IURCSummer AssessmentSummer Assessment
John BearMISO
President & CEO
May, 2011
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Discussion Outline
• MISO Summer Assessment• Resource EvolutionResource Evolution• MISO Resource Initiatives
– Resource Adequacy– Transmission Planning
• Membership Changes
1
MISO current resource adequacy construct enables capacity sharing while leveraging traditional bi-lateral methodologiesmethodologies Setting Planning Reserve Margins (PRM)
– Load Serving Entity establishes load forecast– MISO establishes/recommends PRM based on Loss of Load
Expectation Study– Local regulators have authority to modify for their jurisdiction
Term – Monthly Clearing obligation is met by bringing resources to meet load forecast plus
their Planning Reserve Margin– Owned resources– Controlled resources– Voluntary Capacity Auction
Penalty - Failure to meet resource obligation results in a settlement charge based on Cost of New Entry (CONE) – currently $95,000 / MW-month
2
For the 2011 summer season, there are sufficient resources to manage weather, load and outage uncertainty
Reserve Margin 201117.4%
Reserve Margin Change
23.8%
17 4%6.4%
Margin Increase Drivers
15.4% 2.0%
12.1%
5.3%
17.4%Drivers• Increased
Forecast Error• Forced Outage
Rate• Decline in
C ti
Diversity Benefit
Congestion
Reported Reserve Margin
Planning Reserve Margin
Surplus2010Planning Reserve Margin(PRM)
2011PRM
2011PRM (relative to non-coincident peak)
3
The primary changes from last year are driven by changes in capacity registered in MISO’s resource g p y gadequacy process
• Total installed 2011 summer capacity reflects:p y– Addition of 1,500 MW of wind (although only 382 MW
registered under MISO’s Resource Adequacy program)S bt ti f 18 156 MW f t it t– Subtraction of 18,156 MW of system capacity not registered under MISO’s Resource Adequacy program, including:
• 1,800 MW mothballed,• 2,300 MW extended planned outages,• 5,000 MW external commitments.,
• Forecast demand increased 1.3%– Excludes impacts of FE exit and Big Rivers integration
4
The future resource portfolio will be shaped by a host of influences
Energy PolicyFederal RPS?Clean Energy
Technology
Clean Energy Standard?
EPA Regulations?
Nuclear C i i ?
Resource Supply/Demand Balance
Economic Factors
Development & Adoption
Crisis?Crisis?
Smart GridEnergy Efficiency
PortfolioEvolution
BalanceConstruction CostsOperational Costs
(Fuel, O&M)
gy yDemand ResponseSupply-Side
Technologies
A versatile transmission system and regional resource adequacy are required to accommodate multiple potential resource futures
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63%
63%Resource portfolios vary across the USreflecting the resources of each region
14% 17%
14%9% 9% 5%
ISO NEC lNuclear
NYISO
14%7%
0%51%
31%
ISO-NE
27%34% 34%
CoalGas & OilRenewablesOther
64%7% 9%
1%
MISO 18%
41%36%
%
40%47%4%
27%
1%
WEST
8%1%
27%
1%
70%
5%1%
PJM7% 6%0%
SPP 34%
46%
WEST
CALISO
5%
18%
7%0%
12%7%
2%
SOUTH%
ERCOTSOUTH
6Source: U.S. Energy Information Administration and RTO data, 2010
Technology development/adoption will be a key driver of the evolution of the nation’s resource portfolio …
7 7Limited Portfolio
CCS, PEVs not deployedNo expansion / replacement of
nuclear fleet
Full PortfolioCCS, PEVs availableAdvanced nuclearAccelerated improvements in
er y
ear
5
6
er y
ear
5
6
Demand Reduction
Demand Reduction
nuclear fleet Accelerated improvements in end-use efficiencies and renewables costs
n kW
h pe
3
4
n kW
h pe
3
4
Nuclear
HydroHydroWind
WindBiomassBiomass
Solar
Trill
ion
2
3
Trill
ion
2
3
CoalG
Gas Nuclear
2010 2020 2030 2040 205020000
1
2010 2020 2030 2040 205020000
1CoalGas
CCS Retrofit
New Coal+ CCS
7Source: EPRI, “The Power to Reduce CO2 Emissions”, October 2009
2010 2020 2030 2040 20502000 2010 2020 2030 2040 20502000
… and regional resource portfolios will continue to reflect local resources and regional energy policy decisions
2,000
EAST
1,000
1,500
EAST
Wh
1 500
2,000
MIDWEST1,500
2,000
WEST0
500
,
TW
500
1,000
1,500
TWh
500
1,000
TWh
02010 2020 2030 2040 2050
2,000
SOUTH0
500
2010 2020 2030 2040 2050
02010 2020 2030 2040 2050
1,000
1,500
SOUTH
TWh
0
500
T
Coal-CCS (New)CCS Retrofit
GasSolar
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2010 2020 2030 2040 2050CCS RetrofitCoalNuclear (New)
Nuclear (Existing)Gas-CCS
SolarGeothermal
BiomassWindHydro+
ImportsTotal Energy for Load (after EE)
Source: EPRI 2010 Summer Seminar Presentation, “Prism 2.0: Preliminary Insights from EPRI’s Regional Model”
The actual MISO reserve margin remains high (24%), but the generation fleet is aging and little baseload capacity has been built in the last twenty yearsbeen built in the last twenty years…
9
MISO is proposing to modify its Resource Adequacy construct to address deliverability concerns, price transparency and other concernstransparency and other concerns
Planning Reserve Margin Methodology – Unchanged T 1 b i i i 2013 2014 l i Term – 1 year beginning in 2013-2014 planning year Clearing functions
– Adds an annual resource adequacy auction that establishes a market clearing price
– Load Serving Entities may “opt-out” by providing resource plan to meet their obligations
Penalty – Unchanged New features
– Zonal deliverability assuranceZonal deliverability assurance– Resource portability across seams (to other markets)
10
MISO’s integrated transmission system is designed to reduce the delivered cost of wholesale energy
11
Entergy’s recent decision to join MISO will add scope and diversity to our generation fleet
12
Indiana will benefit from Entergy’s decision
Reduced pro rata share of regulation requirementReduced pro rata share of contingency reserveReduced pro rata share of contingency reserve
requirementReduced per MWh cost of MISO administrative feesp Increased economic trade opportunities Increased footprint diversity will likely resulted in
d d l i i t f I direduced planning reserve requirement for Indiana utilities
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