The changes, approved by the IESO Board of Directors on Oct. 24 and effective Nov. 17, include a multistep tie-break process to optimize the capacity auction clearing process (MR-00488-R00) and an amendment to make it easier for participants to transfer capacity obligations and harder to buy them out (MR-00483-R00).
The board acted following favorable reviews by its Technical Panel. (See IESO Capacity Market Rule Changes Advance.)
Resources selected in the annual capacity auction are expected to participate in the energy market unless they buy out or transfer their obligations. But some resources fail to fulfill their obligations because, for example, they did not complete the registration requirements. (See IESO Seeks to Shore up Capacity Market.)
Unfulfilled obligations reduce the capacity available and distort clearing price signals, the ISO says.
With the changes, suppliers who fail to complete the registration process no longer will have the option of simply forfeiting their deposits and will be required to buy out their obligations. In addition, the buyout charge is increasing from 33 to 50% of the obligation value.
The revisions also will remove the requirement that obligations can be transferred between resources only with the same attributes.
The board said the changes, recommended unanimously by the Technical Panel, will improve reliability.
Tie-break Methodology
A tie occurs when two or more participants offer the same price for the last available quantity of capacity in a zone.
Under the previous rules, the ISO used time stamps to select the bid submitted first to break the tie. The new rules created a three-step process to award an equal share in step 1 and apply a proportional allocation in step 2, based on what’s left over from step 1. Capacity remaining after step 2 will be allocated by time stamp rank.
In its approval, the board said the changes will result in a “more equitable” tie-break solution.
Auction
The Nov. 26-27 auction, which will seek capacity for the periods beginning May 1 and Nov. 1, 2026, is open to existing and non-committed demand response, generation, energy storage and import resources. Results will be posted Dec. 4.
The 2024 auction for summer 2025 (May 1-Oct. 31) procured 1,987.9 MW at $332.39/MW-day in all zones except the Northeast and Northwest, which priced at $195/MW-day. For the winter obligation period (Nov. 1, 2025, to April 30, 2026), IESO procured 1,478.4 MW at $139/MW-day in all zones.
