CARMEL, Ind. — MISO said it will debut a task team dedicated to improving its credit policy as market participants experience more price volatility in the market and default risk grows.

Brian Brown, of MISO’s credit and risk management team, said MISO is in the process of forming the Credit Policy Enhancements Task Team, with meetings to begin in September. At the July 13 Market Subcommittee meeting, Brown said risky circumstances, such as widespread winter storms, are occurring more frequently and could give rise to “defaults or near-default situations.”

Brown said the task team will examine extreme weather events to see how MISO’s credit policy can be strengthened to discourage defaults. Brown said MISO will look at its minimum capitalization requirements to account for increased price volatility, review its estimated exposure calculations and credit requirements for virtual transactions, and explore the possibility of adding a minimum collateral requirement for all market participants — something MISO doesn’t have.

He also said MISO may update the bankruptcy language in its tariff to align with Federal Bankruptcy Code requirements and consider tariff language that allows MISO to implement flexible payment terms in the event of a marketwide event that causes “large, unexpected market charges.”

Brown said as a result of the task team’s work, MISO may begin to make some FERC filings to reinforce its credit policy in the first quarter of 2024.

“We really hadn’t experienced any losses prior to 2021. What we’re noticing is there’s an increase in volatility in the markets. … Frankly, we’ve got some scar tissue from dealing with some issues,” Brown said, referencing virtual traders who nearly defaulted and lost $150,000 in the market in January 2021 and the market participants who lost $38,000 related to the Brazos bankruptcy following Winter Storm Uri in February 2021. The storm led to MISO making 140 margin calls totaling $325 million. MISO makes margin calls when a market participant’s credit exposure is greater than the financial security and unsecured credit they have in place, and MISO requests additional collateral or reduced activity in its market.

MISO said it avoided defaults during the December 2022 winter storm, though it had to issue more than 100 credit exposure warnings. (See MISO Defends Energy Exports During December Storm.)