The Midcontinent Independent System Operator (MISO) declared a state of emergency on September 15, 2018, as price spikes rocked the market. Hot temperatures and a series of increasingly large demand underestimates contributed to the event. This bears a striking resemblance to the volatility seen in September 2017 across the central Midwest, but this time the focus was on the Gulf Coast in MISO South.
The price blowouts culminated in a rare Level-2c/d Maximum-Generation Event across MISO South on the afternoon of September 15 as the shortfall in generation required large quantities of power to be pulled in from neighboring grids. An event like this provides directives for load shedding, along with public appeals to reduce demand. Day-Ahead (DA) and Real-Time (RT) prices for MISO Louisiana Hub are shown in Figure 1 below. Genscape power market analysts saw RT prices blow out to triple-digit levels for three days straight as the excess demand met a lack of available generation resources across the region. The DA market failed to predict the sequence of extreme pricing events, with volatility staying relatively limited for the entire period.
The above-average temperatures across the footprint on September 15 trickled into the rest of the weekend, driving unusually strong cooling load for mid-September as air conditioners were forced to work overtime. The heat impacted demand centers from Minneapolis to New Orleans and east to Detroit and Indianapolis with temperatures hitting between 85-100° F. These highs exceeded forecast expectations and passed the average highs by 5-20° F. The humidity in MISO South made the heat index reach triple digits on both September 14 and 15, compounding the cooling load over performance.
The situation got worse during the afternoon of September 15 after the Grand Gulf Nuclear Station in Port Gibson, MS, experienced an unplanned outage. Genscape’s PowerRT monitors picked up the trip at roughly 5:46pm ET, which resulted in a massive $3,500 system-wide energy print for the following 5-minute interval. Despite offers being capped at $2,000 for generators in MISO, locational marginal prices (LMPs) can climb up to $3,500 due to a higher cap on VoLL (Value of Lost Load). This represents the maximum value that firm electricity customers would be willing to pay to avoid losing service. An instantaneous loss of 1.5GW of nuclear generation during the demand peak necessitated the price spike, as demand response dispatched to keep the lights on.
In addition to the energy price increase, the loss of this critical unit also drove strong congestion across the Louisiana, Arkansas, and Mississippi border region. Grand Gulf is situated near the large Jackson, MS, load center, at a critical junction on the 500kV network. Flows from generation-rich central Arkansas are pulled to this junction, before splitting off towards New Orleans/Baton Rouge to the south and Tennessee Valley Authority (TVA) to the northeast. During the afternoon of September 15, the heavy flows from West to East caused four separate constraints to bind at maximum shadow price along this pathway. As a result, the RT LMP spread between Mississippi Hub (downstream) and Arkansas Hub blew out to more than $1,000 for a sustained period of time. A buy/sell pairing on this spread through the on-peak period would have resulted in a net profit of nearly $1,730/MW.
Genscape’s MISO power market analysts are constantly monitoring the volatility across the footprint. We make sure our clients are in the know about market events and provide guidance on how to pivot to stay ahead of the curve. By leveraging the PowerRT platform to receive timely alerts, our analysts can quickly give insight into both the RT and DA markets. To learn more, or to request a trial of Genscape’s PowerIQ service, please click here.