November 13, 2024
MISO Sets Surplus Reserve Margin Requirement for LSEs Opting Out of Capacity Auction
Neil Shah, MISO
Neil Shah, MISO | © RTO Insider LLC 
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Load-serving entities that decide against participating in MISO’s capacity auction must secure anywhere from 1.5% to 4.2% beyond their reserve margin requirements in the 2025/26 planning year.

CARMEL, Ind. — Load-serving entities that decide against participating in MISO’s capacity auction must secure anywhere from 1.5 to 4.2% beyond their reserve margin requirements in the 2025/26 planning year, MISO announced.  

For the upcoming planning year, MISO’s Neil Shah said MISO will impose a 3.1% adder in summer, a 2.1% adder in fall, a 4.2% adder in winter and a 1.5% adder in spring for LSEs staying out of the auction. Those percentages will be in addition to the 7.9% of 2025/26 planning reserve margin in summer, the 14.9% PRM in fall, the 18.4% PRM in winter and the 25.3% PRM in spring. The RTO revealed the values during a Nov. 6 meetup of the Resource Adequacy Subcommittee.  

Starting next year, LSEs that decide to opt out of the auction and sloped demand curve must secure more capacity than strictly necessary to meet MISO’s 1-day-in-10 years system reliability standard. The rule is a feature of MISO’s new sloped demand curve design in its capacity auction. (See FERC Approves Sloped Demand Curve in MISO Capacity Market.) 

The rule — expressed as “X% adders” beyond strictly necessary load obligations — attempts to create comparable treatment between LSEs that participate in the auction and are subject to the sloped demand curve with LSEs that opt out of the auction by assigning them similar reserve requirements. 

The adder is calculated by MISO simulating the additional megawatts that would have cleared had the capacity auction used a sloped demand curve for the past three planning years. Once it has enough actual data to draw on, it will stop using a simulation of clearing behavior.  

Shah said the adder rule makes sure LSEs “bring forward sufficient resources” based on how they would have cleared had they operated under the auction’s sloped curve.  

Load-serving entities and states can exercise an opt-out of the sloped demand curve and auction. For the 2025/26 planning year, those decisions are due to MISO by Jan. 15 and keep LSEs out of the auction for three years at a time.  

MISO’s auction window will open March 26 and close March 31. The grid operator plans to post auction results April 28. Load-serving entities should have submitted their seasonal peak demand forecasts to MISO at the beginning of November; they can expect their seasonal, availability-based capacity accreditation values from the RTO by mid-February.  

Under the new auction setup, states in MISO are free to continue to set their own planning reserve margin that diverges from MISO’s. Should that happen, the RTO would isolate those LSEs’ load share and multiply it by the state’s chosen reserve margin. The LSEs’ final load share then would be removed from MISO’s planning reserve margin requirement. LSEs that still rely on MISO’s PRM will share the remainder of the requirement, spread pro rata.

Capacity MarketGenerationMISO Resource Adequacy Subcommittee (RASC)Resource Adequacy

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