MISO’s Proposal for
MVP ARRs –
WPPI Energy Concerns
Steve Leovy
MISO FTR Working Group
November 2, 2011
1
Structure of Existing Market
 C
Currently
l iin MISO R
Region,
i
nearly
l all
ll Generation
G
i
is built by LSEs or by IPPs that have contracts
with LSEs
 In order for LSEs to justify the Investment or
Agreement to Purchase, they require some
assurance of congestion protection
 The current MISO tariff provides a process –
albeit imperfect – for adding ARR Entitlements
for new Network Resources
2
Enter MVPs
 MISO now expects most transmission
i i
expansion
i
in the near future to take the form of MVPs
– MTEP11 has $6
$6.5B
5B of new projects,
projects $5.1B
$5 1B of which
are MVPs
– MVP Portfolio will displace other kinds of projects:
~ “eliminates
eliminates the need for baseline reliability upgrades
on 23 lines between 2026 and 2031” [MTEP11 Draft p. 71]
 If MISO sets aside this capacity, it will not be
available to support new ARR Entitlements for
new capacity that would use the MVPs
3
MVP ARRs will Impair current
MISO Market Structure
 Wi
With
h congestion
i
protection
i
less
l
certain,
i it
i will
ill be
b
more difficult for LSEs to commit to new remote
g
generation
 Without LSE commitments, investment in new
generation will be much more difficult
 This may affect the viability of the very same
future generation that MVPs are intended to
accommodate
 Unavailability of this capacity will also limit
MISO’s
MISO
s ability to improve feasibility of existing
LTTRs
4
Fairness Issue
 MISO and
d some Stakeholders
S k h ld
maintain
i
i that
h
MISO needs to separately manage MVP FTR
capacity
p
y to ensure that benefits are proportional
p p
to MVP charges
 It is not clear to WPPI that this is necessary
– No similar argument has been made with respect to
pre-MVP management of new FTR capacity
– No effort is proposed to ensure strictly equal
distribution of other MVP benefits, such as:
~ Gen and Load LMP Impacts
o go e Baseline
ase e Reliability
e ab ty Project
oject need
eed
~ Forgone
~ Planning Reserve Margin reductions
5
WPPI Proposal
 MISO should
h ld modify
dif its
i request to make
k MVP
capacity available to support RSP Addition and
Replacement
p
requests
q
 This should still leave significant capacity
available for MVP ARRs
 Compromise approaches are also possible, in
which part of the MVP capacity would be
available for RSP Addition/Replacement
6
Offsets for RSP Addition
 IIt may be
b reasonable
bl to consider
id reducing
d i
a
party’s share of MVP ARR refunds to compensate
for RSP Addition
 This would probably be most easily accomplished
by converting MISO’s current proposal to devote
all revenues to offsetting MVP costs to one in
which MVP ARR revenues are allocated
individually
y among
g eligible
g
recipients
p
on the
basis of MVP-charge determinants
7
Conclusion
 WPPI B
Believes
li
MISO should
h ld modify
dif its
i MVP ARR
Proposal so that some or all MVP capacity is
available to support
pp
ARR Reserved Source Points
for new resources, and increased feasibility for
existing LTTRs.
8
Additional Questions
WPPI requests addition to FAQ List
1 H
1.
How will
ill MVP ARR Options
O i
b
be Defined
D fi d in
i the
h
Case of Initial Infeasibility?
2 How will MISO Prevent Adverse Impacts to
2.
Existing LTTRs?
3. How will MISO determine which new
Contingencies and Contingency Constraints to
add along with new MVPs?
4. How will MISO ensure that auction-clearing
prices for MVP ARRs are comparable to DA
clearing prices?
9
Initial Infeasibility
1. How will MVP ARR Options be Defined in the
Case of Initial Infeasibility?
–
–
Under MISO’s Proposal, Non-zero quantities of ARR
Options can only be defined if the MVP alleviates all
pre-existing Stage 1B Binding Constraints
How will MISO handle cases where MVPs exacerbate
some constraints?
10
Impacts on Existing LTTRs
2. How will MISO Prevent Adverse Impacts to
Existing LTTRs?
–
–
MISO Proposes to Define MVP ARR Options on the
Basis of Most-recent Stage 1B Allocation Results
Recent Allocation Results Show Relatively little Overlap
between Restoration and Stage 1B Binding Constraints
Constraint Count
Restoration Only
Stage 1B Only
Common
–
Summer 2011
Off‐Peak Peak
19
10
25
20
6
4
Fall 2011
Off‐Peak Peak
15
16
19
28
20
12
Winter 2011‐2
Off‐Peak Peak
11
10
22
21
0
4
Spring 2012
Off‐Peak Peak
14
17
26
16
6
8
Accordingly, Respecting Stage 1B Constraints Does Not
Ensure Continued Feasibility of LTTRs
11
New Contingencies
3. How will MISO determine which new
Contingencies and Contingency Constraints to
add along with new MVPs?
–
–
MVPs introduce new branches,, but also new
contingencies
Appropriate modeling of MVPs in Simultaneous
Feasibility
y Tests requires
q
consideration of all new
contingency constraints that would be enforced in the
DA Market
12
Annual Auction vs.
vs DA Prices
4. How will MISO ensure that auction-clearing
prices for MVP ARRs are comparable to DA
clearing prices
–
–
–
Historically,
y, MISO has awarded incremental FTR
capacity in the Annual FTR Auctions for around $0.70
on the Dollar
If this continues to be true for MVP ARRs,, it would
likely mean a large loss for those who pay MVP
charges.
WPPI would like MISO to commit to monitoring
g these
prices, and propose adjustments as may be
appropriate, as part of any MVP ARR filing
13
Comments?
Questions?
 Steve
S
Leovy
L
 WPPI Energy
 sleovy@wppienergy.org
 (303) 442-2871
14