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Energy Law

: Energy Legal Blog

FERC Blesses Midwest ISO Plan for Resource Adequacy

By Gunnar Birgisson

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The Federal Energy Regulatory Commission has conditionally accepted a Midwest Independent Transmission System Operator (Midwest ISO) plan for ensuring long-term resource adequacy in the RTO?s 15-state territory. Most other RTOs and ISOs have spent years grappling with how to ensure sufficient capacity is available to meet peak demand, and contentious FERC proceedings have led to different market models in NYISO, PJM, and ISO-NE. FERC directed MISO to develop its own resource adequacy plan after having operated for years without one. The first planning year under the resource adequac plan will start June 2009.

MISO?s responsibilities under the new plan will include determining capacity obligations, monitoring compliance, and assessing penalties to deficient load servers. Unlike the PJM, ISO-NE, and NYISO models, the MISO plan does not entail a centralized capacity market, but does require any load server in the Midwest ISO region to maintain access to sufficient planning resources, whether generation or demand response.

The MISO will set a Planning Reserve Margin for each load server, based on analysis that take into account factors such as generator forced outage rates, generator planned outages, forecast performance of demand resources, and transmission congestion. The MISO will then require each load-server to demonstrate that it has sufficient resources to meet the forecast requirements plus the applicable Planning Reserve Margin. FERC directed the MISO to provide more information on how it will establish a Planning Reserve Margin. However, the state regulators may supersede the MISO's Planning Reserve Margin with a higher or lower Planning Reserve Margin if they choose. Resource adequacy is a sensitive jurisdictional issue for federal regulators as it overlaps state jurisdiction over retail service. In recognition of this, FERC acknowledged the contributions of the Organization of Midwest ISO States, which represents regulators from the 15 states in the Midwest ISO footprint.

Full post as published by Energy Legal Blog on March 31, 2008 (boomark / email).