Chapter 4.4 Generation Retirements and Suspensions

Chapter 4.4 Generation Retirements and Suspensions

The permanent or temporary cessation of operation of generation resources can significantly impact the reliability of the transmission system. The MISO Attachment Y process ensures that the retirement or suspension of these assets is evaluated to determine if transmission is adequate to permit the generators to discontinue operation. Under the Tariff provisions, MISO has the ability to require the owner to maintain operation of the generation as a System Support Resource (SSR) if the generator is needed to avoid violations of applicable NERC, Regional and Transmission Owners’ (TO) planning criteria. In exchange, the generator will receive compensation for its applicable costs to remain available. SSR costs are paid by the loads in areas that benefit from the SSR generation.

The MISO Attachment Y process ensures that the retirement or suspension of these assets is evaluated to determine if transmission is adequate to permit the generators to discontinue operation

An SSR is considered a temporary measure where no other alternatives exist to maintain reliability until transmission upgrades or other suitable alternatives are completed to address the issues caused by the unit change in status.

Attachment Y Requests and Status

MISO has received six Attachment Y Notices (964 MW) for unit retirement/suspension during the first six months of 2015 (Figure 4.4-1). The same period (January-June) in 2014 saw 11 Attachment Y retirement/suspension notices (1,835 MW) (Figure 4.4-1).

While the 2015 volume of Attachment Y Notices has remained slightly below the 2014 volume, the data suggests that the majority of retirement and suspension requests related to compliance with the current environmental regulations (Mercury and Air Toxics Standards) have been processed and that activity will remain light in the near term due to uncertainty in the regulatory implementation of the carbon policy. The next round of environmental regulations (Clean Power Plan, National Ambient Air Quality Standard for Ground-Level Ozone) is expected to result in a surge in activity as generator owners seek to address the more stringent standards.

Figure 4.4-1: Generation Retirement/Suspension (Attachment Y) Notices – new and resolved

Figure 4.4-1: Generation Retirement/Suspension (Attachment Y) Notices – new and resolved

Overall, 1,399 MW of generation capacity is retiring in 2015 and an additional 2,733 MW of generation capacity will retire in 2016 (Figure 4.4-2). This includes 3,100 MW of coal generation, 907 MW of gas generation and 122 MW of oil generation that is approved for retirement in 2015 and 2016.

Figure 4.4-2: Generation capacity (aggregate MW) approved for retirement

Figure 4.4-2: Generation capacity (aggregate MW) approved for retirement

2015 FERC Order on Cost Allocation

In February 2015, FERC issued a Compliance Order requiring changes to the methodology for allocation of SSR costs in three cases involving the Upper Peninsula of Michigan and later included a fourth in the U.P. In the order, FERC stated that the current methodology employing optimal load shed mitigation was not just and reasonable. FERC directed MISO to develop a method that would more appropriately assign costs to the loads that benefit from the operation of the SSR unit. In response, MISO conducted stakeholder meetings to seek feedback on its proposed method and submitted the proposed approach in a compliance filing in May 2015. On September 17, 2015, FERC issued an order (SSR Cost Allocation order) conditionally accepting MISO’s proposed method for SSR Cost Allocation and directed MISO to make few changes to its proposed method and make a compliance filing within 30 days of the order.  On October 9, 2015, MISO made a compliance filing as per the FERC directives in the SSR Cost Allocation order.

SSR Agreement Activity

Since the inception of the SSR program, MISO has implemented nine SSR Agreements. The last year has seen a sharp decline in the number of active SSR Agreements. Seven agreements have been terminated as a result of transmission upgrades, alternative solutions and equipment failure (Figure 4.4-3). As of June 2015, two generating plants remain in operation under SSR Agreements.

Escanaba 1 and 2 (25 MW) – The Escanaba Units 1 and 2 requested to suspend operation from June 15, 2012, to June 15, 2015, and have been on SSR Agreements since June 15, 2012. The agreement was recently renewed but equipment failure rendered the unit unable to operate and not reparable under the terms of the SSR Agreement. The agreement was terminated effective June 15, 2015.

Edwards 1 (103 MW) – The Edwards Unit 1 requested to retire on December 31, 2012, and was identified as an SSR unit until transmission improvements are completed in December 2016. The SSR Agreement has been in place since January 1, 2013, and was renewed for an additional term of January 1, 2015, to December 31, 2015. It will be re-evaluated for an additional 2016 term.

Presque Isle 5, 6, 7, 8 and 9 (344 MW) – The Presque Isle Units 5, 6, 7, 8 and 9 requested to suspend operation from February 1, 2014, to June 1, 2015. The generators were determined to be needed as SSR units until transmission projects are complete in the 2020 timeframe. The SSR Agreement was executed for an initial term of February 1, 2014, to January 31, 2015. A subsequent Attachment Y notice to retire the units on October 15, 2014, was submitted by the owner, which resulted in a new agreement from the period October 15, 2014, to December 31, 2015. The owner later rescinded the Attachment Y Notice, returning the units to voluntary operation. The SSR Agreement was terminated effective February 1, 2015.

White Pine 1 (20 MW) – White Pine Unit 1 requested to retire on April 16, 2014, and was determined as an SSR unit until projects are implemented in the 2019 to 2022 timeframe. The initial term of the SSR Agreement was established for April 16, 2014, to April 15, 2015 and was renewed for a second term from April 16, 2015 to April 15, 2016.

White Pine 2 (20 MW) – White Pine Unit 2 requested to retire on January 1, 2015, and was determined as an SSR unit until projects are implemented in the 2019 to 2022 timeframe. The initial term of the SSR Agreement was established for the period from January 1, 2015, through April 15, 2015. In the annual review of the need to continue the SSR Agreement, alternative generation was made available and determined to be adequate to allow the unit to retire. The SSR Agreement was terminated effective April 15, 2015.

Figure 4.4-3: SSR Agreement locations

Figure 4.4-3: SSR Agreement locations

Process

Market participants that own or operate generation resources seeking to retire or suspend operation of a generator are required to submit an Attachment Y Notice to MISO at least 26 weeks prior to the effective date of the change in status (Figure 4.4-5). MISO performs reliability analysis with the participation of the TOs to determine if any violations of applicable NERC and TO planning criteria are caused by the unit retirement/suspension.

Within a 75-day period, MISO provides a response to the market participant indicating the study conclusion. MISO will approve the Attachment Notice if there are no violations of applicable planning criteria or if the issues are resolved by a planned upgrade. Any unresolved issues are presented in a stakeholder-inclusive process to evaluate alternatives that would avoid the need for an SSR contract.

If reliability issues are found in the study, MISO convenes an open stakeholder review of the Attachment Y issues and alternatives through Universal Non-disclosure Agreement (UNDA) and Critical Energy Infrastructure Information (CEII)-protected Technical Study Task Force meetings. Alternatives that provide comparable benefit to retaining the SSR unit are considered and evaluated for effectiveness in relieving the violations and include such options as new/re-powered generation, reconfiguration, remedial action plans or Special Protection Schemes, demand response and transmission reinforcements. If an alternative is available, the Attachment Y Notice is approved. If the alternative does not eliminate all the reliability issues, MISO and the market participant will negotiate the terms of the SSR Agreement, which will be filed with FERC prior to the effective date. The agreement is subject to an annual review and renewal to allow the opportunity to terminate the need for an SSR Agreement if an alternative becomes available. Attachment Y information is considered confidential unless a reliability issue is identified in the study.

Figure 4.4-5: MISO Attachment Y process

Figure 4.4-5: MISO Attachment Y process