The Sierra Club, Natural Resources Defense Council and the Sustainable FERC Project are seeking a rehearing of MISO’s sloped demand curve in its capacity auction, arguing that it’s unreasonable for the RTO to require utilities to procure capacity beyond resource adequacy needs.   

FERC last month allowed MISO to replace the vertical demand curve it had been using since 2011 with downward-sloping demand curves. (See FERC Approves Sloped Demand Curve in MISO Capacity Market.) 

The trio claimed in a July 29 filing that FERC’s June acceptance violates the Federal Power Act and Administrative Procedure Act by requiring load-serving entities that opt out of MISO’s voluntary capacity auction to buy more capacity than what MISO deems acceptable (ER23-2977).  

When it installs a sloped demand curve for the 2025/26 Planning Resource Auction, MISO will impose an “x% adder” on load-serving entities that decide not to participate in the capacity auction. The adder will require load-serving entities to secure more capacity than necessary to meet MISO’s planning reserve margins, which are derived from a one-day-in-10-years system reliability standard. The adder will be based on how much excess capacity is procured through the auction in previous years using the sloped demand curves.  

The Sierra Club, NRDC and the Sustainable FERC Project said use of the adder would impose “significant artificial costs” on ratepayers and distort market signals. 

“It is both arbitrary and improper to impose the excess reserve margins created by a market construct whose principal purpose is to vary reserve margins in order to mitigate extreme price fluctuations and better guide resource investment decisions back on entities who are not participating in that market,” the three argued.  

They said forcing load-serving entities to procure extra capacity undermines MISO’s “carefully measured” resource adequacy standard.  

They also said MISO put too much emphasis on using the adder to prevent non-participating load-serving entities from benefiting unfairly from potential excess capacity from other LSEs participating in the auction. Equally as important, the three argued, is the possibility that LSEs using the PRA benefit from opted-out LSEs’ obligation to meet their individual reserve margins in the years when the PRA clears below its reserve margins.  

“The adder is not about ensuring comparability but instead functions as a one-way ratchet to require excess procurement of capacity by utilities that opt out of the PRA,” they told FERC.