[EDITOR’S NOTE: This story was updated on April 26, 2024, to include comments made by MISO officials and stakeholders during a teleconference.]

MISO said its second seasonal capacity auction returned sufficient capacity in all zones except a portion of Missouri, where prices soared to more than $700/MW-day in fall and spring.  

Save for Missouri’s Zone 5, all local resource zones cleared at $30/MW-day in the summer, $15/MW-day in the fall, $0.75/MW-day in the winter and $34.10/MW-day in the spring. MISO published results at the close of business April 25. 

Zone 5 — which contains local balancing authorities Ameren Missouri and the city of Columbia, Mo.’s Water and Light Department — cleared at the $719.81/MW-day cost of new entry (CONE) for generation in the spring and fall, then followed other zones in clearing at $30/MW-day in the summer and $0.75/MW-day in the spring.  

MISO said its auction showed Zone 5 didn’t have enough capacity to meet its local clearing requirements in the shoulder seasons and that large coal retirements played a factor in the capacity deficiency. CONE, the equivalent value of building new generation, is the maximum price MISO’s tariff will allow the auction to clear.  

MISO said while the auction indicates it will meet most of its 2024/25 planning year resource adequacy requirements, “pressure persists with reduced capacity surplus across the region and a shortfall in Zone 5.” MISO’s planning year begins June 1 with the summer season.  

“Once again, our seasonal construct worked as designed by identifying the highest risk periods on the system,” MISO President and COO Clair Moeller said in a press release. “These results continue to provide real-world examples of the urgent and complex challenges to the electric grid in the MISO region.” 

The grid operator said year-over-year, capacity surpluses in MISO receded by 30% in summer, especially in MISO Midwest. The opposite was true in winter, where all zones are due to experience higher surpluses than last winter.  

This fall, Zone 5 is set to experience an 872-MW shortfall; in 2023, it experienced a 2.4-GW surplus. Zone 5’s local clearing requirement for fall rose by more than 2 GW year over year.   

Overall, MISO said it experienced a 4.6-GW capacity surplus this year, down from last year’s nearly 6.5-GW surplus.  

Last year, MISO zones cleared mostly at $2/MW-day in winter, $10/MW-day in summer and spring, and $15/MW-day in fall. Zone 9 in Louisiana and southeast Texas was an outlier and cleared at $59.21/MW-day in fall and $18.88/MW-day in winter due to price separation to meet requirements. (See 1st MISO Seasonal Auctions Yield Adequate Supply, Low Prices.) 

MISO was required to meet a total 135.7-GW summer planning reserve margin requirement. Its 9% summer 2024 planning reserve margin is higher than the 7.4% annual planning reserve margin used in last year’s Planning Resource Auction (PRA). (See MISO Crunching Data for 2nd Seasonal Capacity Auction.)  

“Retirements, reduced imports and higher requirements are insufficiently offset by new capacity,” MISO reported, adding a warning that its withering surplus, paired with the ongoing clean energy transition and new load demands, will continue to strain resource adequacy. 

MISO said only load-serving entities that entered its PRA without enough capacity to meet their resource adequacy requirements are exposed to auction clearing prices. The RTO said the auction’s impacts on consumer costs “will depend upon the shortfall amount and other factors, such as wholesale purchase agreements or retail rate arrangements with state regulators.” 

“This year’s results amplify the need and urgency for MISO’s efforts around resource availability and market redefinition,” Moeller said. “We will continue working with our member utilities and states to hone regional planning processes and market mechanisms to meet the needs of our evolving fleet.” 

MISO said its proposals before FERC to install a sloped demand curve in the auction and to accredit capacity based on generators’ expected availability, alongside its ongoing work to stimulate critical generating attributes, should help states ensure resource adequacy. 

MISO’s Independent Market Monitor has reviewed the offers and results of the 2024 PRA and has certified the results. 

A ‘New Risk Paradigm’

During an April 26 teleconference to discuss auction results, Senior Director of Resource Adequacy Durgesh Manjure said the auction results show MISO is entering “a new risk paradigm.”

Manjure said the planned closure of a coal plant by fall affected Zone 5’s capacity supply, seemingly referencing Ameren Missouri’s Rush Island, which is slated close by mid-October per a court order for years of illegal air pollution. (See Court: Ameren Still Without Remedy for Years of Rush Island Air Pollution.)

He said Missouri’s capacity picture also is “aggravated” by planned generation maintenance outages in the zone during fall.

“We do believe we’re at the front end or early stages of this evolving risk,” Manjure said, calling the reliability dangers “embryonic.” He said the “unsurprising” effects of generation retirements, increasing planning reserve margins and shrinking imports will continue to intensify.

“And all of this was insufficiently offset by new capacity,” Manjure said of the 2024/25 results.

“We believe the changes we see this year in results are very important. These results signal the need for continued due diligence in our region,” Director of Resource Planning Scott Wright said, referencing the reduction in the Midwest region’s capacity surplus.

Sustainable FERC Project’s Natalie McIntire asked if generation owners in Zone 5 can shift planned maintenance outages to free up generation in the fall.

“It’s really up to the asset owner … and frankly, after-the-fact changes, we haven’t dealt with those before. We’ll have to see,” Majure said.

He added that the auction results are “only a piece of the puzzle” and that MISO has been in a shortage situation before for its entire Midwest region in the 2022/23 planning year. In that case, MISO didn’t experience a loss-of-load scenario, he said. (See MISO’s 2022/23 Capacity Auction Lays Bare Shortfalls in Midwest.)

Manjure said Zone 5’s shortage doesn’t “immediately” mean shortfalls in the fall and spring, pointing out that imports and non-firm energy can assuage the situation.

This is the second year MISO has separated its capacity auction by season. FERC in 2022 gave the RTO the go-ahead to establish four seasonal capacity auctions with separate reserve margins. (See FERC OKs MISO Seasonal Auction, Accreditation.)

MISO will discuss the auction results again at its May 22 Resource Adequacy Subcommittee meeting.