NEW ORLEANS — FERC Commissioner James Danly paid an unannounced visit to MISO’s Board of Directors meeting Thursday following a snag in the RTO’s new capacity accreditation process that will delay next month’s planned capacity auction.

Danly urged MISO’s leadership to “recommit” to market fundamentals. He said the grid operator must ensure that its prices incent resource adequacy and that it follows “steady, deliberate” changes to its tariff.

MISO will experience high capacity prices when scarcity conditions are present, Danly said.

“As the old saying goes, the solution to high prices is high prices,” he said.

FERC issued a show-cause order to the RTO on March 17, directing it to recalculate a systemwide capacity ratio used to validate accreditation values for planning resources or explain why it shouldn’t have to (EL23-46).

MISO said it will recalculate seasonal accredited capacity ratios but doing so will likely delay its first four-season auction. Its original unforced capacity to seasonal accredited capacity ratio erroneously counted some previously excused planned outages against some generators’ availability. (See FERC Order May Delay MISO’s 1st Seasonal Capacity Auction.)

Danly discouraged MISO from “chopping and changing” its market design, saying reactionary alterations make it “rationally impossible” for market participants to respond to and prepare for structural changes. He said his advice extended to other grid operators.

MISO told RTO Insider after the meeting that Danly’s appearance was coordinated weeks prior between it and FERC, though it did not tell stakeholders he was coming. The RTO said that as a rule, it does not place addresses from FERC commissioners on its meeting agendas. It also said that when it scheduled Danly’s visit, it had nothing to do with its seasonal capacity auction. However, Danly’s remarks focused exclusively on the capacity market.

MISO CEO John Bear said staff will ensure stakeholders have enough time to understand the recalculated ratio and how it affects thermal resources’ accreditation before running the auction.  

The recalculated ratios are expected to result in “reduced accreditation values for individual market participants and on an aggregate basis,” MISO says.

Entergy and other market participants have warned that smaller capacity values for their units may cause shortfalls in some MISO zones for certain seasons. (See FERC Denies Exemption Requests from MISO Accreditation Rule.) 

During an Advisory Committee meeting Wednesday, Jim Dauphinais, an energy consultant representing multiple MISO end-use customers, said it’s important that the grid operator back up and make sure it’s using correct values in the auction. He said that while it was “unfortunate” how it played out, FERC’s order and subsequent delay illustrates how untested market changes can cause disruptions when systems and people aren’t prepared.

“Quite frankly, we don’t know if our seasonal construct is working,” Dauphinais said.