Docket No. EL23-46-000
I concur with today’s order directing MISO either to show cause that its calculation of the system-wide Unforced Capacity (UCAP)/Intermediate Seasonal Accredited Capacity (ISAC) ratio (Ratio) for the 2023/24 Planning Resource Auction is consistent with its Tariff or to explain how it will revise the Ratio to account for the corrected ISAC values.
Although I supported the acceptance of MISO’s seasonal resource adequacy construct, which included the new Seasonal Accredited Capacity methodology to determine the capacity accreditation of thermal resources,[1] I would be remiss not to mention that this proceeding, and MISO’s filing in Docket No. ER23-1223-000 that prompted it, provide yet another example of what I have oft said: RTO/ISO capacity markets “are not true markets at all but administrative constructs using an increasingly opaque, complex and questionable pricing mechanism.”[2] As illustrated in this proceeding, the following elements, among others, demonstrate the daunting complexity of MISO’s seasonal resource adequacy construct, specifically with respect to capacity accreditation.
To start with, MISO’s calculated ISAC values for thermal resources are not directly used as the Schedule 53 Resources’ accredited capacity. Rather MISO multiplies these values by the system-wide UCAP/ISAC Ratio, which MISO derives by adding together the UCAP for all Schedule 53 Resources and dividing that total by the sum of the ISAC for all Schedule 53 Resources.[3] MISO explains that “[t]he determination of resource specific [Seasonal Accredited Capacity] values requires the application of the Ratio to account for MISO’s planning model, which calculates resource needs (i.e., demand) in UCAP terms while resources (i.e., supply) are accredited in [Seasonal Accredited Capacity] terms.”[4]
If that is not complicated enough, in its calculations, MISO reduces the ISAC value for each Schedule 53 Resource that has experienced an outage occurring over the past three years, including during tight market hours — i.e., Resource Adequacy (RA) Hours.[5] However, there is an exception to this practice: a Schedule 53 Resource may receive exemptions to its accreditation for certain planned outages that are known well in advance, such that MISO will exclude the exempted hours from its calculation of the Schedule 53 Resource’s ISAC. Thus, such exemptions may alter the group of RA Hours the MISO considers in its calculations.[6] Even further complicating matters, the requirements for a Schedule 53 Resource to receive an outage exemption, and the scope of such an exemption, vary based on whether the outage was scheduled to begin before September 1, 2022 — the day MISO’s seasonal resource adequacy construct became effective — or whether it is scheduled to begin on or after September 1, 2022.[7]
Given these Rube Goldberg machinations,[8] it is perhaps no wonder that something went awry in MISO’s accreditation calculations — though, in fairness, MISO attributes the incorrect calculations to an error by its Control Room Operations Window (CROW) software program in assessing the timeliness of outage submissions[9] (which I suppose represents a serving of CROW).[10]
This proceeding shows once again that these administrative constructs known as capacity markets are characterized by such hopeless complexity and impenetrable opacity that they represent the classic example of a game that only insiders can play and win. The interest groups that have the time and resources to navigate this labyrinth can and will make sure their interests are protected or at least advocated well. Whether the public interest is or even can be protected in this insiders’ game is increasingly a salient question.
For these reasons, I respectfully concur.
[1] See Midcontinent Indep. Sys. Operator, Inc., 180 FERC ¶ 61,141 (2022) (Christie, Comm’r, concurring at P 1), https://www.ferc.gov/news-events/news/commissioner-christies-concurrence-miso-resource-adequacy-construct-proceedings, order on reh’g, 182 FERC ¶ 61,096 (2023). I noted that the Organization of MISO States, Inc. supported MISO’s seasonal resource adequacy filing and that the Market Monitor, while critiquing aspects of the filing, overall supported it as well. Id. at n.3.
[2] Id. P 3; see also, e.g., ISO New England Inc., 179 FERC ¶ 61,139 (2022) (Christie, Comm’r, concurring at P 3), https://www.ferc.gov/news-events/news/commissioner-christies-concurrence-iso-ne-mopr-reform-and-transition-er22-1528 (“RTO capacity markets . . . are administrative constructs, not true markets . . . .”) (footnote omitted); PJM Interconnection, L.L.C., 176 FERC ¶ 61,056 (2021) (Christie, Comm’r, dissenting at P 8), https://www.ferc.gov/news-events/news/commissioner-christies-dissent-order-concerning-pjms-proposed-elcc (“Let’s remember what a capacity market is and what it is not. It is not a true free market open to all sellers willing to compete on price and quality. It is an administrative construct, with some market features . . . .”); PJM Interconnection, L.L.C., 174 FERC ¶ 61,180 (2021) (Christie, Comm’r, concurring at 2), https://www.ferc.gov/news-events/news/commissioner-mark-c-christie-concurrence-regarding-pjm-interconnection-llc (“[T]he PJM capacity market is not a true market, but is, instead, an administrative construct whose very complexity is inconsistent with transparency.”).
[3] MISO, FERC Electric Tariff, Schedule 53, § V (37.0.0).
[4] MISO, Transmittal, Docket No. ER23-1223-000, at 2 (filed Mar. 2, 2023) (ER23-1223 Transmittal).
[5] Id. (citing Market Monitor Affidavit at 4-5); MISO, FERC Electric Tariff, Schedule 53, § III.
[6] MISO, FERC Electric Tariff, Schedule 53, § III.
[7] Id., § II.
[8] See PJM Interconnection, L.L.C., 182 FERC ¶ 61,073 (2023) (Christie, Comm’r, concurring at P 2), https://www.ferc.gov/news-events/news/commissioner-christies-concurrence-pjms-quadrennial-review-er22-2984 (“[PJM’s] proposal is only the latest example — and one of the worst in its hopeless complexity — of the endless Rube Goldberg tinkering with the minute details of the capacity market construct.”) (footnotes omitted).
[9] ER23-1223 Transmittal at 3.
[10] I am also concerned with MISO’s apparent selective correction of its errors in its accreditation calculations — i.e., its correction of the ISAC values for the affected Schedule 53 Resources but not the Ratio for the 2023/2024 Planning Resource Auction. I have also recently criticized MISO for not defending its Tariff in response to waiver requests that collaterally challenged the fairness of the implementation timeline of its accreditation proposal. See S. Minn. Mun. Power Agency, 182 FERC ¶ 61,139 (2023) (Christie, Comm’r, concurring); Cleco Cajun LLC, 182 FERC ¶ 61,138 (2023) (Christie, Comm’r, concurring).