Dive Brief:
- Real time electricity prices were up by 26% during March to May compared to the same period last year in the Midcontinent Independent System Operator's (MISO) exchange, according to the operator's quarterly state of the market report.
- MISO blamed the 1,000 MW cap on transmission exchanges between the Northern/Central and Southern parts of the market and an unusually cold March for the price hike.
- Texas experienced the highest prices, with peak prices in May averaging out to $87.26 per megawatt-hour, more than $30 per megawatt-hour above the MISO-wide average price.
Dive Insight:
MISO set the 1,000 MW cap on transmission as a way to allay stakeholder fears over the effects of its ongoing disagreement with the Southwest Power Pool, whom MISO has accused of using their grid without proper compensation. Unfortunately, the cap has caused MISO significant problems as high demand on the Texas grid in April and May and forced outages across the region cost MISO $725 million. David Patton, president of MISO's independent market monitor Potomac Economics, said the limit "degraded reliability."
"One of the vexing parts of this issue [...] is that it is preventing the ramping down of plants in Arkansas" needed to manage congestion in the region, Patton said. This prevents the dispatch computer system from being able to automatically resolve physical constraints. Under such circumstances, he said, the MISO system is "more vulnerable than it would be without the limit."