Navigating MISO

Established in 1999 and achieving regional transmission organization (RTO) status in 2001, the Midcontinent Independent System Operator (MISO) encompasses a 15-state region from the upper Great Plains to the Gulf coast. MISO commenced energy market operations in 2005. In 2008, MISO received approval to operate an ancillary services market and combined its 24 separate balancing areas into a single balancing area.

MISO expanded significantly into the middle South in 2013, with the addition of the Entergy utilities and other electricity companies in parts of Arkansas, Mississippi, Louisiana, and Texas.

SUSTAINABLE FERC PROJECT PRIORITIES

  • System planning for high levels of clean energy resources.
  • Consolidation of the “bottom up” and “top” down system planning processes.
  • Maximizing the efficiency of the current grid through grid-enhancing technologies, upgrading existing transmission lines, and energy storage.
  • Full integration of demand side resources into MISO’s markets.
  • Meaningful system planning between MISO and other grid regions.

Check out MISO-focused comments and other filings by the Sustainable FERC Project and other organizations in our library.

TRENDS

Renewable energy is a significant share of the MISO generation and installed capacity mix. Wind is dominant, but solar energy is expanding across the footprint. Alone among the RTOs, MISO and its stakeholders developed a set of “multi-value” transmission projects approved in 2011 intended to help states meet growing demand for renewable energy. Most of the proposed projects in MISO’s generation interconnection queue are either wind or solar projects.

MISO is facing challenges in keeping its planning process apace of rapid changes in the power sector. Its current system cannot handle interconnection requests from many wind and solar power generators, resulting in the cancellation of many of those projects. Likewise, MISO often fails to seek efficiencies from consolidating many smaller projects into larger projects.

FAST FACTS

MISO is responsible for the operation of the bulk transmission system and wholesale electricity markets across all or part of Alabama, Arkansas, Illinois, Indiana, Iowa, Kentucky, Louisiana, Michigan, Minnesota, Mississippi, Missouri, North Dakota, South Dakota, Texas, and Wisconsin. Manitoba Province is part of MISO for the purposes of reliability coordination but is not a part of its markets.

  • Service territory: 900,000 square miles
  • Generating units: 6,500+
  • Miles of transmission: 66,000
  • Peak demand (2018): 121,563 MW

MISO operates day-ahead and real-time energy and reserves markets. Unlike the RTOs in the east, MISO does not operate a mandatory all-resource capacity market.  Nearly all states within MISO regulate their electric utilities as monopoly service providers, and therefore are primarily responsible for maintaining resource adequacy.

Some of MISO’s largest transmission owners include:

  • Alliant Energy
  • American Transmission Co.
  • Ameren (Missouri and Illinois)
  • American Transmission Systems
  • Duke
  • Cleco
  • Entergy
  • Indianapolis Power and Light
  • ITC
  • Michigan Public Power Agency
  • NSP Companies (Xcel)
  • Northern Indiana Public Service Co.
  • Otter Tail Power
  • MidAmerican Energy

GENERATION MIX

Installed Capacity (Winter 2018)

Source: S&P Global Market Intelligence

Generation (2018)

Source: S&P Global Market Intelligence

ELECTRICITY MARKETS

MISO operates a co-optimized energy and ancillary services market that dispatches electricity and procures most necessary reliability services. The energy market functions through the combined day-ahead and real-time market, and most reliability services are procured through the reserves markets. All resources who supply capacity required to meet MISO’s resource adequacy requirements for load are required to offer into the day-ahead and real-time markets if capable of doing so.

Since most generating-owning public utilities in the states in MISO recover their costs through state-approved rates, they do not use the MISO power markets as a primary source of revenue.

Day-Ahead Market

The day-ahead market allows market participants to secure prices for electric energy the day before the operating day and hedge against price fluctuations that can occur in real time. One day ahead of actual dispatch, participants submit supply offers and demand bids for energy. These bids are applied to each hour of the day and for each pricing location on the system.

Generators and offers scheduled in the day-ahead settlement are paid the day-ahead LMP for the megawatts accepted. Scheduled suppliers must produce the committed quantity during real-time or buy power from the real-time marketplace to replace what they did not produce.

Real-Time Market

MISO coordinates the dispatch of generation and demand resources to meet the instantaneous demand for electricity. Supply or demand for the operating day can change for a variety of reasons, including unforeseen generator or transmission outages, transmission constraints or changes from the expected demand. While the day-ahead market produces the schedule and financial terms for most physical transactions, a number of factors usually change the day-ahead result. Thus, MISO operates a spot market for energy, the real-time energy market, to meet actual energy needs within each hour of the operating day.

The real-time market financially settles the differences between the day-ahead scheduled amounts of load and generation and the actual real-time load and generation. In real-time, MISO issues dispatch rates and dispatch targets. These are five-minute price and megawatt signals based on the aggregate offers of generators, which will produce the required energy production.

In real-time, generators can also deviate from the day-ahead clearing schedule by self-scheduling, which means that MISO will run a given unit without regard to the unit’s economics unless running the unit presents a reliability concern. Many thousands of megawatts of power are self-scheduled daily in MISO’s system, which undermines true economic dispatch.

Ancillary Services

Ancillary services are those functions performed by electric generating, transmission and system-control equipment to support the transmission of electric power from generating resources to load while maintaining the reliability of the transmission system. MISO procures three ancillary services via the co-optimized energy and ancillary services market:

  • Spinning Reserves: provided by resources already synchronized to the grid and able to provide output within 10 minutes.
  • Supplemental (non-spinning) Reserves: provided by resources not currently synchronized to the grid but capable of starting and providing output within 10 minutes.
  • Regulation: provided by specially equipped resources with the capability to increase or decrease their generation output every four seconds in response to signals they receive to control slight changes on the system.

Capacity Market

MISO does not have a mandatory capacity market since all of the states in its territory other than Illinois are regulated states with cost of service utility regulation. MISO maintains an annual capacity requirement on all load-serving entities (LSEs) based on the load forecast plus reserves. LSEs are required to specify to MISO what physical capacity, including demand resources, they have designated to meet their load forecast. This capacity can be acquired either through an annual capacity auction, bilateral purchase, or self-supply.

MISO’s annual April capacity auction, the Planning Resource Auction (PRA) is a voluntary auction for acquiring capacity resources for the following year. The auction provides compensation for resources not already obligated under a fixed resource adequacy plan, aiming to improve grid reliability during times of scarce supply.

Market Monitor

Potomac Economics is under contract to MISO to provide services as an independent market monitor. Like the other ISO market monitors, it provides annual and semi-annual reports and assessments of MISO’s markets. Its Quarterly Reports to the MISO Board of Directors’ Markets Committee provide valuable information and insights into MISO’s functioning from the IMM’s perspective.

PLANNING

MISO’s planning process spans 18 months, beginning in June of the prior year, and culminating in the Transmission Expansion Plan (MTEP) approved by the Board of Directors every December (so the planning processes overlap for 6 months.) Analyses which go in to the MTEP include economic studies, reliability studies, resource assessments, deliverability assessment, and coordinated system plans.

MISO develops the MTEP through a multi-level group of stakeholder committees, including Subregional Planning Meetings, the Planning Subcommittee, and finally the Planning Advisory Committee. The System Planning Committee of the MISO Board of Directors recommends approval of the draft MTEP to the full Board.

More information on the MISO transmission planning process can be found in MISO Business Practices Manuals.

GOVERNANCE

MISO is a non-profit private corporation with headquarters in Carmel, Indiana and additional offices in Eagan, Minnesota, and Little Rock, Arkansas. MISO seeks guidance from (but is not bound by) its customers, state utility commissions, and others through a stakeholder advisory process comprised of 10 sectors: transmission owners, transmission dependent utilities (such as munis and co-ops), independent power producers, power marketers, end use customers, state regulators, public consumer groups, environmental organizations, transmission developers, and coordinating members (Manitoba Hydro).

MISO’s “members”, which are a subset of all stakeholders, consist of owners of transmission facilities in the MISO footprint and many of the market participants of MISO’s services. Among the primary rights of MISO members is to elect (and seek to remove) members of MISO’s Board of Directors.

While state utility commissions are not themselves MISO members, they participate in MISO through the Organization of MISO States (OMS), and the Entergy Regional State Committee (ERSC) (which, as the name suggests, provides input on the Entergy Transmission System).

STAKEHOLDER ENGAGEMENT

The MISO organizational chart illustrates the governance and stakeholder structure at MISO. Among the important committees are:

Advisory Committee

This provides a forum for MISO members to provide input to the MISO Board on policy matters. Meetings of the Advisory Committee are open to the public. Selection of Advisory Committee members occurs pursuant to the protocols in the Transmission Owners Agreement.

Markets Subcommittee

Provides input and policy guidance on all aspects of MISO wholesale markets, including transmission, energy, capacity, financial transmission rights, credit and ancillary services.

Resource Adequacy Subcommittee

Provides input and policy guidance to MISO management and the Advisory Committee on all market and operational activities and processes that facilitate resource adequacy in MISO for the long-term planning horizon.

Reliability Subcommittee

Addresses reliability-focused issues in the MISO tariff, Transmission Owners Agreement, Amended Balancing Authority Agreement, MISO seams agreements, NERC Reliability Standards, applicable Regional Standards, and other applicable documents relevant to the MISO footprint and between MISO and adjacent areas.

Regional Expansion Criteria and Benefits Working Group  

The Regional Expansion Criteria and Benefits Working Group is a forum for discussion of cost allocation policies for regional and inter-regional cost share transmission projects.

Planning Advisory Committee

The PAC is a standing committee that provides input to MISO staff on key MTEP and Coordinate System Planning activities including policy matters related to the process, adequacy, integrity and fairness of the MISO wide transmission expansion plan and cost allocation. The Planning Advisory Committee provides perspectives from various sectors on planning topics. This committee works with staff to develop planning objectives for the upcoming MTEP cycle, advises on prioritization of planning issues, and participates in inter-regional planning stakeholder committee activities.

Interconnection Process Working Group

The IPWG provides stakeholders a forum to develop better generator interconnection queue process procedures with the goal of reducing study time and increasing certainty.