MISO has ended its 10-year run allowing energy efficiency in its capacity market.
The RTO’s acceptance of energy efficiency in its capacity auctions is officially over with a Dec. 12 order from FERC (ER26-148). MISO asked for permission to discontinue auction eligibility in October.
FERC allowed the request to take effect Dec. 15. MISO will prevent energy efficiency resource registrations beginning with the 2026/27 planning year starting June 1. MISO’s Independent Market Monitor has long advocated for the deletion. (See MISO to Axe Energy Efficiency from Capacity Market.)
MISO said just two market participants have registered and cleared energy efficiency in the auctions since it began allowing it under a new type of planning resource in 2015. The RTO required that energy efficiency measures be in use for less than four years to enroll for auction participation or count toward a planning reserve margin requirement.
MISO said prohibiting capacity offerings from energy efficiency would prevent the double-counting of it on both the demand and supply sides and avert payouts to market participants for energy efficiency measures that would have occurred anyway without the capacity registration.
MISO also said the move would “eliminate the opportunity for unjust enrichment by midstream contractors,” and noted that middlemen have registered energy efficiency in capacity markets based solely on energy-efficient product sales data attained from retailers and distributors, with consumers unaware that they signed on to provide capacity.
The description was an apparent callback to FERC’s nearly $1 billion fine on American Efficient, which culled sales data associated with products sold at retailers such as Home Depot, Lowe’s and Costco. (See FERC Seeks Nearly $1B in Penalties from EE Provider in MISO, PJM.)
American Efficient, one of the two market participants that have registered and cleared energy efficiency megawatts in MISO capacity auctions, protested the filing to no avail.
MISO has said load-serving entities are free to continue to use energy efficiency measures on the demand side to reduce their coincident peak demand forecasts.
FERC decided that energy savings reflected in peak demand forecasts only still would account for energy efficiency contributions. It said MISO’s request was fair and reasonable.
MISO said its auction workload would be lighter if it didn’t have to evaluate the registrations of energy efficiency resources and go through the process of measuring and verifying their energy savings.
