MISO 2020/2021 PRA Shows Interesting Results

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MISO recently concluded its Planning Resource Auction (PRA) where individual Load Serving Entities (LSEs) can procure resources to cover their load and a margin for likely scenarios –jointly called the Planning Reserve Margin Requirement (PRMR). The 2020/2021 auction results indicate that the MISO region as a whole will have enough generation capacity and other types of resources to meet its PRMR for the 2020/2021 planning year (June 1, 2020, through May 31, 2021).

For the first time, however, one of the MISO zones (Zone 7—lower Michigan) did not have enough resources bid in the PRA to meet its Local Clearing Requirement (LCR) for procuring resources within the Zone. As a result, under MISO’s FERC-accepted Tariff, Zone 7’s clearing price will be set at a threshold called the Cost of New Entry (CONE), which is $257.53/MW-day. Approximately 1,150 MW of load will pay CONE, which is 6% of Zone 7’s forecasted peak load.

Zone 7 clearing at CONE is not a surprise as Zone 7 came very close to clearing at CONE last year. The MISO-OMS Survey last year indicated that Zone 7 could be short this year. There are multiple factors that led to this result. Total resources offered within Zone 7 declined by about 336 MW this year compared to last year. That drop-off includes, but is not limited to, 311 MW of coal and 57 MW of oil. These decreases were partially offset by an increase of 138 MW of demand response and 98 MW of energy efficiency resources.

Even with Zone 7 clearing CONE, its shortfall of local resources does not necessarily mean it will face reliability issues. While the zone’s local reserve margin is 0.56% (123 MW) below its target LCR, the zone does have 7.4% (1,490 MW) more local capacity than its forecasted peak-load level, even when outage rates are considered. Moreover, the zone can draw on the support that comes with being a part of the MISO shared resource pool that spans parts of 15 U.S. states and part of Canada.

The South-to-North limit was determined through the Sub-Regional Import/Export Limit analysis to be 1900 MW in advance of this year’s PRA. This limit bound in the auction clearing, causing modest price separation of $0.25 between the MISO Classic and MISO South sub-regions.  This South- to-North limit previously bound in the 2016 auction, as well.

Zone 9 (Louisiana and Texas) exhibited price separation from the rest of MISO South because of higher price offers clearing to meet the zone’s increased LCR, which was an increase of 7%.

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