A record number of project withdrawals in MISO’s generator interconnection queue has become so consequential that the RTO filed with FERC to alter its accounting practices (ER26-1972).
MISO proposed a tariff change to FERC that would allow it to record the interest generated from its interconnection deposits and fees that it needs to return as a deferred expense rather than an immediate one.
The RTO has experienced a record number of withdrawals from its generator interconnection queue in 2025 and so far in 2026, reducing the waiting line from a nearly 300-GW high in 2025 to 192 GW in early 2026. MISO said it expects the exodus to continue over 2026. It said more than 800 projects dropped out of the queue in January 2026 alone.
Consequently, MISO said it is sitting on more than $2 billion in deposits that must be returned with interest to projects exiting its queue. If the grid operator paid out all interest and recorded it as an expense all at once, it could cause the rates it charges to its members to spike.
MISO asked FERC for permission to instead spread that cost out over time by recording interest in a holding account and making deliberate, $7 million/month payments until it pays off what is owed to smooth the potential impact on rates.
“The proposed accounting treatment will stabilize the impact of the interest expense on rates paid by MISO’s customers,” the RTO told FERC in its March 30 filing.
MISO said it needs the change in place to “protect customers from unnecessary rate volatility.” It intends to continue the $7 million/month toll for one year following the completion of its 2026 queue cycle.
The RTO emphasized that its plan would involve only an internal accounting change. It said withdrawing interconnection customers still would get refunds with interest.
“To be clear, payments of both principal and interest will be made to interconnection customers consistent with MISO’s standard practices and procedures, as required, with only the accounting treatment being deferred,” it wrote.
MISO confirmed to RTO Insider that it’s holding a cash balance on the 800 projects that dropped out in January. It estimates that it will have to refund $60 million in interest over 2026.
The RTO said that although it is working “as quickly as possible” to complete the refunds, “timing will vary” on when interconnection customers are refunded. It did not offer an average length of time for interconnection customers to receive funds.
MISO also said it produces “monthly statements that show the expenses against the interconnection customer’s study deposits.” However, it said, “interest is calculated and communicated to the interconnection customer when the refund is processed.”
In a statement to RTO Insider, MISO stressed that its FERC filing has no bearing on its processing of refunds to interconnection customers.
The grid operator wrote to FERC that it hopes it can secure approval for the accounting deferral in time to finalize its first-quarter 2026 financial statements by May 30 with Deloitte, its auditing firm. It asked FERC for an effective date of March 31.
MISO collects initial study deposits and per-megawatt milestone fees from project developers for their projects to enter the queue and remain in line as they are studied. It holds the money in interest-bearing accounts, which earned interest impressively over the past few years of high rates.
The RTO must refund unused deposits and payments, with interest, to interconnection customers when they withdraw projects from the queue. It records deposits and fees as a short-term liability on its balance sheet and debits a dedicated account to refund developers. Ordinarily, when MISO pays out principal and interest, it is recorded as an immediate expense.
MISO said it uses earned interest income “for the benefit of members,” offsetting the rate it charges to cover its operating costs. Because its operating costs are passed on to members, a massive interest obligation paid out instantaneously would shock rates, it said.
In the past three years of financial presentations delivered to its Board of Directors, MISO leadership underscored the high interest it was accumulating and did not publicly discuss potential rate liabilities associated with returning interest.
In its FERC filing, MISO said its queue began ballooning in 2020, when 52 GW of new projects lined up. The pattern continued in 2021, when 77 GW signed up, and again in 2022, when 171 GW worth of projects entered the submission window.
The volumes created study logjams, prompting MISO to roll out stricter rules and higher fees to discourage speculative generation proposals. The rules, combined with the White House’s discontinuation of renewable energy tax credits, have shrunk the queue.
MISO said a “marked increase in project withdrawals” led to “much larger than anticipated refunds of deposits and payments plus interest.”
Only approximately 20% or fewer of the projects in MISO’s queue historically reach the interconnection agreement stage.
The RTO said FERC has allowed it to defer accounting before, specifically when Entergy joined in 2013 to create MISO South and again in 2011, when failure of a cooling fan system necessitated extensive repairs to its Carmel, Ind., control room.
