6.1. ERMUSR 01-14-2014 - Laserfiche WebLink

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- 3 - With limited exceptions amounting to less than 10%of MISO's load,6 MISO LSEs retain their retail service obligations and the accompanying long-term perspective, planning stability, assurance of cost recovery for prudently incurred investment, and financial security. That stability enables MISO-area LSEs to make long-term financial commitments (by ownership or contract)to long-lived, capital-intensive generating assets.7 It also means that MISO's deficiency charge for load that fails to timely procure adequate capacity resources is backstopped by powerful state law remedies. In eastern regions that have largely discarded that model for one focused on short term (e.g., year-to-year) competitive retail service subscriptions, the RTOs have struggled with replacing that"missing commitment."8 In their attempts to replace what MISO still has, the eastern RTOs have generally mandated that LSEs must procure capacity through their centrally- operated capacity markets, and are straining to prop up prices in those markets in the hope of inducing non-LSE generation owners to build capacity for sale through those centralized markets. But their rules put at risk new ratepayer-funded long-term investments, by subjecting LSEs to purchasing capacity a second time if their own capacity(offered at a MOPR-elevated price)does not clear the market. The centralized mandatory capacity market "solutions"to that FirstEnergy to keep the plants on line. See, e.g., Scott Disavino,PJM says FirstEnergy can shut two Pennsylvania coal plants(Sept.20,2013),available at http://www.reuters.com/article/2013/09/20/utilities-firstenergy-pim- idUSL2N0HG20420130920;Platts,PJM asks FirstEnergy to delay retirement of coal-fired power plants(Aug. 14, 2013),available at http://www.platts.com/latest-news/electric-power/birmingham-alabama/pjm-asks-firstenergy-to- delay-retirement-o f-coal-21421569. 6 The only portions of the MISO region in which ultimate consumers may freely switch to a competitive retail supplier independent of their distribution service provider consist of the MISO portion of Illinois(which is much smaller in load terms than the PJM portion of Illinois)and 10%of Michigan load. Together,those two retail choice areas amount to some 10,000 MW of peak load—approximately 10%of MISO's load prior to the ISO's recent southward expansion,and now an even smaller portion. 7 Midwest TDUs made this point in their initial and reply Minimum Offer Price Rule briefs in Docket No. ER1 I- 4081,filed Oct. 14,2013,and Nov.25,2013(eLibrary Nos. 20131015-5126 and 20131125-5194,respectively). 8 See Tr.91-92(Robert Ethier, ISO-NE)(recognizing the crucial role played by LSEs capable of long-term capacity commitments). 118