Utilities raise issues with first-time MISO support deal for coal plant

Wisconsin Power and Light (WPL) and Madison Gas and Electric (MGE) have raised issues at the Federal Energy Regulatory Commission with a plan by the Midwest ISO to support temporary operation of a small coal-fired plant in Michigan’s Upper Peninsula through a System Support Resources (SSR) agreement.

On Oct. 5, MISO filed an SSR agreement with the city of Escanaba. The Escanaba units, located in the American Transmission Co. (ATC) footprint, are the first resource with which MISO has identified the need for an SSR agreement. There are two coal units involved, of 12.5 MW (net) apiece, that a prospective new owner of the plant wants to convert to biomass. Escanaba had initially wanted to mothball the plant for three years beginning in June of this year.

WPL and MGE are Load Serving Entities (LSE) that own and operate electric facilities in Wisconsin and are located in the ATC transmission zone of MISO. Thus they would pay some of the cost of the SSR.

Under the SSR program, MISO uses information submitted by a resource owner to perform an analysis to determine if a resource is needed for reliability. In the case where a resource is needed for reliability, MISO will then evaluate and consider any alternatives that could be employed to address the reliability concern. If no alternatives are found, MISO’s SSR Tariff provisions allow MISO to negotiate compensation for a generation resource for its continued operation to ensure reliability.

In the Escanaba case, the costs of SSR units are allocated to all LSEs within the ATC footprint on a pro rata basis. As a result of this SSR agreement, the costs allocated to the city of Escanaba on an annual basis for the operation of the units will be $8,750 with $3,701,530 being allocated to other LSEs in the ATC footprint, the utilities noted in an Oct. 26 request to intervene in the FERC proceeding.

In a Sept. 21 order, the commission stressed that MISO should only use SSR agreements as a last-resort measure to meet short-term reliability needs caused by the retirement or suspension of a resource and that SSR agreements should have a limited and short duration, the utilities said.

MISO’s Oct. 5 filing in the Escanaba SSR case is deficient in several areas, the utilities said. More information is needed for affected parties to have a reasonable level of assurance of the prudency of the SSR agreement. In addition, MISO stated in its filing that with the need for the Escanaba SSR now being disclosed, MISO can engage stakeholders in discussing other alternatives that could be put in place to alleviate the necessity for this SSR. Without being properly informed, stakeholders will not have the information needed to effectively participate in determining and evaluating possible shorter term solutions, the utilities said.

Utilities want more detail on reliability need for SSR

The first area requiring more information relates to the reliability need for the SSR. “MISO has explained that the Escanaba units are needed for reliability for a limited period of time with the unavailability of either or both of the Escanaba Steam Units 1 and 2 resulting in violations of the North American Electricity Reliability Corporation (‘NERC’) Transmission Planning (‘TPL’) Standards TPL002-0b and TPL-003-0a5, they said. “The Companies request that MISO provide further information related to the reliability analysis performed in order for stakeholders to better understand the reliability issue that needs to be addressed. MISO should provide to stakeholders information on which contingencies cause the need for the SSR designation, what issues that are caused by these contingencies, and the severity of the issues with and without the Escanaba Units available. The Companies believe this is all relevant and important information that should be required to justify MISO’s SSR designation.”

Another area requiring more detail is MISO’s consideration of alternatives to the SSR. “MISO has stated that alternatives related to transmission operating steps, generation and demand curtailment were consider but only vague descriptions of MISO’s efforts in this regard are provided,” WPL and MGE wrote. “The Companies request more specific information as to what exact alternatives were and were not considered as part of this effort. MISO should provide details on why operating guides, system re-configuration, and generation re-dispatch are not viable alternatives to allow the Escanaba Units to go into suspension. MISO should also expand on any consideration of near-term upgrades that could be implemented prior to the completion of the Holmes – 18th Road 138 kV line, such as capacitor banks, that would allow one or both of the Escanaba Units to be suspended until the long term solution is in place.”

Finally, MISO’s Oct. 5 filing assigns the SSR agreement from the city of Escanaba to Escanaba Clean Energy LLC upon close of purchase of the units. “Escanaba Clean Energy plans to convert the units from coal fueled to biomass fueled and the SSR Agreement indicates that MISO has the right to cease the Agreement when this conversion takes place,” the utilities said. “There is however, no indication of the time when this conversion may occur. The Companies request that MISO provide more information regarding the process the units will go through with the conversion to biomass, including an expected timeline for this conversion. LSE’s such as the Companies who are bearing the costs of this SSR agreement need some indication of when the conversion may take place and the SSR terminated for internal planning efforts.”

Also on Oct. 26, two other utilities that would share some of the SSR costs, Wisconsin Public Service and Upper Peninsula Power, filed their own motion to intervene and objections.

“The SSR Agreement is unjust and unreasonable and the Commission must require MISO to modify it in a number of respects,” the utilities wrote. “Importantly, MISO has not supported that it explored all options and that the SSR classification is a ‘last resort measure.’ In addition, provisions respecting unanticipated repairs must be modified to eliminate any possibility that Escanaba, or its assignee, could receive compensation for repairs as unexpected repairs when the expenses are or should have been properly included in the expenses that are expressly identified in the Agreement or subject to recovery from insurance proceeds. Finally, waiver of the 60 day notice period should be denied, and if not denied, MISO must confirm that Escanaba will not be compensated both for participating in the MISO Market as a Generation Resource and as an SSR Unit. MISO should be directed to comply with the Commission’s filing requirements in the future.”

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.