RASC: RBDC Near Final Tariff Language (RASC-2019-8) (20230822-23)

Item Expired
Topic(s):
Grid Resilience, Resource Adequacy

In the August 22-23, 2023, meeting of the Resource Adequacy Subcommittee (RASC), MISO reviewed the final proposal for design of Reliability-Based Demand Curves. MISO also updated draft tariff language in response to stakeholder feedback and provided clarification on key design elements. 

Stakeholders were asked to submit feedback on near-final Tariff language by September 8. 


Submitted Feedback

The Entergy Operating Companies ("EOCs")[1] appreciate the opportunity to provide feedback on MISO’s Reliability Based Demand Curve proposal.

 Regional RBDCs

The EOCs request additional detail and examples for how the regional RBDC curves will be used, particularly as it relates to scenarios where the RDT constraint binds. It is important for MISO stakeholders to be able to reproduce the PRA results using their own analysis tools in order to verify the accuracy of the MISO PRA results and for the purpose of being able to forecast future PRA results. MISO has not currently provided enough explanation and details for how the PRA clearing logic will be performed so that stakeholders can understand and replicate the results on their own. Further, the EOCs believe that the tariff language describing how the PRA clearing logic will work with the RBDCs is insufficient and needs to be expanded and improved.

 PRA Price Cap

The EOCs do not believe MISO has provided sufficient rationale to explain why a 4 x CONE price outcome across all 4 seasons in the PRA is an acceptable outcome.

 Opt-Out Mechanism

The EOCs do not support MISO’s decision to omit Entergy’s proposed AFRAP mechanism from the RBDC FERC filing. Given the results of the July RASC motion and the resolution passed by the Entergy Regional State Committee on August 9th, the EOCs believe that there is ample State and stakeholder support to warrant MISO including the Entergy-proposed AFRAP mechanism and the RBDC in a joint FERC filing. Furthermore, FERC has accepted similar proposals in the past. See PJM Interconnection, L.L.C., 115 FERC ¶ 61,079, order approving contested settlement, 117 FERC ¶ 61,331 (2006).

 


[1] The Entergy Operating Companies are Entergy Arkansas, LLC, Entergy Louisiana, LLC, Entergy Mississippi, LLC, Entergy New Orleans, LLC, and Entergy Texas, Inc.

WPPI Energy (WPPI) offers the following comments on MISO’s RBDC proposal as it currently stands:

 1.            During the August RASC meeting, Mike Robinson indicated that MISO was not prioritizing tariff changes to facilitate, within the RBDC construct, implementation of an alternate PRM established by a state regulatory authority.  Indeed, the posted draft tariff changes appear to not make the changes that appear logically appropriate to preserve this option within an RBDC framework.  WPPI takes the position that MISO should not file RBDC tariff changes until it is prepared to include all the modifications necessary to accommodate existing elements of the Resource Adequacy construct—including the alternate PRM—into the RBDC framework, under clear rules.

 2.            In 69A.9.1 MISO proposes to leave the calculation of the RBDC Opt Out Adder essentially unspecified, pointing to the BPM for more detail.  WPPI feels strongly that these tariff provisions cannot be presumed just and reasonable without detailed specification in the tariff of this calculation.

 3.            69A.7.1.c.x describes the ACP that applies when ZRC Offers are insufficient to satisfy LCR, noting that ‘Initial PRMR associated with the Capacity Deficiency Charge’ needs to be accounted for, but not saying anything about RBDC Opt Out.  This would be valid if ZRCs included in RBDC Opt Out qualified as ZRC Offers, but this appears not to be the proper understanding of RBDC Opt Out given that: (i) Module A defines ‘ZRC Offer’ as “An offer into the PRA of ZRCs by a Market Participant”; and (ii)69A.7.1.a suggests that ZRC Offers are not made by those who select the RBDC Opt Out.  Accordingly, we suggest that MISO either define ZRC inclusion in an RBDC Opt Out as a ZRC offer or (preferably) note that RBDC Opt Out ZRCs also need to be accounted for in assessing satisfaction of LCR.

 4.            WPPI appreciates MISO’s efforts, including at the September 6 special RASC meeting, to clarify the algorithm it plans to use to clear the PRA with system-wide and subregional RBDCs.  MISO appears to have addressed some issues from earlier examples, and WPPI now better understands the process.  Nonetheless we do not yet fully understand the proposed approach and may have additional comments as MISO more fully describes the process in the coming days.

 5.            WPPI is concerned about the lack of detailed specification around how RBDC scaling as a result of Monte Carlo analysis will occur.  In particular, it seems to us that the goal of achieving a long-run equilibrium in which PRA Auction Clearing Prices approach Net CONE should be contingent on auction-clearing MW volumes approaching the 1-day-in-10 level—something that is not clear in the draft tariff language.  The lack of such language causes us concern that the PRA could, under MISO’s rules, clear at consistently high MW volumes and high prices.  Nor is it clear, as an initial matter, that the methodology for developing the initial RBDC requires the addition of adjustment from the RBDC process.  We would suggest that the Monte Carlo analysis could be used to review the efficacy of the RBDC approach, but with any desired changes to the RBDC methodology to be made via a new tariff filing rather than automatically under pre-approval.  If MISO nonetheless determines that it is appropriate to retain automatic scaling via the Monte Carlo analysis, we believe much more detail around this analysis needs to be provided.

 6.            Finally, we offer red-line comments and proposed edits on the draft tariff language via email accompanying this comment submission.

 

 

AMES, AMP, and MPPA support WPPI's feedback (forthcoming).

 

Happy to discuss.

 

David Sapper

dsapper@ces-ltd.com

MidAmerican appreciates the opportunity to provide feedback on updates to the Reliability Based Demand Curve (RBDC) proposal.

As MISO transitions its resource adequacy policies, load-serving entities like MidAmerican need time to react to, and plan for, significant new policy changes like the RBDC proposal with the opt out option. The proposed timeline for implementing the RBDC is too short. The significance of this additional capacity obligation is evidenced by the MISO opt-out proposal discussed at the July 18, 2023, RASC, where MISO estimated that the opt-out amount could be as high as 3.9% to 4%, given the last three historical planning resource auctions.  While the clearing price may be lower for the additional capacity procured, utilities nonetheless need time to react in both regulatory and long-term planning processes. MidAmerican supports an implementation date further in the future, such as the 2027-2028 planning year or a phase-in over several years such that the demand curve slope flattens over time.  

If the auction clearing price is to settle to a more stable equilibrium price as MISO posits, market participants need to fully understand and have confidence in the auction clearing process and the models used to determine the demand curve and how it may vary over time as the resource mix changes. MISO should take the additional time afforded by a more reasonable timeline with a phase-in period to provide additional details regarding the formation of the auction clearing mechanism. MISO states at slide 22 of it most recent presentation slide deck on the RBDC that “MISO intends to expand the white paper during the implementation phase.” But stakeholders are clamoring for additional information now. More information is needed on the auction clearing mechanism formula, and input data MISO is using to develop the loss of load expectation study results.

Further, MidAmerican continues to encourage MISO to significantly simplify the short-term capacity market design to enable load serving entities to conduct long-term planning with the new resource adequacy construct in mind. Predicting accreditation levels and the planning reserve margin requirement into the future is very difficult under the overall proposed design changes that include MISOs Direct Loss of Load proposal, and now the new RBDC proposal. These proposals are in addition to the seasonal aspect of the short-term capacity market which has already been implemented. The combined effect of all three of these new or proposed aspects of the short-term capacity market is an extraordinarily complicated interaction with the long-term generation resource planning conducted by entities like MidAmerican. MidAmerican continues to urge MISO to simplify the design to translate between the short-term capacity market and the long-term generation planning conducted by load serving entities. MISO should also provide additional “bookend” scenarios in the near-term rather than Q4 of 2024 which is MISO’s current target deliverable.

Feedback from the Environmental Sector regarding MISO’s proposed near-final draft tariff language for the Reliability Based Demand Curve

At the outset, we recognize that MISO is not seeking comments regarding the substantive elements of the RBDC design, including any opt out provisions, thus we submit these comments only with respect to achieving greater clarity in the draft tariff language. 

FRAP and Incremental Margin

First, thank you for responding to our previous feedback, in which we asked for further clarification of how the Final PRMR is determined for an LSE that chooses to FRAP. The additional language added to Section 69A.7.6, subsection a, of Module E-1 is very helpful, specifically the part describing the “incremental margin,” which clarifies that the Final PRMR for such LSEs will be determined by direct reference to the Opt Out Adder and its effect on the clearing of the PRA. As such, a choice to Opt Out or not is really just a bet on which will be larger: the Opt Out Adder or the “incremental margin.” We are not sure whether or not this meets the goals of those LSEs and RERRAs that depend on the various PRA participation options, thus we will leave it to such entities to further opine on this matter. 

Definitions and Usage of “PRMR,” Initial PRMR,” and “Final PRMR”

Likewise, we appreciate the greater attention paid to the distinct usage of “PRMR,” “Initial PRMR,” and “Final PRMR” in the latest version of draft Module E-1. The additions and strikethroughs present in this latest draft went a long way to clarifying a number of inconsistencies that existed in the previous draft of Module E-1. 

However, it is not completely clear to us that the use of these three terms is consistent throughout draft Module E-1. We make this specific feedback here only to suggest that MISO ensure that each instance of “PRMR,” “Initial PRMR,” and “Final PRMR” is chosen with intention, and not an artifact from the previous approved version of Module E-1 when only “PRMR” was used.

Other feedback

Finally, while we did not comb the draft tariff for any potential typos or missed cross-references, we provide the following feedback:

  • Section 69A.3.6, subsection 2: the word, “in,” is missing from the following excerpt at the bottom of page 33: “. . . ZRCs from such capacity may be used in the PRA.” Such addition is bolded.

  • Section 69A.7.1, subsection a: there is a reference to the “FRAP or RBDC Opt Out, as described in Section 69A.9.” Considering that the RBDC Opt Out is covered in Section 69A.9.1, we suggest changing the reference to “Section 69A.9 and 69A.9.1, respectively.”

  • Multiple instances of two consecutive spaces placed mid-sentence were observed in the draft. We’re confident that these will be removed when preparing the final draft but wanted to highlight their existence in this feedback.

Thank you for considering the above stakeholder feedback.

Related Materials

Supplemental Stakeholder Feedback

MISO Feedback Response