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MISO board frets over generation losses expected by 2016

Highlights

The threat of rolling blackouts in the Midcontinent Independent System Operator footprint drew some colorful responses at Thursday's board of directors meeting as it pondered the prospect of 11.2 GW of generation capacity retiring by 2016.

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In a presentation about resource adequacy, Clair Moeller, MISO executive vice president of transmission and technology, described the latest results of surveys of MISO generators.

In addition to 6.5 GW of known retirements -- many of which were initiated by new federal environmental rules -- another 4.5 GW of generation is mothballed and expected to be retired for environmental or economic reasons.


As generators representing another 200 MW have not responded to the survey, those are also assumed to be retired, Moeller said.

"I'm not prepared to cry wolf, but the conditions are such that there may be a wolf at the door," Moeller said. "There's a full moon, there's howling, and indications are that there may in fact be a wolf."

A male speaker who was not identified to conference call listeners added: "Whether the wolf is on the porch or in the room, it's damn close to where we're sitting, regardless of where the wall is."

MISO expects about 2,400 MW of new build generation to be brought online across its footprint by the summer of 2016.

Assuming no load growth, MISO could be short 3,000 MW of generation needed to meet its minimum 14.2% planning reserve margin by 2016, Moeller said. Assuming 0.8% load growth, the potential shortage could be as much as 5,000 MW, and assuming 1.4% growth, the shortage could be 7,000 MW, he said.

"We have not operated at those [levels of] minimum requirements since the late 1960s," Moeller said.

Another MISO staffer said: "We would ... be going into our emergency operations procedures" much more often.

As a last resort, those procedures would entail curtailing load around the grid, he said.

In response to a question from MISO board member Judy Walsh, an unidentified male speaker said this impending shortage had not caused forward capacity prices to increase, because of the present 28.1% planning reserve margin.

Moeller said: "Folks need to have confidence in a shortfall before they would be willing to pull the trigger on investing, so it's a little bit of a 'chicken-and-egg' situation."

But, he added: "It would be very hard to build conventional generation in the amount of time left [until 2016] if you haven't already ordered the parts."

Meanwhile, the board also learned that work is on track to integrate the Entergy footprint into MISO by December 19, including an Operations Reliability Coordination Agreement to serve as a temporary seams agreement with Associated Electric, Southern Company, Southwest Power Pool and the Tennessee Valley Authority.

--Mark Watson, markham.watson@platts.com
--Edited by Keiron Greenhalgh, keiron.greenhalgh@platts.com