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Commissioner Tony Clark Statement
October 15, 2014
Docket No: EL14-70-000
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Joint Statement of Commissioners’ Tony Clark and Philip D. Moeller on Indianapolis Power & Light Company v. MISO

“Indianapolis Power & Light Company’s waiver request avoids unnecessary costs for Indiana ratepayers and does not create reliability issues that would cause undesirable consequences for third parties. This proceeding is a product of an unfortunate timing mismatch between MISO’s planning year and the compliance date for the Environmental Protection Agency’s Mercury and Air Toxics Standards (MATS) rule. To comply with the MATS rule, Indianapolis Power will retire 216 MW of coal-fired capacity at its Eagle Valley plant by April 16, 2016, which is approximately 6.5 weeks before the end of MISO’s 2015-2016 planning year.

“Realizing this gap, Indianapolis Power was forced to choose between procuring replacement capacity, paying penalties, or requesting waiver of certain MISO Tariff provisions. Based on concerns related to the imposition of unjust and unreasonable costs on its customers, Indianapolis Power ultimately chose to submit a request for waiver. 1

“Because Indianapolis Power’s request for waiver of the must-offer requirement and waiver of the requirement to purchase replacement capacity will reduce available capacity by 216 MW, it was imperative that Indianapolis Power justify exactly how reliability will be maintained during this 6.5-week shoulder period in the Spring of 2016.

“The reliability analysis presented by Indianapolis Power is two-fold. First, Indianapolis Power submitted an Attachment Y to MISO for its Eagle Valley units and was informed by MISO that the units were not needed for reliability beyond April 16, 2016. 2 As discussed in today’s order, this finding covers the relevant NERC Standards critical for assessing whether local reliability will be maintained subsequent to retirement of the Eagle Valley units.

“The second phase of Indianapolis Power’s reliability analysis goes to resource adequacy and the determination that available supply will be sufficient to meet the demand of Indianapolis Power’s customers during the 6.5-week period. In its testimony, Indianapolis Power shows that it will have abundant reserve margins of 47% and 20% in April and May 2016, respectively.3 In addition, Indianapolis Power explains that Indiana utilities have taken the unique step of providing MISO with their generation outage schedules far in advance so that MISO could conduct a “maintenance margin” study for future years. MISO’s analysis demonstrates that MISO Zone 6, in which Indianapolis Power is located, has a sufficient planning reserve margin even after accounting for scheduled outages. 4 This is an important resource adequacy study given the level of scheduled maintenance outages typically experienced during shoulder periods. Going forward, Indianapolis Power will also be constructing new generation that is expected to more than offset the retirements and further ensure reliability following the 6.5-week period.

“While we appreciate MISO’s concern for resource adequacy, it is clear that MISO’s reservations are based more broadly on resource adequacy concerns in the MISO region as a whole and not on concerns directly related to Indianapolis Power’s request for waiver of the Eagle Valley units. As today’s order makes clear, however, the Commission’s determination to grant Indianapolis Power’s waiver is based on the facts and circumstances related to this specific case and in no way ties our hands to granting waivers under a different set of circumstances. Looking at Indianapolis Power specifically, it is notable that MISO’s Attachment Y reliability study cleared the Eagle Valley units for retirement; the maintenance margin study demonstrates resource adequacy after accounting for outages; and Indianapolis Power’s planning margin shows sufficient resources during the 6.5 week period. With regards to the broader issue of resource adequacy in the greater MISO region, we look forward to continuing engagement with MISO and the MISO States on these issues.

“It is with this basis that we concur with the decision to grant Indianapolis Power’s request for waiver and conclude that imposing additional costs on Indiana consumers is unnecessary and unwarranted.”

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    1 See also Indiana Utility Regulatory Commission Comments at 2-3.

    2 Indianapolis Power Request for Waiver and Complaint, Attachment A (Testimony of L. Franks) at 7.

    3 Id. at 11-13.

    4 Id. at 13-15.