misoenergy.org

Highlights• Significant progress was made in RAN Phase 1 to improve availability by 5 GW to 10 GW during times of need

• Multiple initiatives are underway to address system needs for availability, flexibility and visibility

• MISO is pro-actively ensuring reliability in an increasingly diverse portfolio

D E C E M B E R 2 0 1 9

ALIGNING RESOURCE AVAILABILITY AND NEED

Ensuring reliable and efficient operations every hour of the year

Contents

Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

History of Resource Adequacy at MISO . . . . . . . . . . . . . . . . . . . . . . . . . 4

Resource Adequacy Timeline and Highlights: . . . . . . . . . . . . . . . . . . . . . . 4

Need for RAN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

Key Industry Drivers of Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

Explore . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

Evaluation of Reliability Requirements and Metrics . . . . . . . . . . . . . . . . 10

Load-Modifying Resources Performance Requirements . . . . . . . . . . . . . 10

Fuel Assurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

Forward Market Mechanism. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

Resource Adequacy Construct (8760) . . . . . . . . . . . . . . . . . . . . . . . 14

Decide . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

Transmission Service Deliverability . . . . . . . . . . . . . . . . . . . . . . . . . 16

Enhancement to Emergency Pricing . . . . . . . . . . . . . . . . . . . . . . . . 16

Do . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

Resource Accreditation Improvements . . . . . . . . . . . . . . . . . . . . . . . 18

Multi-day Operating Margin (MOM) Enhancements . . . . . . . . . . . . . . . .19

Done . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

Multi-day Operating Margin (MOM) Forecast Initial Report . . . . . . . . . . . 21

Accreditation of Resources on Long-Term Outage . . . . . . . . . . . . . . . . 21

Load-Modifying Resources Availability and Visibility . . . . . . . . . . . . . . . 22

Outage Coordination Enhancements . . . . . . . . . . . . . . . . . . . . . . . . 22

MISO's Stance on RAN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

1

Executive Summary

MISO’s vision is to be “the most reliable, value-creating RTO.” Since its inception, MISO has converted the capacity

from committed resources to energy in order to reliably and efficiently operate the Bulk Electric System. Beginning

in 2016, MISO began experiencing a marked increase in the number of Maximum Generation Emergency (MaxGen)

emergencies. As a result, the Resource Availability and Need (RAN) initiative was established to identify near-term

solutions to increase the conversion of committed capacity resources into energy during times of need. Five key

drivers of change were identified as major contributors of increasing MaxGens emergencies. These five drivers

identified market conditions which would impact reliability in the near-term and become even more prominent in

the future.

In early 2019, MISO released the MISO Forward report, which looks at the impacts of three major trends --

de-marginalization, decentralization and digitalization. The 3Ds will intensify the operational impact of these five

drivers of change as MISO moves into the future. Solutions implemented now must not only address near-term

issues, but they must also take the future portfolio into account. To that end, RAN is exploring one of the most

complex and critical questions in the industry: What changes should MISO make to address near-term reliability

challenges while also preparing for a future portfolio likely to be comprised of far less thermal dispatchable

resources, more emergency-only resources, and a large percentage (e.g., 40 percent) of renewable resources?

Additionally, how does MISO sequence and align enhancements to not only address near-term issues but also

provide an effective progression of changes over time?

This transition away from legacy thermal units to new

technologies, including more intermittent and emergency-

only resources, requires planning, markets and operations to

also evolve. MISO and stakeholders must work to identify and

implement new solutions to address the challenges and take

advantage of the opportunities presented by the unprecedented

scale and speed of industry change.

This paper will describe the Resource Availability and Need

(RAN) initiative and MISO's plan to address issues in the

Explore, Decide, Do, Done framework.

2

The RAN program focuses on enhancements that help create better availability, flexibility and visibility

of resources for MISO system needs. MISO created three guiding principles that guide our longer-term

preparations while also informing more near-term enhancements.

1. Reliability Needs and Requirements: Reliability criteria must reflect required capabilities in all horizons—

all hours matter

2. Reliability Contribution: Members take responsibility for meeting reliability criteria with resources that

will be accredited based upon the resource’s ability to deliver those capabilities

3. Alignment with Markets and Infrastructure: Market prices must reflect underlying system conditions

and resources must receive appropriate incentives for the capabilities they provide; infrastructure should

enable efficient utilization of resources

As initiatives flow through the Explore, Decide, Do, Done framework, solutions will be evaluated in

accordance with these guiding principles.

AVAI

LABILITY VISIBILITY

REQUIREMENTS

FLEXIBILITY

The availability of transmission and energy resources to meet

requirements at all hours

The ability to see and coordinate relevant resource, demand and

power flow attributes on operating and planning horizons

The ability to anticipate and adapt to frequent and significant changes in

resource output and demand, including the enabling of new sources of flexibility

3

• Multi-day Operating Margin (MOM) Forecast Initial Report

• Accreditation of Resources on Long-Term Outage

• Load-Modifying Resources Availability and Visibility

• Outage Coordination Enhancements

• Evaluation of Reliability Requirements and Metrics

• Load-Modifying Resources Performance Requirements

• Fuel Assurance

• Forward Market Mechanism

• Resource Adequacy Construct (8760)

• Transmission Service Deliverability

• Enhancement to Emergency Pricing

• Resource Accreditation Improvements

• Multi-day Operating Margin (MOM) Enhancements

Explore Decide Do

Explore Decide Do

Explore Decide Do

THESE ITEMS CAN BE TRACKED WITH THE INTEGRATED ROADMAP ON OUR WEBSITE

Done

4

History of Resource Adequacy at MISO

The term “Resource Adequacy” refers to the electric industry’s ability to serve peak demand while also providing

enough excess supply to achieve an agreed-upon level of grid reliability. In the MISO footprint, the responsibility

for achieving resource adequacy rests with Load Serving Entities (LSEs) with oversight by states as applicable by

jurisdiction. MISO facilitates these efforts by administering tariff-defined Resource Adequacy Requirements, which

LSEs use to demonstrate their ability to serve peak demand and provide a sufficient margin of excess supply. These

requirements help to ensure that the MISO footprint will have ample supply to meet demand in all time horizons.

In 2004, MISO began phasing in its approach to support resource adequacy in its footprint. MISO’s approach was

designed to complement state mechanisms as a majority of MISO members operate within traditionally regulated

cost-of-service utility constructs. Initial efforts focused on energy pricing improvements to enhance reliability

across the region.

In 2008, a monthly Voluntary Capacity Auction was implemented to allow Load Serving Entities (LSEs) to efficiently

buy and sell residual capacity in advance of each month. Since 2011, the Federal Energy Regulatory Commission

(FERC) has required that MISO's resource adequacy construct include locational components. In 2012, FERC

approved replacing the monthly auction with the annual Planning Resource Auction (PRA), which established seven

Local Resource Zones. In 2018, MISO added tariff provisions to incorporate External Resource Zones, as well.

Going forward, MISO must address whether there is continued value in refining MISO’s existing resource adequacy

construct, or whether future reforms and enhancements must be focused on operational adequacy and energy

market reforms.

RESOURCE ADEQUACY TIMELINE AND HIGHLIGHTS

2004: FERC approves MISO’s original transmission and energy market tariff, with a short-term resource adequacy

provision. MISO is directed to develop something more permanent.

2006: With FERC’s approval, MISO develops a phased-in approach to establish a permanent resource adequacy

mechanism. Phase I develops an ancillary services market for contingency reserves; Phase II calls for a long-

term integration of shortage pricing into the energy markets.

2007: Phase I of MISO’s ancillary services market is approved. MISO proposes Planning Reserve Margin (PRM)

requirements for LSEs on an LSE-by-LSE basis for Phase II.

5

2008: Phase II of MISO’s resource adequacy construct is approved, with the caveat that MISO must consider

multiple reserve margin methodologies and operate with a regional approach.

2008: Per FERC directive, MISO proposes an assessment to financial settlement charges on LSEs that fail to

satisfy their resource adequacy requirements as well as a voluntary capacity auction to allow LSEs with

insufficient capacity to meet these requirements with the opportunity to purchase capacity from market

participants with excess planning resources. FERC urges MISO to take proactive steps to incorporate

locational market mechanisms into its resource adequacy construct.

2011: Per FERC request, MISO proposes several changes to its resource adequacy construct including: (1) an

annual resource planning process; (2) options for LSEs to meet their requirements; (3) establishment of

seven local resource zones; (4) a minimum offer price rule.

2012: FERC accepts the major elements of MISO’s resource adequacy construct for an annual Planning Year

with a two-month forward period and a vertical demand curve; it also accepts MISO’s locational market

mechanisms. FERC rejects MISO’s proposed mandatory auction requirement and the Minimum Offer Price

Rule (MOPR) proposal.

2016: MISO proposes a Competitive Retail Solution (CRS) to address emerging resource adequacy needs in

competitive retail areas.

2017: FERC rejects CRS, expressing concerns that bifurcating MISO’s resource adequacy construct into two

separate markets could create uncertainty in terms of price formation, market efficiency and transmission

allocation. MISO then helps affected states develop long-term resource adequacy processes.

2018: MISO modified its Resource Adequacy construct to model and price External Resources in External

Resource Zones to prevent inequity and address potential reliability concerns. MISO paired creation of

these zones with Historic Unit Considerations (HUCs), which prioritizes holders of historic transactions for

distribution of excess revenue if there is price separation.

2019: FERC accepts MISO’s filing to make enhancements to LMR testing and registration along with

improvements to generator outage coordination. MISO released the MOM Forecast to provide a seven-day,

forward-looking report to Market Participants. The report forecasts expected resources and obligations

to assist in resource commitments. Additionally, MISO submitted a filing to provide clarity on long-term

outages within the Planning Resource Auction.

Need for RAN

The RAN initiative, instituted in 2017, came as a response to the increasing number of MaxGen emergencies

events as outlined in MISO's 2018 Issue Statement Whitepaper. MISO recognized that changing market

conditions were impacting the resource fleet’s operational characteristics and challenging the reliability and

efficiency of market outcomes. At the RAN initiative inception, a total of 12 emergencies occurred beginning

in the 2016-17 planning year through half of the subsequent planning year. That trend has continued as MISO

entered MISO Market Capacity Emergency procedures 27 times through the summer of 2019. These events have

occurred multiple times in every season reinforcing the notion that “every hour matters.” This differs greatly from

the assumption that the system will be reliable for all 8,760 hours of the year as long as utilities have enough

generation capacity to meet demand on the "peak hour" of the year, which typically occurs on an exceptionally

hot and humid summer day. This white paper summarizes MISO’s actions regarding future stakeholder

discussions during which it will continue to work collaboratively to enhance availability, flexibility and visibility.

MISO Maximum Generation Alerts

3 3

0 0 8 8 9 2+

2015/16

SUM

M

AUT

WIN

T

SPR

2014/15 2016/17 2017/18 2018/19 2019/20

1

2 2 22 2

4

3 3

SUM

M

AUT

WIN

T

SPR

SUM

M

AUT

WIN

T

SPR

SUM

M

AUT

WIN

T

SPR

SUM

M

AUT

WIN

T

SPR

SUM

M

AUT

WIN

T

SPR

MISO Maximum Generation Emergencies

6

Wind Volatility Wind

NSI

6/1/15 9/1/15 12/1/15 3/1/16 6/1/16 9/1/16 12/1/16 3/1/17 6/1/17 9/1/17 12/1/17 3/1/18

6/1/15 6/1/15 6/1/15 6/1/15 6/1/15 6/1/15 6/1/15 6/1/15 6/1/15 6/1/15 6/1/15 6/1/15

14,00012,00010,0008,0006,0004,0002,000

0

14,00012,00010,0008,0006,0004,0002,000

0

Key Industry Drivers of Change

In early 2018, MISO released the RAN Issues Statement Whitepaper, which outlined drivers of change with a

significant impact on current operations and practices. While RAN has implemented multiple solutions, those five

Drivers of Change are still relevant and are being accelerated by the 3Ds. The growth of variable energy resources

(related to De-marginalization) along with the proliferation of Load-Modifying Resources (LMRs) and other

Distributed Energy Resources (Decentralization) are clearly linked to Drivers of Change 1, 3, and 5.

Retirements and increasing outage levels (both planned and forced) require MISO to

operate with less available capacity than in the past. The effect is a reduction in the

redundancy provided by additional resource availability. For example, daily average

energy offers were down 8 GW in Planning Year 2016/17 over Planning Year 2015/16.

This reduction reflects a 4 GW net resource retirement and a 4 GW (23 percent)

increase in the average MWs on outage.

The MISO system has year-round load and supply needs, but is planned with a summer-focused capacity

commitment. Lower overall capacity levels and higher outage rates have reduced available capacity in non-summer

periods. As a result, the MISO footprint has experienced frequent MaxGen emergencies outside summer. This

imposes a growing challenge to ensure sufficient available capacity in those periods. Of the 27 recent MaxGen

emergencies, 74 percent of them occurred outside of the summer months.

DRIVER ①

DRIVER ②

AGING AND RETIREMENT OF THE PORTFOLIO’S GENERATING UNITS

OUTAGE CORRELATION

Coal

2005

13 7242

98234

786

1081 1024880 931

1929

7001

953

44104575

170

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

Gas Nuclear Oil Diesel Other

73%

22%

2%2% 1%

Coal

2005

13 7242

98234

786

1081 1024880 931

1929

7001

953

44104575

170

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

Gas Nuclear Oil Diesel Other

73%

22%

2%2% 1%

Coal

2005

13 7242

98234

786

1081 1024880 931

1929

7001

953

44104575

170

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

Gas Nuclear Oil Diesel Other

73%

22%

2%2% 1%

Generation Retirement Trend by Fuel Type

(Capacity in MW)

Total Approved Retirement since 2005 (24.3 GW)

7

LSEs committed more than 11 GW of LMR (demand response and behind-the-meter generation) cleared in the

PRA in 2019. This was 9 percent of the summer peak load forecast. These 11 GW of resources are not available to

MISO’s operators without the declaration of a MaxGen emergency under the existing framework. Overall, LMR

performance has fallen short of its performance requirements during emergencies. Additionally, LMRs can have

notification times up to 12 hours and can have limited or no availability outside of summer. However, based on

FERCs approval of the RAN Phase 1 filing relating to LMR performance and generator outages, these resources

are now required to offer their true availability and shortest notice time throughout the year. LMRs also must

demonstrate their ability to curtail load on an annual basis.

DRIVER ③

MISO now relies more heavily upon uncertain or otherwise non-committed supply resources. In the last few

years MISO has become a significant importer of energy from neighboring systems. About half of this energy is

scheduled in real time with submission of interchange due just 20 minutes prior to each 15-minute interval. While

MISO has arrangements in place for the purchase of emergency energy from neighboring systems during declared

emergency conditions (as occurred in January 2018), availability of such energy remains highly uncertain. While the

regions have successfully managed these issues to date, there could be increased risk to reliability if steps are not

taken to address the changing future portfolio.

Variable energy resources (e.g. wind and solar generation), an increasingly important resource category, has

different operational characteristics than legacy thermal resources. Renewable resources are accredited based

on historic contribution during past system peaks, but there is no assurance that the accredited capacity will be

available during a particular emergency event. If wind or solar happen to contribute less during a particular time

of need than in prior instances, the difference must be made up elsewhere. These resources, at times, will likely

help conditions by producing more than accredited, so it is important to understand and plan for the operational

implications of future growth of renewables .

DRIVER ④

DRIVER ⑤

GROWING RELIANCE ON UNSCHEDULED RESOURCES

GROWTH OF VARIABLE ENERGY RESOURCES

GROWTH IN DEMAND SIDE AND OTHER EMERGENCY-ONLY CAPACITY

8

Seek to understand opportunities and challenges and identify new capabilities that will sustain and enhance MISO's Value Proposition

Leverage insights to conduct studies and analysis that guide economic and reliability decisions

Prioritize the execution of clear solutions

Initial implementation has been completed. MISO collaborates with stakeholders to make continuous improvements to maximize value

Done9

10

EVALUATION OF RELIABILITY REQUIREMENTS AND METRICS

As part of MISO's assessment of risk and opportunities

in a transforming portfolio, MISO is evaluating how

to analyze and identify appropriate future reliability

requirements and metrics to meet MISO's needs -

Availability, Flexibility, and Visibility. This evaluation

should shed light for planning purposes on the type

and quantity of specific capabilities needed from

resources across all hours of the year. As an example,

this evaluation of capabilities would not only address

generic flexibility related services such as ramping,

but it would also address how much and what type of

ramping the system needs across various time horizons

(immediate, within an hour, within the day and across

days).

Ramping is one example of a capability needed to

operate the system reliably in a portfolio where

at least 40 percent of the generation comes from

renewables. MISO’s studies - Renewable Integration

Impact Assessment (RIIA) and Portfolio Evolution

Study simulations - give an indication of these needs

and show the magnitude of extreme ramps will grow.

Additionally, the RIIA study shows frequency regulation,

system stability and local voltage support will

become more challenging with increasing renewable

penetration. MISO’s existing planning mechanisms,

markets and operational processes are sufficient to

address these needs at the region’s current penetration

of renewables. However, all of these tools will need to

be reevaluated and potentially revised as renewables

continue to grow in the region.

These assessments and related engagement with

stakeholders are of the highest priority while MISO

also continues to advance other directionally aligned

enhancements that are more near-term in nature.

Next Steps

• Work with stakeholders to evaluate the effectiveness

of current reliability requirements and metrics to

address risk and opportunities within a transforming

portfolio

• Based on findings and input from stakeholders,

recommend changes to reliability requirements and

metrics to assess needs across all hours

LOAD-MODIFYING RESOURCES PERFORMANCE REQUIREMENTS

In each of the past three Planning Reserve Auction

years, LMRs comprise a higher percentage of MISO

resources.

The region is increasingly experiencing tight operating

conditions that MISO must address by deploying all

types of resources — including LMRs that currently can

only be called into service during emergencies. This

increasing reliance on and use of LMRs, now and in the

future, begs the question as to whether LMRs should

continue to be treated differently from traditional

generation.

11

In terms of managing the system in real time, the

increasing penetration of LMRs limits MISO's ability

to effectively and efficiently use all the resources that

are committed under the region's capacity construct.

This is partly due to a lack of sufficient locational

information. Further, LMR access comes via Emergency

Operating Procedure (EOP) activation at Step 2a, when

conditions are volatile due to stakeholder responses

to earlier emergency declarations, both within MISO

and other Balancing Authorities. Additionally, MISO is

limited to five LMR deployments per planning year, so

use must be judicious. Lastly, LMRs are only obligated

to be available during the summer season.

LMR deployment is not a simple calculation. A single

CPNode may cover a vast area of the reliability

footprint thereby limiting system operation’s ability

to know exactly how and to what extent LMR

deployment will help mitigate an emergency. More

precise locational information will improve MISO’s

ability to mitigate system emergencies. In addition,

there is a disparate and different set of tools used to

manage LMRs versus traditional generation. Traditional

generation is dispatched via the Day-Ahead Real-Time

(DART) Energy Markets Operating System versus

LMRs, which are committed through a component

of the MISO Communication System (MCS). Better

locational information and a single platform for

commitment/dispatch of traditional generation and

LMRs would allow LMRs to be used for congestion

management and to relieve constraints.

From a market perspective, LMRs are also treated

differently. Traditional generation uses a different

testing and performance penalty structure for non-

performance compared to LMRs. Also, while there

have been recent tariff changes on rules for utilizing

LMRs more effectively, they are still only obligated to

be called upon five times per Planning Year.

These issues are complex as MISO markets,

operations and the broader Bulk Electric System

(BES) have evolved and changed significantly since

the introduction of LMRs to the MISO Tariff. As

LMRs continue to displace traditional generation

as a percentage of total resources and are utilized

more frequently, there is a need to evaluate if it is

appropriate to continue to treat them differently, while

also understanding the limitations in doing so.

Next Steps

MISO will engage with stakeholders to:

• Explore LMRs performance and impacts during

MaxGen emergencies

• Generate options for process improvements to

provide better visibility into LMR availability

• Engage stakeholders to evaluate options for

operational and planning enhancements

Emergency Demand Response (EDR) is a

service that refers to the use of a demand resource

under a specific Tariff schedule.

Demand Response Resource (DRR) refers to a resource type; one that provides service to the

energy and ancillary services market.

Load Modifying Resource (LMR) is a category that refers to the

use of a demand resource toward meeting Planning

Resource Margin Requirement (PRMR)

Load Curtailment

12

FUEL ASSURANCE

Fuel-related issues with gas-fired generators impacted

reliability and pricing outcomes during MaxGen

Capacity Emergencies in January 2014, 2018 and 2019.

During these events, MISO deployed every emergency

and non-emergency resource available.

While fuel issues were not the only driver of these

MaxGen events, they were another risk factor

associated with the extreme winter weather that led

to capacity scarcity. MISO can be capacity sufficient

one day and insufficient the next, should a number of

often-correlated risks align. The table below shows

the number of MWs of gas-forced outages during past

winter MaxGens, and the number of MWs attributed

to fuel issues based on Generating Availability Data

System (GADS) cause codes.

MISO has undertaken a number of initiatives to

enhance fuel security in the region, including

administering an annual, voluntary survey that provides

insights into the methods that gas-fired generators

use to ensure that their facilities can operate when

needed. The survey was first published in 2015 and

has response rates of 70-90 percent of the fuel-based

generation in MISO. The survey and various internal

studies indicate some redundancies for gas-fired

generation in MISO (such as back-up fuel capabilities

or connections to multiple gas systems). Also evaluated

is the growing availability of fuel across the entire

region due to the growth of shale gas supply and

related improvements in gas pipeline deliverability.

MISO has also completed assessments of vulnerability

to disruptions of gas supply and pipeline infrastructure

and found MISO much less vulnerable compared to

some other regions. That said, fuel-related outages are

material during extreme winter weather and contribute

to reduced operating margins.

However, past winter MaxGen emergencies

have illustrated the difficulty and expense of gas

procurement during extreme cold. As a result, MISO

has been exploring how to provide gas generators with

the certainty and flexibility they need to firm up their

fuel supply when MISO expects tight operating margin

conditions. This includes the recent implementation of

MOM Forecasts.

Next Steps

• Evaluate how enhancements to MISO's resource

accreditation process and markets could mitigate

multiple risks that the region faces, including risks

related to fuel assurance.

• Work with stakeholders and the gas industry to

explore firm/flex natural gas pipeline pre-positioning

and offerings in a multi-day context

Winter MaxGen

Day

Gas forced outages in GADS

Coded as fuel-related

in GADS

% Fuel Related

1/6/2014 8.2 GW 4.5 GW 56%

1/7/2014 12.0 GW 5.4 GW 45%

1/17/2018 7.3 GW 3.6 GW 49%

1/18/2018 7.8 GW 3.7 GW 47%

1/30/2019 5.8 GW 2.7 GW 47%

1/31/2019 6.4 GW 3.0 GW 46%

Fuel-Related Outage Share During Winer MaxGen Emergencies

13

FORWARD MARKET MECHANISM

Since its founding, MISO has worked with stakeholders

to set up rules, processes and markets that ensure

applicable reliability standards are met in ways that

create value for MISO members. MISO’s Day-Ahead

(DA) and Real Time (RT) energy markets utilize

security-constrained unit commitment and security-

constrained economic dispatch while using industry

best practices and industry-leading price formulation

methods, including MISO enhancements such as

enhanced LMP (ELMP) and emergency pricing. While

market-based unit commitment is an important

efficiency enhancing component of the energy market,

given the uncertainties and incentives faced by

resource owners, most commitment of capacity has

occurred prior to the Day-Ahead market due to owner

operational, financial, and contractual considerations.

For example, given practical operational considerations,

nuclear units remain running while not on outage

rather than wait for a Day-Ahead market-based unit

commitment.

Low wholesale energy prices and the increasing

volatility and uncertainty of system needs and

resources has led a number of stakeholders to request

that MISO provide better information in advance of

the Day-Ahead market to inform unit commitment

decisions. In addition to implementation of the MOM

volumetric forecast, MISO is responding to this request

by exploring a Forward Market Mechanism. The goal

of a such a mechanism is to better inform and incent

member decisions about resource availability in

advance of the Day-Ahead market – ultimately with

a goal of mitigating the risks of insufficient energy in

real-time and preventing inefficient production cost.

Decisions that could be informed by a FMM in advance

of the DA include:

•Outage timing & prevention

•Commitment of long-lead resources

•Fuel procurement decisions

•Availability of flexible resources

•Import and export scheduling

•Flexible load scheduling and LMR use

<1d 1-7d 7-90d >90d

60,000 -

40,000 -

20,000 -

0 -

MW

JAN

17 -

FEB

17 -

MA

R 17

-A

PR 17

-M

AY 17

-JU

N 17

-JU

L 17

-AU

G 17

-SE

P 17

-O

CT 17

-N

OV

17 -

DEC

17 -

JAN

18 -

FEB

18 -

MA

R 18

-A

PR 18

-M

AY 18

-JU

N 18

-JU

L 18

-AU

G 18

-SE

P 18

-O

CT 18

-N

OV

18 -

DEC

18 -

JAN

19 -

FEB

19 -

MA

R 19

-A

PR 19

-M

AY 19

-JU

N 19

-JU

L 19

-AU

G 19

-SE

P 19

-

Generation Outages by Lead Time

14

Next Steps

• Discuss problem definition and evaluation criteria at

the Market Subcommittee

• Identify and assess potential alternative approaches

• Develop, test and discuss a Forward Market

Mechanism proof-of-concept results with

stakeholders

RESOURCE ADEQUACY CONSTRUCT (8760)

MISO is evaluating whether the current resource

adequacy construct is sufficient to address reliability

risks throughout the year now and in the years to

come. Several factors contribute to this exploration,

including planned and forced outages; the changing

resource mix due to retirements and addition of more

variable energy resources; net scheduled interchange

volatility; and extreme weather events.

Historically, MISO's approach to resource adequacy has

focused on ensuring that sufficient resources would

be available when demand peaks in the summer--with

the expectation that serving load the rest of the year

would be comparatively easier. But given the increase

in MaxGen emergencies in the last three years in non-

summer seasons, MISO is now evaluating whether a

summer focus continues to make sense. As part of that

evaluation, MISO is looking into several traits of the

current construct such as the granularity, risk metrics,

PRA auction design, reliability requirement, and market

signals.

There has been growing concern that the current

construct is missing risks outside the summer

timeframe. During the last three years, only one of

the 10 total MaxGen emergencies has occurred in the

summer. Because of this, MISO is evaluating whether

a more granular construct could help provide visibility

into risks throughout the year to ensure reliability

during all time periods. One option would be a

seasonal construct, which has the potential to match

reliability requirements to specific seasons and provide

the flexibility for resources to participate in the PRA in

times best suited for each resource.

In addition to the granularity of the resource adequacy

construct, MISO is looking at the risk metrics

used in establishing the PRM and Local Reliability

Requirements. The industry standard used by MISO

has been a loss of load expectation(LOLE) of one day in

10 years (0.1 days/year). However, given the changing

resource mix and increase in variable energy resources,

MISO will evaluate if the LOLE metric sufficiently

reflects risk, especially across all hours of the year.

There may be a need to augment the LOLE metric or

consider alternatives. Expected Unserved Energy (EUE)

is one alternative metric for assessing reliability risk,

which has some support from others in the industry

and from several stakeholders. EUE is expressed as the

expected number of megawatt-hours of load that will

not be served in a given time period. One reason it may

be useful compared to LOLE is as storage and other

variable energy resources become more prominent

in the MISO portfolio, EUE has the ability to measure

those attributes. There are additional alternatives

worthy of consideration and MISO is evaluating those

as well As MISO moves into the future, it will be

essential to utilize the proper risk metric to determine

reliability criteria and requirements. The reliability risk

metric is not the only crucial component to accurately

capture risks. Improved modeling is something MISO

continuously strives to achieve and is directly linked to

accreditation as shown in the feedback loop graphic.

15

Lastly, MISO members will need to continue to take

responsibility for meeting reliability criteria with

resources that will be accredited based upon the

resource's ability to deliver specific capabilities. This

contribution to reliability can be met through self-supply

or market purchases. A seasonal construct is a serious

consideration for MISO because of the granularity and

flexibility it provides in reliability planning and aiding in

meeting the system’s future needs.

Next Step

• MISO will continue discussions related to the resource

adequacy construct with stakeholders at the Resource

Adequacy Subcommittee (RASC)

Real World

Identify Risks

PRM ModelingAccreditation

Linkage Between Accreditation and Actual Operations

16

TRANSMISSION SERVICE DELIVERABILITY

Potomac Economics, a Washington, DC-area company

that servers as MISO's Independent Market Monitor

(IMM), recommended in 2017 that all resources in the

MISO region should be able to deliver 100 percent

of their accredited Installed Capacity (ICAP) levels

to load when needed. MISO agreed to evaluate this

recommendation as part of the MISO Integrated

Roadmap #65 and the 2019 RASC workplan. In 2019,

the FERC encouraged MISO to continue working

through the stakeholder process for implementation.

The tariff requires that all types of resources be

deliverable to load in order for eligibility as capacity

resources. Deliverability is determined by, among

other things, demonstrating the resource has Network

Resource Interconnection Service (NRIS) or Energy

Resource Interconnection Service (ERIS) coupled with

firm transmission service reservations.

MISO is working towards a solution for determining

deliverability for all resources based on the entire

ICAP of applicable planning resources. This will ensure

consistency with MISO’s transmission planning studies,

which assume that resources will perform up to their

ICAP level when available. By making this change,

resources would be required to demonstrate firm

transmission service in the amount of their full ICAP

level either by having NRIS up to their ICAP level or

ERIS along with firm transmission service up to their

ICAP level.

However, this may not be appropriate for intermittent

resources because these resources cannot consistently

provide capacity at the level of their full ICAP value.

Therefore, MISO is exploring options, in conjunction

with stakeholders and the IMM, through the RASC

on potential solutions for the intermittent resources

deliverability requirement. The requirement to

demonstrate deliverability for intermittent resources

will be calculated and set at a more appropriate,

expected output rather than their full ICAP levels.

Next Step

• MISO will continue the discussion with stakeholders

and the IMM at the RASC in 2020

ENHANCEMENTS TO EMERGENCY PRICING

MISO administers competitive electricity markets to

deliver reliable and efficient outcomes at the lowest

cost. Since the inception of the energy markets,

MISO and the Independent Market Monitor (IMM)

have analyzed the markets to identify and implement

various types of enhancements. For example, pricing

should be consistent with the marginal system cost

and degree of reserve shortage during emergency

events, considering the marginal cost of out-of-

market reliability actions, costly demand response

deployments, the Value of Lost Load (VOLL) and Loss

of Load Probabilities (LOLP) during reserve shortages.

Said more simply, prices should be high enough to

reflect that MISO is running out of resources when

it makes emergency declarations. Scarcity pricing

should also reflect regional reliability risks and reserve

17

needs. MISO’s IMM and stakeholders have questioned

whether prices during MaxGen emergencies reflect

the scarce conditions declared by MISO so as to

properly incentivize needed resource availability, avoid

uplift from reliability commitments, and incent market

participants to take other actions that would improve

the supply-demand balance.

MISO continues to look for ways to inform and

enhance markets to align with desired operational

outcomes. MISO pioneered the ramp product, ELMP

pricing, and emergency pricing which aims to avoid

price suppression by using the highest available offer

when pricing emergency resources. Going forward,

MISO will continue to pair solid theoretical market

pricing approaches with enhancements that are

expected to incent needed Market Participant behavior

during times of scarcity.

MISO’s pricing design must provide efficient incentives

for adjustments to interchange with its market and

non-market neighbors. In recent years, MISO has

become a significant net importer but most of the

interchange is submitted as fixed schedules and is

not explicitly committed through economic market

mechanisms in either the DA or RT markets. Changes

in net schedule interchange (NSI) during emergencies

can supply needed megawatts to meet MISO load and

maintain reserves, but reductions in NSI can also lead

to reserve shortages and reliability challenges if the

MISO market design does not send an efficient price

signal for import supply. In addition, the Net Scheduled

Interchange scheduling process can create uncertainty

about capacity sufficiency when making reliability

and market commitments. This impact of uncertainty

regarding future levels of NSI on commitment

decisions has contributed to low prices during MaxGen

emergencies and significant amounts of uplift.

Next Steps

• Enhance emergency pricing outcomes

• Assess the shape and ceiling of the Operating

Reserve Demand Curve including estimates of the

Value of Lost Load

• Decide whether/how to better optimize interchange

between RTO and non-RTO regions

Misalignment Between NSI and Regional Price Differences

1/30/2019

1

1/31/2019

3 5 7 9 11 13 15 17 19 21 231 3 5 7 9 11 13 15 17 19 21 23

700

600

500

400

300

200

100

0

-100

RT L

MP

Diff

eren

ce $

/MW

h

* PJM & MISO Price Vs NSI

Real-Time LMP Difference

Real-Time NSI with PJM

18

RESOURCE ACCREDITATION IMPROVEMENTS

The goal of resource accreditation is to incentivize

improved availability throughout the year, especially in

periods where margins are tight.

MISO’s current Resource Adequacy Construct allows

many exceptions to real time availability. The PRA

allows resources to offer and clear the auction without

a reduction in their capacity credit, even in light of

these exceptions. Because resources can use these

exceptions without a reduction in their capacity credit,

there is little incentive to be available in times of need.

Additionally, MISO has many different resource

types, each with different capabilities. MISO’s current

accreditation methodologies do not accurately reflect

these capabilities. For instance, some resources have

use limitations that are not efficiently accounted for

in accreditation. One example is the lead-times of

resources to respond which are not factored into the

credit they receive.

Ideally, MISO would have a capacity accreditation

methodology that accounts for actual resource

availability, specific resource capabilities as well as the

deliverability of resources. Also, LMR accreditation will

be critical as those resources become more prevalent

within the MISO footprint and continue to make up a

significant portion of the PRM as shown below in the

Day-Ahead Must Offer chart. MISO developed several

guiding principles related to accreditation that include:

1) incentivized availability for periods of tight margins;

2) removal of exceptions currently in place that limit

availability; 3) providing visibility into actual availability

of all resource types throughout the year to better

manage reliability risks; and 4) the establishment of a

more universal methodology for all resource types that

accounts for a resource’s specific capabilities.

Planning Resource Auction MWs Cleared

Planning Resource Auction Year 2017-18 2018-19 2019-20

Total Cleared 134,753 135,179 134,743

Demand Resources (DR) 6,014 6,964 7,372

DR as % of Total Cleared 4.5% 5.2% 5.5%

Behind-the-Meter Generation (BTMG) 3,456 4,098 4,097

BTMG as % of Total Cleared 2.6% 3.0% 3.0%

DR + BTMG as % of Total Cleared 7.0% 8.2% 8.5%

Load-Modifying Resources are an Increasing Share of Cleared Capacity Resources

6/2014 12/2014 6/2015 12/2015 6/2016 12/2016 6/2017 12/2017 6/2018 12/2018

160

150

140

130

120

110

100

90

80

70

Thou

sand

s

DA Offer Available PRMR PRA Gen. PRA Cleared

Historical Hourly Day-Ahead Offer (MISO System, MW)

19

Next Steps

• MISO is exploring several options for accreditation with stakeholders at the Resource Adequacy Subcommittee (RASC).

- Effective Outage Rates (EOR), which include planned, maintenance and forced outages and derates

- A real-time availability option that would look at Day Ahead and Real Time offer data during hours of tight margins to accredit resources

- LMR accreditation that reflects actual availability, which could include past performance or utilization of MCS

• MISO is targeting the first half of 2020 to file a new accreditation methodology with FERC for most resource types.

MULTI-DAY OPERATING MARGIN (MOM) ENHANCEMENTS

MISO stakeholders want better information to help

them identify potential operating day issues several

days in advance. Until October 2019 stakeholders,

generation and transmission owners/operators

generally became aware of operating day issues

only when MISO declared various advisories, alerts,

emergencies and events via Emergency Operating

Procedures (EOPs). Since these procedures focus on

real-time operations, notice is generally provided just

hours in advance of a potential issue.

A multi-day operating margin and associated inputs

provides better transparency to various stakeholders.

Generation and transmission owners/operators are

better able to assess their risk to adjust planned

operations and outages on their own and better align

20

their plans without having to wait for a request from

MISO. This also provides generators better information in

order to procure natural gas and make associated pipeline

reservations multiple days in advance rather than the day

prior to operations. MISO began posting multi-day peak

hour operating margin in October 2019. This information,

which is updated daily, is based on the information used

by MISO Operations. MISO intends to solicit stakeholder

feedback to guide work efforts on subsequent iterations,

adjustments and improvements.

Next Steps

While specific details will be vetted with stakeholders,

future enhancements could include uncertainty in load

and renewable forecasts and hourly disaggregation of

data. Other improvements to reduce uncertainties could

include, but are not limited to:

• Estimates of forced outages/capacity returning from

outage

• Regional Directional Transfer (RDT) flow

• Interchange forecasting, stranded capacity

• Behind-the-meter generation and emergency resource

information

Future enhancements will have to consider availability of

data, effort to generate new data and data confidentiality.

View our Multi-day Operating Margin (MOM) Forecast Reports here

21

MULTI-DAY OPERATING MARGIN (MOM) FORECAST INITIAL REPORT

Stakeholders have expressed interest in understanding

near-term system needs, especially in areas such as

whether the system is expected to experience tight

operating conditions on a forward-looking basis. To

that end, MISO has created the created the MOM

Forecast. The table below illustrates committed and

uncommitted resources (broken down by lead time),

along with a renewable forecast and NSI. These

variables equal the total resources available. The

report also provides the projected load and operating

reserve margin. The total resources available minus the

obligation provide the resource operating margin. The

lower the number, the tighter the forecasted operating

margin is expected to be.

ACCREDITATION OF RESOURCES ON LONG-TERM OUTAGE

The MISO Tariff does not specify adverse

consequences for resources that clear in a given

PRA and are either on long-term outage or have one

scheduled after the beginning of the Planning Year

(PY). In such a scenario, a resource would receive

capacity credit during an extended time of planned

unavailability.

In October 2019, MISO formally presented the

Resource Adequacy Subcommittee with a structure

to address these situations. The framework stipulates

that resources expected to be unavailable for at least

90 of the first 120 days of the Planning Year do not

qualify for PRA participation. Pending FERC approval

this would be effective beginning with the 2020-2021

Planning Year PRA.

This filing is not necessarily intended to be a long-

term solution, but rather a pathway to a more

comprehensive accounting. Factors to consider during

this extended review period are resource accreditation

and other qualification elements, examination of

further statistical analysis and potential seasonal

considerations that include a more granular focus

and/or increased flexibility. The target PRA for these

additional elements is the 2021-2022 PRA.

Done

22

LOAD-MODIFYING RESOURCES AVAILABILITY AND VISIBILITY

The intent of Phase 1 for LMRs was to improve visibility

and availability throughout the year. Through the

enhancements to the LMR registration process, 9.5 GW

of the 11.4 GW of LMR capacity indicated they would

be available to be called on year round. Along with

indicating more availability, the amount of LMRs with

less than two hour notification time increased from 2.2

GW to 4.1 GW.

Another enhancement to the availability and visibility

of LMRs was modifications to testing requirements.

To help facilitate the testing requirements during

the accreditation process, MISO accounts for LMR

performance during events in which they were

called upon. If LMRs wish to opt-out of the testing

requirements, they could do so, but with significant

penalties associated with non-performance. These

changes were instituted with the goal of increasing

MISO’s visibility into the availability of LMRs during

emergency events which can be called upon during

emergency events.

OUTAGE COORDINATION ENHANCEMENTS

In order to increase availability, flexibility and visibility,

MISO provided accreditation-related incentives to

generators to notify MISO of their outage scheduling

as early as possible. If circumstances required an

outage to be scheduled closer to the operating day, the

resource requesting the outage would have increased

transparency of other planned outages and potential

impacts. The Outages by Lead Time table shows the

total outages by lead time throughout the year. When

comparing outages across 2017, 2018 and 2019,

outages scheduled in 2019 following FERC approval of

MISO's RAN Phase 1 tariff changes show fewer overall

outages. Phase 1's full impact on outage coordination

will be the subject of further analysis.

LMR Outage by Notification Time

12,000

10,000

8,000

6,000

4,000

2,000

MW

18-19 PY 19-20 PY

≥6 Hours >2 Hours and < 6 Hours ≤2 Hours

4,473

1,970

4,127

6,150

2,523

2,192

LMR MWs by Notification Time

23

60,000 -

40,000 -

20,000 -

0 -

JAN 17 FEB 17

2017

MAR 17 APR 17 MAY 17 JUN 17 JUL 17 AUG 17 SEP 17 OCT 17 NOV 17 DEC 17

MW

60,000 -

40,000 -

20,000 -

0 -

JAN 18 FEB 18

2018

MAR 18 APR 18 MAY 18 JUN 18 JUL 18 AUG 18 SEP 18 OCT 18 NOV 18 DEC 18

MW

60,000 -

40,000 -

20,000 -

0 -

JAN 19 FEB 19

2019

MAR 19 APR 19 MAY 19 JUN 19 JUL 19 AUG 19 SEP 19 OCT 19 NOV 19 DEC 19

MW

1d 1-7d 7-90d >90d

MISO System Resource Outage–OOS 2017-2019 by Outage Lead Time

24

MISO's Stance on RAN

At the Board of Directors meeting in September of 2019, it was stated that “RAN is the most timely and significant

near-term strategic initiative.” While this statement is true and the focus of RAN has been near-term strategic

initiatives, longer term issues must also be considered and addressed. MISO is also elevating and extending its

focus to address these longer-term needs. Current drivers of change are impacting today’s planning, markets

and operations in a manner which the industry has not seen before. Actions are needed now. At the same time,

MISO cannot afford to focus on solutions which only resolve today’s issues without taking into account the

future. To help strike the right balance, MISO will continue to proactively evaluate solutions with stakeholders in

a collaborative manner. Working together will ensure that we accomplish our vision of being the most reliable and

value-creating RTO.

misoenergy.org