SPP, MISO Institute Rotating Outages, Showing ERCOT 'Energy-Only' Market Design Not Cause Of Outages
February 16,2021
Both the Southwest Power Pool and Midcontinent ISO (South region) have instituted rotating outages due to demand exceeding available generation in the recent days, indisputably illustrating that the rotating outages in ERCOT are not the result of ERCOT's unique energy-only market design
SPP directed utilities to implement controlled interruptions on both Feb. 15 and Feb. 16
MISO on Feb. 15 said, "Sustained frigid temperatures and winter weather impacting the Midcontinent Independent System Operator (MISO) South Region contributed to the loss of generation and transmission. This led to emergency actions in the region’s western portion to avoid a larger power outage on the bulk electric system. Periodic power outages began early Monday morning for some customers in Southeast Texas."
"To protect the bulk electric system from a larger power outage, MISO directed Entergy to shed load in Texas," MISO said
MISO (South region) and SPP are made up of rate regulated, vertically integrated investor-owned utilities, or munis and co-ops which also do not have electric choice. Such regulated utilities are seen as the safest investment for electric capacity due to their regulated rate of return and captive customer base. As such, if rotating outages are caused by alleged "underinvestment" in ERCOT due to its energy-only design, then surely SPP and MISO would be passing the current weather event with no rotating outages.
However, despite such ostensibly attractive investment conditions -- and more importantly, customers being forced to pay to carry costly excess capacity under regulated integrated resource planning -- such customers were subject to rotating outages just as customers in ERCOT's energy-only market.
Nonetheless, the usual suspects are already trying to paint the ERCOT experience as a failure or a "lack of investment" due to its energy-only design, despite vertically integrated utilities in SPP and MISO facing the exact same issues.
Academic Ed Hirs, who has repeatedly called for a capacity market in ERCOT or a return to regulation, took a swipe at ERCOT's market design in a quote in a Houston Chronicle article -- while the quote did not note the rotating outages seen in SPP and MISO or attribute such insufficient generation in those RTOs to alleged "underinvestment"
Hirs was quoted as stating ERCOT, "limped along on underinvestment and neglect until it finally broke under predictable circumstances."
To blame ERCOT's current conditions on a lack of investment, when vertically integrated utilities -- which are designed to provide the "return" Hirs says is needed for investment -- are experiencing the same lack of generation as ERCOT, is laughable