On February 16, 2023, FERC addressed arguments raised on rehearing of its August 31, 2022, order accepting Midcontinent Independent System Operator, Inc.’s (“MISO”) proposal to establish a seasonal resource adequacy construct with availability-based resource accreditation (“August 2022 Order”). In doing so, FERC continued to find that MISO’s proposed transition from an annual planning resource auction to an independent auction to meet seasonal requirements is just and reasonable.

MISO filed its seasonal construct proposal with FERC on November 30, 2021, as amended on April 8, 2022.  As relevant to rehearing requests, MISO proposed to (1) replace its existing accreditation method based on a resource’s Unforced Capacity with an accreditation for thermal resources based on availability during high-risk Resource Adequacy hours (“RA Hours”) and standard operating hours (“non-RA Hours”) over the prior 3 years; (2) define RA Hours for each Season as a 65-hour minimum target including all hours with Maximum Generation Emergency Events and the remaining hours with the tightest operating margin; (3) exempt RA Hours and non-RA Hours for resources that schedule a planned outage; and (4) subject resources that are on a planned outage or derate for more than 31 days in a Season to a Capacity Replacement Non-Compliance charge.  FERC accepted MISO’s seasonal resource adequacy construct, subject to condition, in the August 2022 Order.  However, several parties requested rehearing, arguing among other things that: improvements to the accreditation methodology did not outweigh increased volatility in accreditation; MISO’s process is unduly discriminatory; the process for identifying RA Hours is unreasonable; the outage exemption process is unreasonable; and the capacity replacement proposal is unreasonable.

In upholding its August 2022 order, FERC found that the protestors’ claims that the accreditation methodology unduly increases volatility is outweighed by increases in accuracy and confidence in generator availability during high-risk hours, better coordination of resource outages, and stronger incentives for resources to be available in times of need.  Second, FERC found the protestors’ arguments that accreditation could be significantly smaller for intermittent resources as speculative and lacking any evidence. FERC also found that it is reasonable for different classes of resources to be accredited under different methodologies.  Third, FERC found that MISO’s proposal to set a minimum target of 65 RA Hours is reasonable because it supports the stability of accreditation values.  Fourth, FERC accepted MISO’s proposal to exempt resources on a planned outage from a reduction in their accreditation values for certain tiered hours, provided that the generator owner or operator scheduled its first planned outage 120 days in advance and the maintenance margin is positive at the time of the outage request.  FERC stated that this proposal provided more visibility and advanced notice of available resources, and that the new requirement is a beneficial incentive for resource owner coordination.  Fifth, FERC found that MISO’s proposed capacity replacement provisions ensures that a planning resource receiving capacity payments should not be unavailable for a significant portion of the season. FERC explained that while the capacity replacement provisions may reduce capacity revenues for resources planning longer duration outages in a given season, the reductions reasonably reflect the fact that the resources are unavailable for at least one-third of that season.

Commissioner James Danly concurred with the order to reiterate that the question before FERC is whether MISO has demonstrated that the proposal is just and reasonable, and not whether the proposal is better than the existing tariff. Commissioner Allison Clements dissented, commenting that the proposal contained several unaddressed flaws, and that while MISO had not adequately justified its proposal, “it was laudable for MISO to seek to improve its outdated capacity accreditation framework.”

A copy of the order, issued in Docket No. ER22-495, can be found here.