In the late 1990’s, the Federal Energy Regulatory Commission (FERC) issued orders that lead to the formation of wholesale electric energy markets operated by regional transmission organizations (RTOs). However, even before the existence of wholesale markets, utilities in the Upper Midwest were heavily interconnected physically and contractually, so it made sense that they would join together to form the Midwest Independent System Operator, or MISO (pronounced “My-So”). As more utilities joined and enlarged the MISO footprint, the RTO was renamed the Mid-Continent Independent Operator.
What is MISO and How Do They Impact Municipal Utilities?
The MISO has many responsibilities. It provides reliability coordination and regional planning services and sets procedures and rules for transmission services, generation interconnection, maintenance coordination, market monitoring, and dispute resolution. MISO also administers a wholesale energy market for utilities in regulated markets, and, in deregulated markets, administers the resell of electricity to residential, business and industrial customers.
As administrator, MISO has established a market settlement process for all wholesale physical and financial transactions that occur through day-ahead and real-time purchases, capacity markets, and ancillary services.
Market prices may vary by location, depending upon losses and congestion, and as market overseer, MISO determines the hourly price and serves as the clearinghouse of bids from load-serving entities and offers from power generators. Bilateral purchases are used by utilities to financially hedge bids and offers in the marketplace.
As a registered transmission owner and designated agent for utilities, CMPAS manages this process to help municipal utilities comply with MISO resource adequacy requirements and manage congestion costs by hedging financial transmission rights and auction revenue rights. CMPAS also participates in stakeholder groups and closely monitors changing and complex MISO tariff rules regarding transmission, capacity, and energy charges.
3 Issues MISO Is Watching in 2017
In a MISO Matters blog post, Kasey George, Corporate Communications Sr. Analyst, makes the point that MISO must consider many factors that impact the future of electricity production and delivery — something that MISO must be able to plan for and accommodate today and in the future. Factors limiting predictability in the energy market include uncertainty about government rules and regulations, fuel prices, emerging technologies, and others.
“As we move through 2017, we remain focused on our strategic objectives; Market and Grid Positioning, Serving and Growing Membership, and Providing Independent Thought Leadership. Doing so enables us to continue to provide reliable, least cost energy and provide increased value to our members.” – Kasey George
For 2017, the MISO Board of Directors is focusing on three timely topics that affect MISO stakeholders:
- Regional Transmission Overlay Study (RTOS)
- Transmission Cost Allocation
- Market System Evaluation
Midwest Resource Mix Evolution
Driven by state renewable energy mandates and the threat of Federal carbon regulations, the MISO region has experienced a significant shift in its resource portfolio over the past decade. The trend toward lower carbon fuels is demonstrated in the series of pie charts offered below.
In 2005, coal made up 76 percent, nuclear 13 percent, and gas 7 percent of power in the Midwest, all with the help of a negligible amount of renewable generation. By 2016, coal had fallen below 50 percent, gas grew to 27 percent, and 16 GW of installed wind produced 8 percent of the energy in the MISO market.
In comparison, the pie charts below show a similar evolution of CMPAS’s resource portfolio since the MISO market began in 2002.
Strategic planning is an important service offered by CMPAS to position utilities for the future. Through a diversified power portfolio, CMPAS helps its members manage risk and mitigate costs in the MISO marketplace.
Looking to learn more about MISO and how it affects municipal utilities? Contact CMPAS today.