such a measure to limit flexibility in generator replacements, and we encourage more discussion on this particular provision to find a solution that addresses MISO’s concern while providing some reasonable flexibility. 

Finally, given the expansive and rapid nature of the resource fleet transition we are in the midst of, we encourage ongoing discussions between MISO and stakeholders to identify additional necessary generator replacement process improvements and better ensure a reliable and orderly fleet transition.

Footnote 1: It’s worth noting that the term “grandfathered” has its origins in the racist, anti-voting laws of the Post-Reconstruction South. While we understand MISO is using the term “Grandfathered GIA” as a defined term in the tariff, we might suggest a different terminology, such as “Legacy GIA”. 

Xcel Energy appreciates MISO’s efforts to improve the Generator Replacement Process and supports the proposed changes.  Xcel Energy requests that MISO consider allowing a Generator Replacement for multiple units sharing a Grandfathered GIA an additional option for moving forward with a GIA.  MISO’s proposal adds language in BPM-15 that requires an Interconnection Customer requesting a generating facility unit replacement to split the existing Grandfathered GIA prior to the replacement request.  In addition, the proposal would require the GIA split be completed prior to the replacement GIA becoming effective and the replacement GIA is only to replace the GIA of the existing unit in the replacement request.

Xcel Energy requests that MISO also allow an Interconnection Customer requesting a generating facility unit replacement to an existing Grandfathered GIA be allowed to request a single GIA prior to submitting the replacement request that would include all the Grandfathered units – including the unit requesting replacement.  This would provide benefits for an Interconnection Customer planning to replace the Grandfathered units at different times and potentially with different fuel sources.  

Further, Xcel Energy requests that the Interconnection Customer be allowed to “pool” the Interconnection Rights for the entire generating facility where any combination of the units could inject up to the Interconnection Rights - as opposed to assigning interconnection rights to individual units.  This would allow the Interconnection Customer to develop a "Hybrid" generating facility which “could improve capabilities at existing generating facilities, prevent stranded costs, and improve access to the transmission system” allowed under FERC Order 845 Surplus Interconnection Service.

Xcel Energy looks forward to discussing this with MISO and Stakeholders.

Vistra Corp. (“Vistra”) appreciates the opportunity to submit feedback on MISO’s proposed tariff changes to the Generator Replacement Request language in Attachment X. Vistra’s comments specifically address the language included as part of Section 3.7.5, “GIA for Generating Facility Replacement.” MISO’s proposed language states, “If the MW of a Generating Facility Replacement request is less than the MW of the Existing Generating Facility that is being replaced, the Interconnection Customer cannot make any additional Generating Facility Replacement requests after the first GIA for the Generating Facility Replacement is signed.”

Vistra encourages MISO to adjust this proposed language to remove confusion that MISO would prohibit market participants from filing more than one Generating Facility Replacement Request if the MWs of the initial replacement request are less than the MW of the existing Generating Facility that is being replaced. Based on the discussion during the August 30^th PAC meeting, it appears that MISO would accept more than one replacement request after the first GIA is signed, even if the replacement request is less than the MW of the existing Generating Facility that is being replaced. Vistra’s understanding, based on the August 30^th PAC discussion, is that MISO is seeking some type of increased and improved visibility into the future generation projects at the generation replacement site, something Vistra understands and agrees with. However, if MISO were to try and achieve this improved visibility by limiting market participants to a single Generating Facility Replacement request, it could lead to situations where in order to avoid losing MWs, certain generators may decide to submit a single, highly speculative, generation replacement request to ensure that they preserve their full interconnection rights prior to having complete certainty regarding the full level of replacement capacity that can be developed at the existing point of interconnection. The result will be greater uncertainty, as MISO will have less visibility into the portion of the replacement capacity that can reasonably be expected to reach commercial operation.

It is important to recognize that the renewable and energy storage projects that are likely to account for a significant portion of replacement facilities are typically developed in phases based on the availability of state incentives, offtake agreements, and financing. Thus, while the owner of an existing generation resource may have plans to use all of its existing interconnection rights to support the development of replacement capacity, the owner may hold off on submitting replacement requests for discrete phases of the replacement facility until they are confident that they will be able to secure the funding or commitment necessary to support development. Ultimately, providing interconnection customers with the flexibility to submit replacement requests in a phased approach benefits both MISO and other interconnection customers by providing greater certainty that the capacity that is the subject matter of a replacement request will make it to commercial operation.

Xcel Energy supports the Generator Replacement process improvements as discussed in the August PAC meeting.  In addition, Xcel Energy identified an item that Xcel Energy requests that MISO address.  Xcel Energy believes that the language in Tariff section 38.2.7 regarding  Generation Suspension, Generation Retirement, and System Support Resources or the language in Attachment X, Section 3.7.1.v, Requirements for Replacement Generating Facility Requests, should be updated to indicate that a Generating Facility Replacement that requests less Interconnection Service (MW) than that of the Existing Generating Facility that is being replaced be required to submit the Attachment Y request at least one (1) year prior to the date that the Existing Generating Facility will cease operation.  Currently, Attachment X, Section 3.7.1.v states that a Generating Facility Replacement that requests less Interconnection Service (MW) than that of the Existing Generating Facility Generating Facility that is being replaced is required to submit an Attachment Y Notice in accordance with timing and requirements of Section 38.2.7 of the Tariff.  Tariff Section 38.2.7 requires a Generation Resource submit an Attachment Y Notice to the Transmission Provider at least four full Quarterly Study Periods prior to changing to Suspend status.