POWER July 2017 - 45

ENERGY MARKETS
3. Where to from here? MISO CEO John Bear foresees a decarbonized energy fleet,
featuring expansive wind generation and more natural gas. Much of the future, however, will be
determined by federal policy. Courtesy: MISO
tax credits expire (they were enacted in 1992
as a " short-term " subsidy, which has continued
for the past 25 years), the wind proposition
could change. Late last year, Patton told
MISO, according to RTO Insider, " Some
wind generators appear to be deliberately
over-forecasting their output to inflate their
revenues. "
MISO is less bullish on solar, as its footprint
often is cloudy. But in January, MISO
integrated a 100-MW community solar project
from Minnesota (selling power to Xcel
Energy) into its wholesale market, a first,
according to Utility Dive. " MISO remains
committed to supporting our members in
meeting their policy goals through reliable
and efficient markets, " said MISO vice president
Todd Ramey. " This project furthers the
integration of renewable resources into our
markets. "
MISO is gingerly examining utility-scale
Cooperative Energy), and East Texas Electric
Cooperative.
" MISO's new members across the South
will begin to receive the broad array of benefits
that our markets provide, including the
cost savings realized from improved reliability
and efficient commitment and dispatch, "
said Bear in a press release at the time.
Two years later, RTO Insider newsletter
reported, " Entergy and MISO's Independent
Market Monitor told the Entergy Regional
State Committee in Little Rock on Aug. 11
[2015] that the December 2013 integration
has produced substantial benefits and that the
transition was well-managed. " Entergy said it
had achieved $236 million in annual savings
since the integration with MISO.
MISO's Future
MISO's first order of new business may be
old business: dealing with the FERC order
rejecting its bifurcated capacity plan. One
of FERC's criticisms of the MISO scheme
was, as Power Markets Today noted, that
" MISO would have to allocate that transmission
capability across two different auctions,
which could lead to price separation
that does not reflect what is actually happening
on the system. "
Patton has suggested that the ISO could
run a dual market to make sure resources in
competitive areas are paid enough. He has
advocated a plan similar to what ISO-NE has
proposed, a two-part capacity auction with
conventional bidders in one and subsidized
bidders in the other. Winners in the second
auction would then have to compete against
the winners in the first auction, including
meeting the requirement of a " minimum offer
price rule, " which sets a floor on capacity
bids.
Discussing FERC's rejection of the capacJuly
2017 | POWER
ity plan, Bear said he's confident Michigan
and Illinois will be able to work out ways that
they can continue with MISO's traditional
approach to capacity. As others have noted,
one of the reasons MISO considered altering
its approach to capacity in Illinois was
because Exelon's Clinton nuclear plant was
facing a shutdown. The Illinois legislature
energy storage. The 1,872-MW Ludington
pumped storage project in Michigan, operated
by Consumers Energy, is in MISO's
territory. Battery storage is on the corporate
radar. " We are having a lot of discussions
about all the different things storage can do, "
Bear said. Storage " is a big game-changer. "
But much of the future depends on natu " We
foresee a decarbonized generating
fleet, with lots more wind and solar, more
agile natural gas, and some continued coal
and nuclear. "
-John Bear, Midcontinent Independent System Operator CEO
authorized the subsidies that will keep the
plant running.
In the longer run, MISO faces many of
the same market forces that are transforming
the electric generation and distribution business
across the country. " We continue to see
pressure from a public policy standpoint and
from environmental issues, " Bear said. " We
foresee a decarbonized generating fleet, with
lots more wind and solar, more agile natural
gas, and some continued coal and nuclear. "
Bear said federal policy would be important
for MISO (Figure 3). The Obama
administration's Clean Power Plan, which
the Trump administration is now trying to
reverse, was " pretty significant " for MISO,
as was the Mercury and Air Toxics regulation,
which " forced a lot of older coal plants
to close. "
When it comes to wind power, Bear noted
that with federal tax credits supporting it,
wind is " incredibly inexpensive. " Should the
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ral gas. While wholesale markets love low
gas prices, they make life difficult for renewables
such as wind and solar, and for
storage. Coal, nuclear, and gas come with
storage built-in.
" The other big question " for the future,
said Bear, is load. MISO's peak demand
has been sinking, while the overall amount
of electricity use is going up. Conservation
programs, he said, have been " not that successful. "
As with all economic markets, it's
not just a matter of supply, or " resource adequacy, "
but also demand and the interaction
with supply that defines prices.
For MISO and competitive wholesale
markets, it's Economics 101-supply and
demand determines prices. For monopoly
markets, that's irrelevant. Which paradigm
prevails? We'll see. ■
-Kennedy Maize is a long-time energy
journalist and frequent contributor to
POWER.
45

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POWER July 2017

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