MISO asks FERC for quick approval to avoid market ‘gaming’

The Midcontinent Independent System Operator (MISO) asked the Federal Energy Regulatory Commission for a quick approval of bid procedure changes so that market participants can’t “game” the system while the changes are being made.

MISO said in the Oct. 16 filing that it filed revisions to its tariff “to prevent potential gaming behavior aimed at improperly extracting from MISO’s markets certain make-whole payments. MISO requests an effective date of October 17, 2013, i.e., one day after the date of this filing, and expedited Commission action, because once the potential gaming opportunities are made public by this filing, the proposed Tariff revisions should be applied immediately to prevent any party from exploiting the identified vulnerabilities.”

MISO’s Independent Market Monitor (IMM) has identified the following three types of gaming practices that market participants can potentially engage in to unduly receive make-whole payments under the tariff.

  • Updating Offer costs to increase Day-Ahead RSG Make Whole Payments (DA RSG MWP).
  • Updating the Real-Time Economic Minimum Limit, Ramp Rate, or otherwise not following dispatch, to increase Real-Time RSG Make Whole Payments (RT RSG MWP).
  • Using an Offer strategy to cause an “oscillating” Day-Ahead Schedule to increase Day-Ahead Margin Assurance Payment (DAMAP) and Real-Time Offer RSG Payment (RTORSGP).

“Upon due consideration, MISO agrees with the IMM’s assessment and recommendations regarding the above matters,” MISO said. “Accordingly, the present filing proposes revisions to the relevant Tariff provisions to address the above-described practices, and to limit make-whole payment eligibility. In addition, MISO agrees with the IMM that it would be appropriate to specify in the Tariff the types of make-whole payments for which eligibility may be removed by MISO pursuant to Module D of the Tariff for Resources found to be manipulating or gaming the associated payment mechanisms.”

MISO proposes to revise a section of the tariff (for “Day-Ahead Revenue Sufficiency Guarantee Payments”), to modify the Day-Ahead RSG calculation to use the lesser of the “as-committed” costs and the “as-dispatched” costs during the affected hours of the commitment period. In particular, the evaluation of what parameters to use between the “as-committed” and “as-dispatched” day-ahead offers will occur if a resource meets the following criteria: it is scheduled to provide MW during the last hour of the prior operating day; it is scheduled to provide MW during the first hour of the SCUC Instructed Hours of Operation in the current operating day; and it has a positive initial on hours value (i.e., the number of hours elapsed since the resource was online in the prior operating day up to the start of the current operating day, as calculated in the Day-Ahead Market process) that is less than the resource’s minimum run time for the current operating day.

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.