Ameren, MISO argue over compensation for Edwards 1 life extension

AmerenEnergy Resources Generating (AERG) on July 5 filed at the Federal Energy Regulatory Commission a complaint against the Midcontinent Independent System Operator (MISO) over issues related to the temporary life extension of the 90-MW (net) Unit 1 at the Edwards coal plant in Illinois.

This Complaint is related to a Section 205 filing that MISO will make within the next several business days. Accordingly, AERG said it will want to consolidate these two proceedings.

The AERG complaint concerns the costs that should be recovered by the owner of a generating unit when MISO asks that unit to provide service past its retirement date due to reliability concerns. AERG asks the vommission to find that, to compensate AERG’s Edwards Unit 1 for its continued service for reliability as a System Support Resource (SSR), the SSR rate should not be limited to its incremental costs of operation, or a narrow application of “going forward” costs.

Specifically, AERG said the commission should find that the costs of existing plant – recovered as depreciation expense, return on rate base, and associated taxes – should be included in SSR compensation for Edwards 1. If the commission finds that the MISO Tariff currently limits compensation to only incremental costs, AERG asks the commission to find that portion of the MISO Tariff unjust and unreasonable and fix a new rate that provides SSR units with appropriate compensation, including the costs of its existing plant.

Edwards 1 had been designated for retirement, but MISO has deemed the unit needed for reliability beyond its planned retirement date of Dec. 31, 2012. MISO therefore designated Edwards 1 as an SSR unit under the MISO Tariff effective Jan. 1, 2013.

Since that designation, AERG has been engaged in negotiations with MISO to determine the appropriate level of compensation for Edwards 1 under MISO’s SSR agreement. While AERG said it has worked diligently and in good faith with MISO and its Independent Market Monitor, commission involvement is required to resolve a fundamental question about SSR compensation.

AERG believes that the costs of existing plant – recovered through a return on undepreciated rate base, depreciation expense, and taxes – must be included in SSR compensation. AERG said it has quantified over $12m in annualized costs that MISO has determined that its tariff does not permit it to provide to AERG as SSR compensation.

AERG owns about 1,220 MW of capacity located within the MISO footprint. AERG was granted authority to sell electric energy and capacity at market-based rates, as well as the authority to sell ancillary services at market-based rates into both RTO/ISO and non- RTO/ISO markets. AERG sells 100% of the output from the generating facilities it owns to Ameren Energy Marketing.

In August 2011, AERG submitted a completed Attachment Y form to MISO to change the status for Edwards 1 to “suspend operation of and mothball” status for no less than 36 months effective Feb. 6, 2012. The effective date of the Attachment Y was subsequently changed to Dec. 31, 2012. In December 2012, MISO informed AERG that MISO’s reliability analysis indicated that Edwards 1 could not be deactivated without jeopardizing system reliability, and that continued service as an SSR unit would be required. Accordingly, effective Jan. 1, 2013, AERG was required by MISO to continue to run Edwards 1 as an SSR unit.

The Edwards plant began commercial operation in 1960. Edwards 1 is a 90-MW (net) summer-rated facility. Unit 2 (240-MW net) began commercial operation in 1968. Unit 3 (315-MW net) began commercial operation in 1972.

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.