MISO OMS survey may spell trouble

Mike Zaccardi, CFA, CMT

The Organization of MISO States (OMS) released their annual outlook for the RTO late last week. For background, OMS was founded to promote the collective interests of state and local utility regulators in MISO.

Some of the key highlights include a note regarding resource adequacy. MISO-OMS says that the Midwest region is projected to have enough generation in 2021, but more action may be required to ensure reliability going forward.

Specifically, MISO is projected to have 800 MW of firm capacity beyond the regional Planning Reserve Margin (PRM) based on responded from nearly all of MISO load market participants.

It’s not all great news, though, as last year’s report featured a better cushion of resources above the PRM. So margins are tighter today looking a year and five years versus the report completed in June 2019. A higher PRM and some load growth are the drivers.

A key risk to demand, however, is COVID-19. Will the virus and shutdowns lead to weaker load growth versus expectations earlier this year? This is a question I would like to pose to the OMS.

What areas of MISO are at particular risk? Zones 2, 4, 6, 7. Those are in what is known as “MISO Classic” – or the Central & North regions. Recall that MISO Zone 7 (Michigan) had a capacity auction clear that was through the roof for PY 20-21. Those four zones are higher demand areas with less renewable generation.

In MISO, power usually flows west to east as ample wind generation is found in Zones 1 and 3 but not much load (or power demand) is found there. As power flows in the path of least resistance, the prevailing movement is from the rural areas to the population centers like Chicago, Indianapolis and Detroit.

More information on the OMS results can be found in the full briefing.

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