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MISO's inability to manage generation outages a factor in January price spike: IMM

The Midcontinent Independent System Operator's lack of authority to manageresource outages played a big role in the MISO South Region's maximumgeneration event and high power prices in January, the independent marketmonitor said Wednesday.

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During a meeting of the Entergy Regional State Committee, a group ofregulatory representatives from MISO South's footprint of Arkansas, Louisiana,Mississippi and Texas, David Patton, president of Potomac Economics, MISO'sIMM, noted that MISO South's load-weighted average power prices in Januarywere the highest they've been in more than two years.

Tag Short, director of the MISO South Region operations, acknowledged that onJanuary 17, when the cold snap was at its most frigid, almost 9.5 GW of MISOSouth's capacity was in forced outage, about 4 GW was planned and 3.6 GW wasderated.

"When it gets to 7 degrees Fahrenheit in Little Rock [Arkansas], you aresusceptible to air lines freezing, water lines freezing," Short said. "Expectthings to trip off during the night, and that's exactly what happened."

MISO South peakload topped its internal capacity January 16-18, Patton noted,which meant that power had to be imported from other regions.

Much of that power came across the transmission system from MISO's North andCentral regions, Short said, but other systems supplied power, as well,although they, also, were calling for consumers to conserve energy during thepeak of the cold snap.

MISO deployed load-management resources -- a type of demand response -- "whichMISO almost never does," Patton said.

"On those days, they got a response, but it was so delayed that it didn't helpvery much," Patton said.

Patton noted that the situation reinforced his recommendation that MISO expandits authority to manage outages, because during shoulder months, when plannedoutages are greatest, MISO has faced reliability risks that could be mitigatedby greater control of planned outages.

For the month of January, more than 10% of MISO South's capacity was inplanned outage, compared with about 8% in January 2017 and about 4% in January2016, according to Patton's written presentation.

Patton also advocated establishing a 30-minute operating reserve product inMISO South, which has a relatively large number of independent powerproducers.

"If they start retiring because we're not valuing reliability, ultimatelythose costs start to go up and up," Patton said.

--Mark Watson, markham.watson@spglobal.com

--Edited by Annie Siebert, annie.siebert@spglobal.com