MISO highlights capacity concerns in bid to change generator retirement process

Midcontinent Independent System Operator is making changes to its generator retirement process and stakeholders say that more transparency about retirements could help avoid future capacity shortfalls, according to discussion at an April 27 Planning Advisory Committee meeting.

The conversation comes on the heels of MISO's recent 2022-23 planning resource auction, in which seven zones in MISO Midwest cleared at the cost of new entry at $236.66/MWd. The high prices in the capacity auction came as a surprise to some who had expected the region to narrowly have enough capacity.

When the auction results were released, MISO said resource retirements were one of several factors that had eroded the capacity surplus that had been expected. Since then, stakeholders have been seeking more information about generator retirements. Now, MISO's retirement process overhaul could prove to be a focal point if that discussion.

Retirement process

MISO introduced the idea of improving the retirement process at the April 27 PAC meeting.

"MISO hopes to improve the timeline associated with retirement studies, review mitigation options available, and expand the types of analyses done," according to a presentation to the PAC.

While MISO did not outline many specifics, one change could be the addition of a stability analysis to the retirement process, said Andy Witmeier, the director of resource utilization at MISO.

Stakeholders repeatedly brought up the impact that generator retirements have on resource adequacy. Increasing transparency about retirements is one of the most important things MISO could do to improve the capacity market, said Hwikwon Ham, an official with the Minnesota Public Utility Commission.

Some suggested that MISO provide regional retirement data. "I would hope MISO could provide zonal-level transparency going into the auction, if not continually" said David Sapper from Customized Energy Solutions.

Natalie McIntire, a technical and policy consultant for Clean Grid Alliance, backed the idea, arguing that a zonal approach might be a way to maintain some level of confidentiality.

Drivers of retirements

To make the case for changing the generator retirement process, MISO noted that state decarbonization goals, as well as Environmental Protection Agency rules on coal ash and air emissions, are contributing to the trend toward increased retirements, the presentation said. MISO pointed to resource adequacy concerns and the recent capacity auction to highlight the need to scrutinize the retirement process, according to the presentation.

Some stakeholders pushed back on the idea that regulations are the source of resource adequacy problems in the region. The lack of adequate transmission is also making it difficult for new generators to connect to the grid, said Lauren Azar with the Sustainable FERC Project.

"I really would not place the blame with EPA, with states, with regulations," Azar said. "Instead, I would look in the mirror," she told MISO officials.

And Han noted that the power industry is facing pressure to decarbonize even without EPA rules. "Wall Street and institutional investors are moving in that direction," he said. "We really need to pay attention to money."

MISO's Witmeier responded that the presentation was just setting the stage to explain that generator retirements are something MISO needs to improve upon. Witmeier also noted that MISO intends assess the retirement process in the PSC first, and if a resource adequacy component is added, it would go through the Resource Adequacy Subcommittee as well.