On October 27, 2020, FERC accepted Midcontinent Independent System Operator, Inc.’s (“MISO’s”) proposal to require conventional, non-intermittent capacity resources with Energy Resource Interconnection Service (“ERIS”) to secure firm transmission service in the amount of the resource’s full Installed Capacity (“ICAP”) in order to meet its capacity market deliverability requirements. In addition, if a capacity resource obtains firm transmission service in an amount less than the resource’s full ICAP, MISO will prorate the amount of capacity credits that resource receives.
Under MISO’s previously-effective Tariff, capacity resources seeking to participate in MISO’s annual capacity auction—termed its Planning Resource Auction—were required to demonstrate deliverability to load by showing, as relevant here, either: (1) Network Resource Interconnection Service, permitting the entire ICAP level of the resource to be deliverable, or (2) ERIS with firm transmission service up to the resource’s Unforced Capacity (“UCAP”) level. UCAP is defined as a planning resource’s capacity after accounting for forced outage rates and historic availability, and according to MISO’s market monitor, is five to 10 percent less than a resource’s ICAP level.
MISO’s filing explained that permitting capacity resources with ERIS to secure transmission service only up to their UCAP level is inconsistent with MISO’s Loss of Load Expectation (“LOLE”) study. MISO performs LOLE studies to determine the expected number of days in a year where load will not be met by available generation. In order to ensure reliability, load serving entities must either procure or prove they already possess sufficient resources to meet their peak load forecasts for the coming year, based on a LOLE of no more than one day for every ten years. MISO’s LOLE studies assume that when resources are available, they will perform up to their ICAP level. In order to ensure consistency between its deliverability requirements and its LOLE study, MISO proposed to require that conventional, non-intermittent capacity resources demonstrating deliverability through ERIS get firm transmission service up to the resource’s ICAP level. MISO also proposed that if a capacity resource obtains firm transmission service in an amount less than the resource’s full ICAP, MISO will prorate the amount of capacity credits that resource receives.
FERC’s October 27 order accepted MISO’s proposal, explaining that MISO demonstrated that a disparity existed between its LOLE study assumptions and the deliverability requirements associated with conventional capacity resources. FERC concluded that MISO’s proposal would provide certainty that its reserve requirements are satisfied by fully deliverable planning resources and that MISO is able to meet its reliability needs.
FERC’s October 27 order is available here.