MISO sees future capacity issues due to possible coal retirements

The Midwest Independent System Operator region has adequate generating capacity to meet its reserve requirements through 2021 based on currently announced generation retirements, but that assessment does not include coal-fired capacity retirements that might be required by regulations imposed by the U.S. Environmental Protection Agency.

The impact of those EPA regulations “could significantly, and rapidly, erode reserve margins,” said a draft system report from the Midwest ISO. Depending on economic conditions, including the cost of environmental compliance, about 13 GW of existing coal generation within the region is at risk for retirement, the report noted.

EPA is finalizing four proposed regulations that will affect the MISO system and require utilities to choose between retrofitting their generators with environmental controls or retiring them. MISO evaluated the potential impacts of the new regulations, including the impact of carbon reduction requirements. The four regs relate to cooling water, coal waste disposal, the Cross-State Air Pollution Rule and the Mercury and Air Toxics Standards.

A survey of the current fleet within MISO revealed 298 generation units will be affected by the four proposed regulations, the report noted. The capacity of the units at risk for retirement is 12.7 GW, based on the assumptions surrounding the cost of environmental regulation compliance. The compliance cost of retrofitted units and replacement generation due to the EPA regulations are estimated to exceed $30bn. A 7% to 7.6% increase in retail rates could be realized, excluding the impacts of carbon on energy prices. If carbon costs are included in the generation production costs, the rate effect increases to a range of 37.2% to 37.7%.

The EPA regulations could also have an impact on the transmission system’s ability to meet demand. If no replacement capacity is identified for Resource Adequacy purposes, then the system reserve margin could decrease to 6.9% in 2021, the report said. The 2021 reserve requirement is 18.2%.

“System reliability must be maintained throughout all MISO planning efforts, both on a local and interconnection-wide basis,” said the draft report. “This requirement can be difficult, in the face of changing generation and energy policy standards. Throughout 2011, MISO continued the transformation of the planning process to create an integrated transmission network that supports current and future reliability needs, while minimizing the cost of delivered energy. This value-based planning approach demonstrates a robust view of project benefits, through the analyses of many potential reliability, economic and policy-driven variables.”

The report, called MISO Transmission Expansion Plan 2011, or MTEP11, is the eighth edition of this publication. The primary purpose of these reports is to identify transmission projects that: ensure the reliability of the transmission system over the planning horizon; provide economic benefits, such as increased market efficiency; and facilitate public policy objectives, such as meeting renewable portfolio standards.

MTEP11 recommends $6.52bn in new transmission expansion through the year 2021. Key findings and activities from the MTEP11 planning and evaluation cycle include recommendation of the first multi-value project portfolio for approval by the MISO Board of Directors. The portfolio consists of 17 projects, costing $5.6 billion. The proposed portfolio mitigates approximately 650 reliability violations for more than 6,700 system conditions, increasing the transmission system’s robustness under normal operation and extreme events. It also enables the delivery of 41 million MWh of renewable energy.

MTEP11 includes a forecast of resource adequacy based on projections of future generation and load. The results of a study of the period 2012-2021 indicate that MISO will have enough generating capacity to meet demand through 2021, excluding the impacts of the EPA regulations. Net internal demand is expected to be 89 GW in 2012 and 97 GW in 2021. A total of 113 GW of resources are expected to be available to meet this demand in 2012 for the MISO region, increasing to 115 GW in 2021.

Among the transmission projects covered by the report is the Ellendale to Big Stone to Brookings project, which is a new line planned from North Dakota into Minnesota that provides an outlet to North Dakota wind by directly transferring wind energy at 345 kV, thus offloading the existing 230 kV circuits.

Another project is the 345 kV Brookings to Twin Cities line, which in addition to transferring wind from North Dakota, helps transfer additional southwestern Minnesota wind into Minneapolis-St. Paul.

The 345 kV North LaCrosse to North Madison to Cardinal project, a continuation of the northern 345 kV path, connects the North Lacrosse station at the Minnesota-Wisconsin border into the Madison load center.

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.