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Clark: no reason to seek briefs on a minimum offer price rule for MISO

From the August 22, 2013 issue of Public Power Daily

Originally published August 22, 2013

By Robert Varela
Editorial Director
A minimum offer price rule (MOPR) in the Midcontinent Independent System Operator could undermine local planning resources and unwind the capacity market design changes approved by the Federal Energy Regulatory Commission last year, Commissioner Tony Clark said in an Aug. 12 dissent. "Given the seemingly poor fit of a MOPR in the MISO region, and lacking a compelling rationale for rehearing, I cannot support the decision" to ask for briefs on whether the commission should reconsider its decision to reject a proposed minimum offer price rule for MISO, Clark wrote.

In requesting rehearing, Potomac Economics (MISO’s market monitor) and a group of capacity suppliers argued that load-serving entities in the region have an incentive to exercise buyer-side market power because they obtain a portion of their resource adequacy needs through bilateral contracts. "This is no revelation, however," Clark observed. FERC has already acknowledged that resource planning in MISO is largely based on bilateral arrangements and "I see no reason to initiate briefing procedures based on this less-than-compelling information."

Reopening the MOPR issue "could ultimately lead to changes that decrease the flexibility of MISO’s resource adequacy construct," Clark said. In its order approving MISO’s capacity market, FERC found that some elements of the market, including the opt-out provision, would not allow for an effective minimum offer price rule, he said. 

Flexibility "is necessary for maintaining the balance between state and regional resource planning processes in MISO and it would be inappropriate to upset this balance by injecting Eastern RTO capacity market principles into it," Clark said. The commission previously recognized that the voluntary nature of MISO’s capacity auction allows utilities and their regulators to maintain significant flexibility when developing resource plans based on their specific region, he said. "Maintaining this flexibility is a core issue for states in the MISO region."

MISO’s territory is overwhelmingly composed of state-regulated, vertically integrated utilities subject to resource planning regimes, Clark said. "This regulatory framework places MISO in a different position than Eastern RTOs that are substantially relying on capacity markets, and administrative constructs such as a MOPR, to produce accurate price signals for resource development needs."

If market participants believe that a minimum offer price rule would "further the ability for the region to meet its resource adequacy needs," they should raise the issue through the MISO stakeholder process, Clark said. "Circumventing the stakeholder process by reopening the MOPR issue in this narrow context interjects unnecessary uncertainty into MISO’s resource adequacy construct at a time when the region is still adapting to the major design changes just recently approved." 


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Senior Vice President, Publishing 
Jeanne Wickline LaBella

Editorial Director
Robert Varela

Editor, Public Power Daily
Jeannine Anderson

Communications Assistant
Fallon W. Forbush

Manager, Integrated Media 
David L. Blaylock

Integrated Media Editor 
Laura D’Alessandro