July 18, 2014 Dear Mike Robinson and Ted Kuhn, The following are comments from the MISO Environmental Sector regarding MISO’s minimum capacity resource limits. Specifically, we ask that MISO re-assess its current minimum limit of 5 MW and look at implementing a limit comparable to PJM (100 kW). This issue was raised by market participants at the June 4, 2014 Demand Response Working Group as a barrier to demand response participation in MISO’s markets. MISO responded with an informational presentation at the July 7 DRWG, describing its rules regarding minimum capacity resource limits, and requested additional stakeholder feedback on the topic.
In the July 7 presentation, MISO noted that a Demand Response Resource (DRR) must be greater than or equal to 5 MW to be included in the Network Model. There is the possibility for an exception for resources down to 1 MW that are handled on a case-by-case basis. To qualify for the exception the resource must meet the criteria of having Real-Time telemetry, be tied to a single CPNode, and offer as a price-taker. This exception is insufficient because it doesn’t allow economic resources provide value to the market by setting price, and precludes aggregation of demand-side resources across CPNodes. MISO stated that this rule was developed based off a rudimentary cost-benefit analysis conducted when the markets were originally launched.
During the July 7 discussion it was noted that PJM’s minimum resource limit is 100 kW. It was also noted that there are MISO Market Participants exploring investment in additional Demand Response Resources who have found this particular rule to be creating a difficult environment for developing DRRs in MISO.
We agree that the current 5 MW minimum limit is a barrier to demand response participation in MISO. EPA regulations and resource retirements are causing reserve margins to tighten, with MISO predicting a 2016 shortfall of resources necessary to maintain the one day in ten year loss of load criteria. Demand response is a flexible resource that can be developed with a short lead time, and reducing MISO market barriers to demand response participation is one effective strategy in tackling the regional shortfall.
Because of these reasons, we ask that MISO re-assess their initial cost-benefit analysis justifying the current the minimum capacity limit, looking at a level comparable to PJM’s minimum capacity limit (100 kW). This would involve identifying the scale of potential resources that would be unlocked if the minimum were lowered. A tightening reserve margin is putting upward pressure on prices for capacity, energy, and ancillary services. Additionally, retail tariff changes by states regarding DR participation in MISO are being considered. These factors are improving the business case for demand response, and justify a reassessment of MISO’s minimum capacity limit.
Thank you for the opportunity to provide feedback, we look forward to continuing to work with you on this issue. Don’t hesitate to contact me if you have any follow-up items to discuss.
Kind regards,
Steve Dahlke
On behalf of the following organizations:
Great Plains Institute Environmental Law and Policy Center
Fresh Energy The Sustainable FERC Project
cc: DeWayne Todd, DRWG Chair
