MISO said it no longer will recognize energy efficiency as a capacity resource beginning with the 2026/27 auction. If approved, the action would satisfy a longtime recommendation from the RTO’s Independent Market Monitor.
The grid operator said it needs to address market participants’ double counting of energy efficiency measures before the next capacity auction in April 2026. It plans to make a filing to FERC in early September to enact the ban by December.
Research and Development Manager Geoff Brigham said while MISO will deny energy efficiency entry into the capacity auction, it will continue to allow energy efficiency to be reduced from load-serving entities’ coincident peak load forecasts. Brigham said energy efficiency resources often are part of utilities’ integrated resource planning and are recognized by states.
After FERC proposed a landmark, nearly $1 billion penalty for American Efficient’s apparently bogus programs in PJM and MISO, MISO conducted an audit of all energy efficiency resources offered in the 2025/26 Planning Resource Auction. Brigham said staff found that a “significant portion” of the resources were offered into the auction while already being accounted for in LSEs’ coincident peak load forecast.
MISO’s tariff stipulates that energy efficiency resources cannot qualify to be auctioned off when they’re already reflected in the RTO’s peak load forecast.
The RTO said it confirmed with local distribution companies that “all savings derived from state-mandated energy efficiency programs are included in their coincident peak forecasts.”
Brigham said MISO also found some resources submitted incomplete information that fell short of MISO’s measurement and verification standards.
“MISO is in the process of adjusting each resource’s accreditation and capacity payments,” he said.
Monitor David Patton has long said MISO should consider discontinuing energy efficiency capacity payments. He has said the benefits of energy efficiency exist for customers with or without the benefit of the MISO markets.
At the annual OMS Resource Adequacy Summit in Chicago, Patton said energy efficiency in the capacity markets “has been a bit of a debacle.”
“I think it’s time we follow through,” Patton said again at the March 2025 Board Week in New Orleans, where he referenced PJM’s move to eliminate energy efficiency from its capacity market. He said energy efficiency isn’t a “legitimate” capacity product.
“We really believe that energy efficiency serves no purpose in MISO markets,” fellow Monitor Carrie Milton said at a Jan. 16 Market Subcommittee meeting.
