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Wooing the Western Wind

How a move to bring power markets to the Great Plains has uncovered a crisis in grid planning.

Fortnightly Magazine - February 2009

to disagreements over regional funding obligations. It suggests that any member seeking to withdraw from RTO participation must pay an exit fee that includes shares of previously allocated RECB and RTO startup costs, which presumably would cause any would-be defector to think twice.

Overall, MISO urged not getting hung up over concerns about FERC Order 2000, or the fact that the proposal in truth will not fully eliminate inter-regional transmission rate “pancakes” where they exist today. MISO argued that its idea could overcome the present stalemate, which has seen many Western utilities, and especially public power entities, unable or unwilling to participate in RTOs. Even so, FERC decided last fall to withhold approval for MISO’s proposed Market Coordination Service (see, Dkt. ER08-637, Oct. 10, 2008, 125 FERC ¶61,029) .

Instead, FERC asked the industry for comment on whether the new tariff proposal might violate FERC Order 2000 or undercut RTO membership. By the time of FERC’s November 12 technical conference, Commissioner Jon Wellinghoff showed that the commission still had its doubts. Weighing in at the conference, Wellinghoff abruptly broke in on MISO CEO Graham Edwards, as the latter was dutifully running down a list of benefits the MISO members would enjoy by signing up new MAPP market customers (MC), and broadening MISO’s virtual footprint:

“Excuse me for interrupting,” said Wellinghoff.

“Those were benefits that would also be shared by the other entities. What benefits would the existing members have that the Schedule F members [the MAPP MCs] do not have? Any? I don’t think so.”

In fact, Wellinghoff even suggested that widespread MISO defections might solve the problem of RTO members arguing over the regional allocation of costs for large-scale grid expansions:

“If I understand it correctly, if current MISO members opt out of MISO and go under Schedule F, market service, there’s no more RECB anyway to worry about.”

Unhedged Market?

Clair Moeller, MISO’s vice president for transmission asset management, had explained in the MISO tariff proposal why the Western Markets Proposal could offer benefits to MAPP utilities and MISO members alike.

As Moeller explained in an affidavit, the current regime was governed by an expiring seams operating agreement and successor “bridge” agreements between MISO and MAPP that employed a hodge-podge of transmission loading relief (TLR) and redispatch of generating plants to manage energy flows between the two regions. But while the MISO market manages grid congestion over five-minute intervals, through LMP and computer algorithms for security-constrained dispatch, the old-fashioned MAPP TLR model allows for grid-flow adjustment only after 30 to 60 minutes, with no process or capability to seek energy flow in a defensive direction (counterflows or decremental dispatch), making economic grid optimization impossible across the MAPP/MISO seam. Thus, unfunded congestion costs increase and are uplifted to the entire MISO membership, while money is left on the table on the MAPP side in the form of underutilized generation resources.

John Norris, chairman of the Iowa Utilities Board and a key MISO watchdog group, the Organization of Midwest ISO States, terms MISO’s analysis and benefit claims as “somewhat speculative and difficult