Concurrent with PJM Interconnection’s decision to double the cap on offers in its regional energy market to $2,000 per megawatt-hour (MWh), the Midcontinent Independent System Operator (MISO) announced on October 5 that it may increase its energy market offer cap from $1,000/MWh to $1,500/MWh this winter in anticipation of expected Federal Energy Regulatory Commission (FERC) action.
In Docket No. RM15-24-000, filed on September 17, FERC issued a Notice of Proposed Rulemaking (NOPR) addressing “Settlement Intervals and Shortage Pricing in Markets Operated by Regional Transmission Organizations and Independent System Operators.” As part of that proceeding, FERC indicated that future price formation action is expected, although it did not say when:“[…] The commission expects to undertake further action addressing various price formation topics, including offer price caps, mitigation, uplift transparency, and uplift drivers.”
At the meeting of the MISO Market Subcommittee on September 29, staff offered three interim energy offer cap options for the coming winter:
- Status Quo – Leave the cap at $1,000/MWh – Excess fuel costs are not recoverable with Revenue Sufficiency Guarantee (RSG);
- Repeat uplift-based solution from Polar Vortex winter 2014-15, with costs above the energy offer cap recovered using RSG; or
- Increase energy offer cap to $1,500/MWh.
The final option was preferred by the marketing team, at least for the immediate future. “Anything we do should not be considered permanent, given FERC’s pending action,” said Jeff Bladen, MISO’s executive director of Market Design.
The Market Subcommittee has scheduled its FERC filing for November 1, with an anticipated implementation date of January 1, 2016.