MISO survey shows reserves tightening as power plant retirements continue

The Organization of MISO States (OMS) and the Midcontinent ISO on June 10 released their annual resource adequacy survey, the results of which indicate that the MISO region has adequate capacity for 2017 with potential shortages in 2018 and beyond.

The assessment shows that the region should be able to meet the expected peak demand for electricity with an adequate safety margin for 2017. The survey shows that a surplus of 2.7 GW is available, which could be reduced to 0.9 GW if recently announced generation retirements and suspensions in Southern Illinois materialize. If these retirements proceed as announced, available resources could fall below minimum required reserve margin levels as early as 2018.

“Retirements in excess of new generation are driving supply to tighten in the region,” said John Bear, the CEO of MISO.  “We will continue to support our State regulators and members as they take necessary actions to ensure continued resource adequacy in 2018 and beyond.”

The survey also indicates certain locations within the MISO region will fall below reserve margin requirements in 2017. These areas should be able to import needed capacity from neighboring zones to meet their requirements, a regional benefit of being part of the MISO region.

Each year, OMS and MISO conduct a forward looking survey of its members to provide a view into the balance of supply and demand in the region for the future years. This forward-looking view informs and enables collective actions by states and MISO members to ensure continued resource adequacy.

“State and local authorities and regulated utilities undertake rigorous planning efforts to ensure future resource adequacy,” said Sally Talberg, President of OMS and Chair of the Michigan Public Service Commission. “The OMS-MISO survey is a great tool and provides a useful snapshot in time for these active planning efforts.”

Announced retirements as well as resources located in MISO, but committed to other markets, could play a significant role the region’s ability to meet future capacity needs. Additionally, steps to build new generation continue.

In the MISO region, Load Serving Entities, with oversight by the States as applicable by jurisdiction, are responsible for resource adequacy.

For 2017, the survey shows:

  • The region has 2.7 GW (2.2%) in excess of the projected resource requirement
  • Recent publicly announced retirements decrease this excess to 0.9 GW (0.7%)
  • Several zones are below their resource requirement and will rely on imports
  • Demand has shrunk due to reduced forecasts and point load reductions
  • Supply has declined due to plant retirements in excess of new resource additions

Beyond 2017:

  • Continued resource adequacy will depend on uncommitted resources or resources with potential retirements
  • Continued commitment to firming up planned generation interconnections through the MISO process will also be required
  • This outlook depends heavily on load projections; current forecasts of modest load growth are not in line with recent history of flat year-to-year loads

The Organization of MISO States is a non-profit, self-governing organization of representatives from each state with regulatory jurisdiction over entities participating in MISO. The purpose of the OMS is to coordinate regulatory oversight among the states, including recommendations to MISO, the MISO Board of Directors, the Federal Energy Regulatory Commission, other relevant government entities, and state commissions as appropriate.

MISO ensures reliable operation of, and equal access to, high-voltage power lines in 15 U.S. states and the Canadian province of Manitoba. MISO manages one of the world’s largest energy markets, with more than $24.7 billion in annual gross market energy transactions. The not-for-profit organization is governed by an independent board of directors and is headquartered in Carmel, Indiana.

Dynegy, Exelon have issues with MISO markets

Due to what it sees as flaws in the MISO markets, Dynegy Inc. (NYSE: DYN) said May 26 that it plans to back the Illinois Generation Reliability Act, which would put MISO’s portion of Illinois into the PJM Interconnection region, at the Illinois Legislature. The ultimate goal of the act is to move all of Illinois, including the Commonwealth Edison (ComEd) and Ameren Illinois service areas, into the PJM market. Currently, Illinois is divided into two separate power markets with northern Illinois participating in the competitive PJM market while central and southern Illinois are in MISO, a hybrid power market designed to benefit traditional utilities in the surrounding states, Dynegy said.

Dynegy said the results from the most recent MISO and PJM capacity auctions clearly illustrate the problem: capacity prices (the amount generators are paid to be ready to run) in northern Illinois are nearly three times that of southern Illinois due to less economic plants in the north, while more cost effective plants in southern Illinois sit idle, or shut down, as they don’t receive any compensation to cover operating costs from MISO.

Dynegy’s Illinois power plants in MISO, all coal-fired, are: Baldwin Energy Complex; Havana Power Station; Hennepin Power Station; Wood River Power Station; Coffeen Power Station; Duck Creek Power Station; Edwards Power Station; Joppa Power Station; and Newton Power Station.

Citing the lack of progress on Illinois legislation to help distressed nuclear plants, Exelon (NYSE: EXC) announced June 2 that it will retire the money-losing Clinton and Quad Cities stations. The Clinton Power Station in Clinton, Ill., will close on June 1, 2017, and the Quad Cities Generating Station in Cordova, Ill., will close on June 1, 2018. Quad Cities and Clinton have experienced big financial losses despite being two of Exelon’s best-performing plants, the company said. Clinton is in MISO while Quad Cities is in PJM.

While the Illinois legislative session has not ended, the path forward for consideration of the Next Generation Energy Plan legislation is not clear. As a result, Exelon has begun taking necessary steps to shut down the two nuclear plants. 

Clinton is a single-unit boiling water reactor (BWR). It has a nameplate capacity of about 1,100 MW. Quad Cities is a two-unit BWR facility with a total nameplate capacity of more than 2,000 MW.

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.