OREANDA-NEWS. The operator of the primary midcontinent power grid has moderated its view of reliability impacts of planned coal capacity retirements in 2016 after concluding that the region will have sufficient resources to meet reserve margin requirements.

The latest survey of resource adequacy shows a surplus of 1.7GW-2.3GW across the Midcontinent Independent System Operator (MISO) in 2016. By contrast, a survey by MISO and a utility regulators' group called the Organization of MISO States last year expected installed capacity in 2016 to be 2.3GW lower than the sum of the projected peak load and mandatory reserve margin.

The changing view reflects a lower load forecast for 2015, even though near-term load growth rate of 0.8pc/yr is unchanged. The decrease in the 2015 load forecast and the resulting decrease in reserve requirements contributed a combined 1.4GW to the resource adequacy balance. The latest survey also shows an additional 2.6GW in committed resources compared with last year.

The survey especially alleviates concerns about inadequate capacity margins in Michigan's lower peninsula, located in MISO zone 7. Projected capacity shortage in the lower peninsula zone 7 is now estimated at 1.2-1.3GW, down from last year's projection of a 3GW deficit. "Regulators and utilities are working to close that [remaining] gap. ... We are confident the gap will be closed," MISO executive vice president of transmission and technology Clair Moeller said today.

The projected shortage for Michigan's lower peninsula does not reflect lack of physical generation capacity. But some generators located there can choose to supply capacity into the neighboring PJM Interconnection instead.

Coal last year accounted for 59pc of generation in MISO, which covers 15 states from the Canadian border to the Gulf coast.

MISO's April survey of coal plant owners showed 15.7GW of coal capacity across the power grid critically affected by multiple federal rules in the next five years, although not all of them will retire.

The first wave of coal plant retirements in MISO started in April but many plants affected by the federal mercury and air toxics rule won a one-year reprieve from the rule that went into effect in mid-April 2015.

Retiring coal and other capacity in 2020 could force reserve margins below required levels in Iowa, Indiana, Kentucky, Minnesota and Michigan so that grid-wide resource adequacy margin could range from a 0.5GW surplus to a 2.3GW deficit. But MISO sees 9GW of capacity in planned resource additions capable of closing the resource gap in 2020, Moeller said.

The MISO projections released today did not take into account the potential effects of the Environmental Protection Agency's Clean Power Plan for reducing CO2 emissions from the US power sector. The federal agency plans to finalize the rule by late summer.

"We are obviously looking at the implications of the Clean Power Plan," Organization of MISO States president and Iowa Utility Board commissioner Libby Jacobs said.