Resource Adequacy Locational Reforms. August 2017

Transcription

1 Resource Adequacy Locational Reforms August

2 Purpose & Key Takeaways Key Takeaways: Purpose: Discuss locational proposal and updated draft Tariff language, focusing on recent stakeholder feedback and questions Modeling External Resources based on their physical location using External Resource Zones (ERZs) in the Planning Resource Auction model will ensure reliability and alleviate equity concerns, given potential new External Resources MISO has posted draft Tariff language articulating the detailed locational proposal, including modifications based on recent stakeholder feedback; notable changes include combining all three stages of Historic Unit Considerations (HUCs) into a single phase MISO is still targeting a filing after September 13th RASC meeting 2

3 Today s discussion will focus on more recent questions and concerns identified in stakeholder comments and Tariff revisions Locational Resource Adequacy Proposal External Resource Zone (ERZs) Key areas from stakeholder comments Historic Unit Consideration (HUCs) Capacity Import and Export Limits (CIL and CEL) The slides today attempt to address open areas, including Can a Border External Resource qualify in more than one zone? What ERZs would have been created and how would they be classified, based on historical offers? When will shift factors for blended zones be available on an annual basis? What are some examples of ERZ pricing under multiple scenarios? Is the multi-stage HUC construct appropriate and necessary? What arrangements could qualify for HUCs and why? The posted Tariff language includes improvements recommended by stakeholders 3

4 External Resource Zone (ERZ) comments focused on pricing scenarios External Resource Zone (ERZs) Border External Resources Historic ERZ categorization Shift factor calculations Pricing Examples Historic Unit Consideration (HUCs) Tariff Edits 4

5 External Resource Zones will be integrated into the PRA and priced based on Balancing Authorities (BAs) Balancing Authority Proposal Create External Resource Zones (ERZs) based on Balancing Authority boundaries Set one price for all resources within a given External Balancing Authority ERZs which touch both MISO South and MISO North would receive a price based on the Settlement Agreement cost flows 5

6 Border External Resources Border External Resources are resource which 1. Have no physical separation from the MISO footprint, and 2. Have unit-specific must offer requirements If there is a resource which could be considered in more than one zone: Resources must designate their zone 2 years in advance of the PRA Once a zone is designated, the resource would be included in the zone for at least 2 years 6

7 ERZs are modeled based how they electrically connect to MISO Local Resource Zones ERZs based on historical offers AEC AECI EEI LGEE OVEC PJM SOCO SPA SPP TVA LRZ States W. AL S. MO NW. KY N. KY OH IL, IN, OH, MI AL E. AR ND, SD, NE, KS, OK, TX TN, MS, AL 1 MN, ND, W.WI x 2 E.WI, U.MI x 3 IA x x x 4 IL x x x x 5 MO x x x x 6 IN, KY x x x x 7 MI x 8 AR x x x x 9 LA, TX x x 10 MS x x x in line ERZ in line ERZ in line ERZ In-line ERZs are zones which only have physical ties to one MISO LRZ ERZs which do not directly border MISO will be evaluated for ties to other ERZs. If they only tie to one in-line ERZ, they, too, will be considered in-line New ERZs would be created as needed, based on resources qualifying for a given auction 7

8 For dually-connected ERZs, blended zone shift factors are calculated annually and posted with Q2 model updates for the next year s PRA BA January 2016 September 2016 Sept ember 2016 June 2017 June 2017 posting TVA SPA AECI SPP Calculated in accordance with Procedure for the Determination of Transmission Distribution Factors (TDFs) (Appendix D of MISO-SPP Settlement Agreement) Docket Nos. EL , EL , EL , and ER MISO-SPP Settlement Agreement

9 ERZ Pricing Principles The goal of the PRA will continue to be minimizing the total system costs Resources in ERZs will be able to support regional resource requirements Zones will be subject to export limits, based upon qualified capacity offers, and validated prior to the auction ERZs will be priced upon their support of subregional resource requirements Prices will generally be set to either the North/Central, South, or subregional unconstrained price This price may vary when the marginal resource is located in the ERZ and other system constraints bind 9

10 ERZ Examples: Framework Offer ACP Dual Con. BA MISO N/C 50% 50% MISO S Solution Details LRZ A LRZ B Dual Connected BA LRZ A LRZ B ACP 200 MW PRMR LCR Offer ACP Offer ACP SRPBC MW Cleared The next slides will walk through a series of ERZ pricing examples Key assumptions Assume single priced offer stacks for each ERZ and LRZ PRMR, LCR, and CEL vary between examples Key examples include No price separation South North constraint LCR constraint ERZ CEL constraint In-line ERZ 10

11 ERZ Example 1: No price separation in unconstrained system Dual Con. BA Offer: $6 ACP: $5 MISO N/C 50% 50% MISO S Solution Details LRZ A LRZ B ACP 200 MW PRMR: 199MW LCR: 0MW Offer: $70 ACP: $5 Offer: $5 ACP: $5 MW Cleared LRZ A $5 0 MW LRZ B $5 199 MW Dual Connected BA $5 0 MW SRPBC Sub-regional power balance constraint is non-binding No price separation, similar to PY auction results ACP of the ERZ is based on the two LRZ prices External resources with offer prices less than $5 MW would clear Impact of adding 1 MW of capacity demand in LRZ A Increase 1 MW from resource in LRZ B at cost of $5 Net cost increase is $5 11

12 ERZ Example 2: PRMR increases, South - North constraint binds Dual Con. BA Pmax: 400MW Offer: $6 ACP: $37.5 MISO N/C 50% 50% MISO S Solution Details LRZ A LRZ B 200 MW PRMR: 450MW LCR: 0MW Offer: $70 ACP: $70 Offer: $5 ACP: $5 SRPBC ACP MW Cleared LRZ A $70 50 MW LRZ B $5 0 MW Dual Connected BA $ MW Sub-regional power balance constraint binds, resulting in price separation Similar to PY auction results ACP of the ERZ is based on the two LRZ prices External Resources priced less than $37.5 would clear Impact of adding 1 MW of capacity demand in LRZ A Increase 1 MW from resource in LRZ A at cost of $70 Net cost change is $70 12

13 ERZ Example 3: LCR increases and binds Offer: $6 ACP: $6 Dual Con. BA MISO N/C 50% 50% MISO S Solution Details LRZ A LRZ B 200 MW PRMR: 450MW LCR: 100MW Offer: $70 ACP: $70 Offer: $5 ACP: $5 SRPBC ACP MW Cleared LRZ A $ MW LRZ B $5 50 MW Dual Connected BA $6 300 MW LCR binds, resulting in a higher price in LRZ A Similar to LRZ 4 in PY auction results Sub-regional power balance constraint is binding Impact of adding 1 MW of capacity demand (PRMR) in LRZ A Increase 2 MW from resource in ERZ, costing 2*$6=$12 Decrease 1 MW from resource in LRZ B, saving 1*$5=$5 Marginal cost is $12-$5 = $7 ACP of the ERZ is based on subregional unconstrained prices South: $5, North: $7 13

14 ERZ Example 4: ERZ CEL binds Dual Con. BA CEL: 80MW Offer: $6 ACP: $6 MISO N/C 50% 50% MISO S Solution Details LRZ A LRZ B 200 MW PRMR: 450MW LCR: 100MW Offer: $70 ACP: $70 Offer: $5 ACP: $5 SRPBC ACP MW Cleared LRZ A $ MW LRZ B $5 160 MW Dual Connected BA $6 80 MW External resources are constrained due to ERZ CEL binding ACP for ERZ will be determined based on marginal offer within the zone Impact of adding 1 MW of capacity demand in North Increase 1 MW from resource in LRZ A at cost of $70 Net cost change is $70 14

15 ERZ Example 5: In-line ERZ Offer: $6 ACP: $5 In-line ERZ MISO N/C Solution Details MISO S LRZ A LRZ B 200 MW PRMR: 450MW LCR: 0MW Offer: $70 ACP: $70 Offer: $5 CEL: 150 ACP: $5 SRPBC ACP MW Cleared LRZ A $ MW LRZ B $5 150 MW Dual Connected BA $5 0 MW In-line ERZ capacity is constrained by CEL of associated LRZ Joint CEL applied for LRZ B and inline ERZ If CEL binds, ACP of in-line ERZ and LRZ will be based on a shared marginal unit Impact of adding 1 MW of capacity demand in North Increase 1 MW from resource in LRZ A at cost of $70 Net cost change is $70 15

16 Historic Unit Consideration (HUC) comments focused on categorization External Resource Zone (ERZs) Stages Definition of commitments Historic Unit Consideration (HUCs) Capacity Import and Export Limits (CIL and CEL) 16

17 Given stakeholder feedback, MISO proposes combining all HUCs into a single stage Single stage of HUCs, consisting of agreement types in dotted-blue outline below Carved Out Pre-MISO arrangements which opted out of the energy market (GFA Option B, Carve Outs*) Pre-locational Capacity Market Arrangements Internal or external resources with commitments prior to the filing date of MISO s original Planning Resource Auction Resources impacted by zonal boundary changes External resources with commitments prior to the locational proposal filing date Zonal Deliverability Benefit Distributed via existing Tariff provisions 17 * Option B provides refunds to resources scheduled in Day Ahead Market; Carve Out resources are exempted from most market charges

18 Further detail provides clarity on which agreements qualify as HUCs A number of stakeholder comments focused on the definition of commitments Proposed Tariff language focused on Qualified Grandfather Carve-Out and Option B contracts; Qualified ownership or contractual arrangements executed prior to July 20 th, 2011 Qualified ownership or contractual arrangements with External Resources executed prior to the filing date Arrangements include Transmission service requests Power purchase agreement Rate based generation with load in a separate zone 18

19 Historic Unit Consideration (HUC) comments focused on categorization External Resource Zone (ERZs) Revisions to Tariff language Historic Unit Consideration (HUCs) Tariff 19

20 Tariff Updates to the draft Tariff revisions have been posted with the meeting materials Key edits are focused in Module E-1 and include Establishment of Local Resource Zones (Section 68A.3) Establishment of CIL and CEL Limits (Section 68A.4) Establishment of Local Clearing Requirement (Section 68A.6) PRA Procedures (Section 69A.7.1) Distribution of Excess Auction Revenues (Section 69A.7.7) 20

21 Next Steps Submit feedback and redlines on posted Tariff by August 25 th MISO will continue stakeholder outreach on unresolved concerns Targeting September Filing 21

22 Feedback Request MISO requests feedback and suggested redlines to the posted Tariff language Please provide comments to and by August 25, 2017 All feedback requests are posted on the Stakeholder Feedback Page 22

23 23 Appendix

24 Stakeholder Comments and Responses: ER Qualification Stakeholder Comment Summary MISO Response Duke Exelon What is needed to qualify as External Resources? What is the verification process for ERZs and their firm capacity commitments? Is PPA defined, as referenced in the External Resource section? Exempting Border External Resources which are electrically indistinguishable from non-border External Resources results in unwarranted discriminatory pricing. Please see Section 69A.3.1.c of the Tariff. This drives the creation of ERZs by March 1. PPA is referenced in Module A. Border External Resources are distinct from other External Resources due to their lack of physical separation from MISO. 24

25 Stakeholder Comments and responses: ERZ Clearing Stakeholder Comment Summary MISO Response LSE Coalition LSE Coalition Duke IPL MISO needs to provide additional examples of External Resource clearing MISO should provide additional consideration to resources that have become external due to membership changes What is the marginal cost of the CEL? MISO has not sufficiently explained the draft business rules. See slides

26 Stakeholder Comments and responses: HUCs Stakeholder Comment Summary MISO Response DTE Energy DTE Energy DTE Energy WPPI Energy Duke MISO should explicitly specify what constitutes a long term and continuous contract Only agreements in the form of long-term (20+ years) contracts tying a specific planning resource to a single load serving entity should qualify for HUCs. Cut-off date for Stage 2 HUC allocations should be set at the beginning of the current effort to reform the locational capacity construct (June 1st, 2016) Long term External Resource (ER) arrangements that happened after July 2011 but before MISO introduced its changes to ER modeling, should be eligible for Stage 1 HUCs Why doesn t increasing transmission capability fall into a higher priority for HUCs? See slide 18. See slide

27 Stakeholder Comments and responses: CIL, CEL, LRR, LCR Stakeholder Comment Summary MISO Response WEC Energy Group MidAmerican Energy Company Duke Proposal will create CILs and CELs which reflect the representation of resources with the PRA Concerned that CELs from each ERZ are not comparable to CELs from internal LRZs. Support annual verification that ERZs may export the expected PRA capacity When will MISO calculate CELs for ERZs? Will these be updated? Is the reference to ZIA in LCR, and the resulting lack of impact of impact of capacity from neighboring regions, intentional? Why was physical location removed from the LRR section? The annual evaluation of the ERZ CEL will allow knowledge of any potential limitations. All CEL and CIL values will be evaluated in the SFT. CELs for each ERZ will be calculated in November and updated in March. Yes LCR will continue to be calculated LRR less total import ability (ZIA) and non-pseudo tied exports. This allows the LRR to model resources in accordance with the PRA. 27

28 Stakeholder Comments and responses: Tariff Stakeholder Comment Summary MISO Response MidAmerican Energy Company Delete description of LCR equation and retain formula Should references to marginal cost be replaced by Shadow Price? Remove first sentence under Distribution of Excess Auction Revenue Add reference to holders of qualified agreements for HUCs Replace reference to annual transmission service for HUCs with associated transmission service Add reference to planning resources which utilize agreements Change applied in Tariff language Marginal cost language retained to match with LRZ clearing language Change applied in Tariff language 28

29 Stakeholder Comments and responses: Tariff Stakeholder Comment Summary MISO Response WEC Energy Group MidAmerican Energy Company Duke Replace physical location with accreditation and add portrayal or representation Add reference to ERZ CEL being based on capacity participating in PRA Language around HUCs should give MISO the flexibility to review contracts and grant HUCs appropriately Recommend adding language to clarify Stage 2 HUCs apply to resources in ERZs Should MISO use the Total Transfer Capability defined term for CIL and CEL Tariff language? Will MISO determine rather than model the CEL for each ERZ? Should references to long-term and continuous contracts for HUCs include ownership as well? Change applied in Tariff language 29

30 Review of Key Tariff Changes Multiple sections Added to or replaced mention of accreditation in the PRA with representation in the PRA Establishment of Local Resource Zones (Section 68A.3) Clarify that ERZs would not be created for external BAs with only Coordinating Owner or Border External Resources Establishment of CIL and CEL Limits (Section 68A.4) Added reference to Total Transfer Capacity (TTC) Reframed language for clarity 30

31 Review of Key Tariff Changes Establishment of Local Clearing Requirement (Section 68A.6) Removed verbal description duplicating equation PRA Procedures (Section 69A.7.1) Added reference to clarify treatment of ERZs which connect to only in-line ERZs Added language stating how border resources which could qualify in more than one LRZ will be modeled Distribution of Excess Auction Revenues (Section 69A.7.7) Added language stating HUCs will be awarded to holders of contracts and utilized by resources designated or utilizing arrangements Created one single stage for HUCs Removed reference to annual transmission service Clarified that Stage 2 HUCs only apply to External Resources 31