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MISO Needs To Fix Capacity Market To Maintain Reliability

July 15, 2013

MISO needs to fix its power market to encourage generating companies to invest in new plants to help keep the system reliable, according to the grid’s market monitor. Economic signals in the ISO “would not support private investment in new resources,” Potomac Economics, said in its 2012 state of the market report. The monitor explained that MISO needs to fix its capacity market to encourage generators to keep more of their existing power plants – especially coal-fired plants – in service and build new units. MISO has forecast that generators could shut up to 12,000 MW of coal-fired power plants as weak natural gas and power prices and growing wind power resources make it uneconomic for them to upgrade old coal plants to comply with increasingly strict federal environmental rules. Potomac warned that even more coal units are at risk if shale production continues to keep gas prices low. Despite possible future problems, Potomac said MISO should have enough power to keep air conditioners humming this summer. The market monitor did, however, add that MISO’s reserve margin of 28.1 percent for summer 2013 would fall to 16.9 percent if the grid “includes only firm imports and more realistic assumptions regarding wind and demand response.”