Can’t keep all of MISO’s new demand response rules straight? You’re not alone.

The grid operator convened a stakeholder workshop Oct. 14 to go over new requirements for demand response resources heading into the 2026/27 planning year.

After multiple instances of fraud and misrepresentation from DR in MISO’s capacity market, the RTO has spent months developing stricter rules to deter abuse.

The RTO has made:

• • A March 2025 filing seeking to discourage nonexistent or overstated curtailments by requiring proof of contracts and hourly meter data while instituting reference levels for DR resources so they cannot inflate baselines. FERC accepted the stricter rules in July (ER25-1729).
  • An April 2025 filing to put an end to MISO allowing load-modifying resources to also identify as emergency demand response and collect extraneous capacity payments. FERC also accepted the changes in July (ER25-2050).
  • An April 2025 filing to divide load-modifying resources into fast and slow categories for capacity accreditation, with the faster resources receiving higher accreditation values. The pending filing wouldn’t take effect until the 2028/29 planning year (ER25-1886). (See MISO Approaching LMR/DR Accreditation Based on Availability.) FERC in September decided it needed more information on the proposal’s inner workings and issued a deficiency letter.
  • A July filing to mandate its demand response to make real-world demand reductions for tests instead of submitting mock tests to prove capability. (See MISO Tries to Ward Off DR Fraud with New Testing Regime.) FERC hasn’t yet decided whether to accept MISO’s proposal and issued an August deficiency letter to glean more information. The new testing rules would apply retroactively for any tests after July 15, 2025, if MISO’s proposal wins approval (ER25-2845).

MISO plans to file at FERC for permission to more consistently dole out monetary penalties when a DR resource delivers less than promised, effective June 1, 2026. It also plans to bar energy efficiency from participating in its capacity auctions. (See MISO to Axe Energy Efficiency from Capacity Market.)

MISO senior market design economist Joshua Schabla reviewed new rules stemming from the filings that pertain to DR contracts, broader penalties, testing and providing MISO with documentation. MISO included the end of mock testing and stepped-up monetary penalties in its roundup, though those rules don’t have FERC approval yet.

Docs and Data

Before summer 2026, MISO will insist on more descriptive documentation for DR that details the operating procedures used to curtail load, how the market participant communicates with the facility making the cuts, the expected time to draw down the load and confirmation that the load can be held at a minimum amount for four consecutive hours.

“What we need to see is that the persons physically responsible for curtailing the load understand what they need to do and how they will do it; it does not need to provide confidential information but should be specific enough that a reasonable third party feels confident the facility knows what they’re doing,” Schabla said of the required documents.

MISO also will require written verification from facility owners that real power tests reflect what they expect to curtail if called upon by MISO.

Schabla pointed out that DR resources voluntarily participate in MISO’s capacity market and receive compensation to do so.

“With that, there comes a certain level of expectation of the documentation they submit,” Schabla said. He also said MISO wants to have confidence that DR resources are real, that ratepayers are paying for actual capacity and that members aren’t making decisions to retire generation or forgo adding generation because of fake DR megawatt reductions.

“We feel like we’re asking for some very fundamental and basic information,” Schabla said. He added that MISO wouldn’t outright reject registrations if information is lacking; rather, it would reach out for more data.

MISO also wants every non-residential resource that’s registered to submit a physical address of the load’s location.

“What we’re trying to accomplish here is to figure out where these LMRs are located,” Schabla said, adding that the addresses are a starting point.

Beginning in the 2027/28 planning year, MISO said it would further require market participants to submit the elemental pricing nodes for DR resources that are at least 5 MW.

Schabla said MISO hopes to gain more visibility into LMR and eventually be able order more targeted curtailments in instances like local transmission emergencies. He said the extra year should provide “plenty of runway” for market participants to start assembling more exact location data.

Moving into the 2026/27 auction, MISO will require market participants with DR to submit hourly metered output from every resource in the seasons they’re signing up to contribute. The RTO said it would allow single aggregated values from residential DR programs.

Enel X’s Allison Miller said time is running out to make registrations for the 2026/27 auction, but MISO has yet to finalize all the new rules and provide all registration templates. She also said there’s still a “back and forth” at FERC on MISO’s real power testing proposal, which was issued a deficiency letter.

Other stakeholders asked if MISO would hold another workshop to get stakeholders better acquainted with the new rules. Schabla said MISO would not. Schabla said MISO isn’t attempting to shut DR out of its markets but needs to discourage bad actors.

“We just want to make sure what we’re paying for is quality,” Schabla said.

At an Oct. 1 Resource Adequacy Subcommittee, MISO’s Neil Shah said MISO understands it’s putting market participants through tremendous change with its new demand response rules.

LMR Replacement Becomes an Option

There may be a silver lining in the 2026/27 auction: MISO will permit market participants to replace their load-modifying resources if the original resources become unavailable. MISO will allow demand response to replace (and avoid penalties for nonperformance) when a contract previously approved by state regulators is terminated or if there’s a change in ownership of the facility contracted to dial back load.

For behind-the-meter generation, MISO will allow replacements in the event of outages that are communicated to MISO at least two weeks in advance or if regulatory restrictions crop up, such as environmental run-time limits. MISO also said load-modifying resources can replace on a case-by-case basis with approval from MISO’s Independent Market Monitor.

The grid operator said it plans to hold DR resources to more rigid nonperformance penalties and make a FERC filing soon. MISO plans to assess penalties when DR resources are coming up short on what they said they could provide or when a resource is marked as unavailable but is consuming demand during an emergency. Penalties would be based on auction revenue and include a charge based on locational marginal prices at the time.

MISO will divide penalties into either partial failures (when a DR resource has provided at least 25% of its required response) or complete failures (when the resource has supplied less than 25%). MISO said repeat complete failures would lead to disqualification as a capacity resource.

However, MISO said it will offer penalty exemptions for when behind-the-meter generation must perform maintenance. For that, the market participant would have to pre-schedule a no more than 31-day outage in either a spring or fall period (March 1 to May 15, and Sept. 15 to Nov. 30, respectively).

Schabla said MISO realizes it’s unrealistic for 30 to 40% of its behind-the-meter fleet to seemingly never need annual outages, as is the case now.

Finally, MISO stressed the importance of market participants updating their availability in its nonpublic Demand Side Resource Interface. Schabla said offers made in the 2027/28 planning will begin to affect DR accreditation in the 2028/29 planning year. Beyond that, MISO didn’t touch on the new accreditation, reasoning that it was too early to address it.