CARMEL, Ind. — MISO revealed it will crack down on demand response testing requirements ahead of its spring capacity auction, while some stakeholders argued the stepped-up measures amount to a change that requires FERC approval. 

The announcement at the Jan. 15 Resource Adequacy Subcommittee meeting follows FERC doling out several million dollars in penalties across a string of companies for invented demand reductions in recent years.  

MISO’s Joshua Schabla said before its late March capacity auction, MISO will require all load-modifying resources (LMR) and demand response resources that haven’t submitted real power tests demonstrating 100% of their registered capability to provide documentation explaining why complete reductions couldn’t be achieved and submit 10 days of meter data before, during and after seasonal coincident peak loads. 

Load-modifying resources that contain aggregated retail customers must show a contractual relationship for their megawatt capability, Schabla added. MISO said contracts must be active for all seasons an LMR offers their services and detail response time, how the LMR achieves demand reduction and specify how many megawatts or to what firm service level end-use customers agree to curtail. MISO said those entering aggregations of households must “submit a detailed report describing how the load reduction is achieved, how the load reduction works and how the load reduction value is calculated.”  

Further, resources using a firm service level threshold to measure reductions must show in testing that they can cut use to that level.  

Schabla said the testing and documentation requirements aren’t new and have been in MISO’s business practice manuals. He said beginning with the upcoming Planning Resource Auction (PRA), MISO will begin disqualifying resources that fail to provide required information.  

MISO said it “continues to see testing inconsistencies” among its demand response fleet.   

Some LMRs already are registered for the upcoming auction; MISO said some of those may need to resubmit registrations if they lack detail.  

Representatives from Voltus — the latest company to agree to a multimillion-dollar civil penalty to settle demand response violations — voiced the most opposition to MISO’s doubling down on enforcement. (See Voltus Agrees to $18M Fine to Settle DR Tariff Violations in MISO.)  

“A lot of these are changes and they’re being delivered to stakeholders at the 11th hour,” Voltus’ Sean Shafer said. “This does feel like a last-minute surprise.”  

Shafer said it appeared MISO was trying to “push through” testing changes that stand to affect rates without FERC approval.

MISO staff at the meeting disagreed and said the RTO already is authorized to administer rules on its books. “We are going to start enforcing them based on behavior from market participants over the last several years,” Schabla said.  

“We don’t like the situation we’re in either,” Executive Director of Market and Grid Strategy Zak Joundi told stakeholders. 

Jim Dauphinais, representing a collection of MISO end-use customers, said MISO should have raised more stringent enforcement back in September. He said at this point, MISO has appeared to issue conflicting guidance on testing requirements. Dauphinais pointed out that some load-modifying resources already have performed testing for the upcoming auction.  

“You can pursue a more aggressive approach, but you’re going to have to be patient and flexible. Unfortunately, this is going to cause a big scramble,” Dauphinais said, advising MISO to allow testing deferrals.  

“This is a 13th-hour change,” Voltus’ Luke Metcalf argued. “We are 40% of the way through registration. … There is a change here, and MISO should be going through the stakeholder process to codify this.”  

Metcalf said MISO should have communicated a more stringent testing process to stakeholders at least a year in advance. He said until MISO introduces a proposal to bolster testing requirements, market participants should be free to rely on the more lenient LMR testing guidance MISO issued in previous years.  

Schabla said MISO’s chief concern is that resources have cleared the PRA without ever intending to perform. He said some demand response can “effectively take payment from ratepayers” while even opting out of testing requirements. 

“We believe that’s not acceptable,” Schabla said.  

IMM Presses for More Near-term LMR Rules

As some stakeholders say MISO is going too far in requirements, the Independent Market Monitor pushed MISO to enact further edicts on LMRs. 

IMM Carrie Milton said MISO should make a short-term filing to hold LMRs to more stringent rules by the 2026/27 capacity auction. 

Milton said some LMR rules should be rolled out faster than MISO’s ongoing, longer-term effort to move to an availability-based accreditation for its LMRs, demand response and behind-the-meter generation. She advised MISO to draft a separate FERC filing for short-term fixes.  

The IMM said MISO’s filing should strengthen penalties for unavailability and overstating capability, eliminate dual registration of LMRs and emergency demand response, require exclusive contractual rights for LMR output and do away with mock testing.  

“Unfortunately, mock tests have been abused in the past,” Milton said, adding that real performance testing is best.  

MISO in late 2024 announced it would put an end to allowing LMRs to also register as emergency demand response. The RTO plans to make a filing sometime in the coming months.  

Milton said the filing also should rework the tariff’s Attachment TT to become a singular how-to for measuring and verifying demand response and load modifications. Attachment TT should be expanded to include testing and deployment rules and should define firm service levels and their application in use reduction.   

Joundi said MISO is evaluating the IMM’s recommendations and will return to the February meeting of the Resource Adequacy Subcommittee with a response.  

Auction Preparations

Meanwhile, MISO is full steam ahead on other capacity auction preparations. Market participants have until Feb. 1 to question MISO about their resources’ accreditation values. MISO is targeting mid-February to post final accreditation values for resources.  

The auction window will open March 26 and close March 31. MISO plans to publish auction results at the end of April.  

Using summer data, MISO anticipates a 122.66-GW coincident peak and will require a 7.9% planning reserve margin at 135.3 GW. However, the RTO so far estimates it has 124.6 GW in total seasonal accredited capacity despite 159.8 GW in total installed capacity.  

“Today’s data is the first cut, very preliminary and will change,” Manager of Resource Adequacy Andy Taylor said, adding that the current data is only an indication for stakeholders. “There is a whole lot that’s still missing.”  

MISO will finalize accredited capacity values in mid-February and post updated versions of auction data periodically until it opens the offer window.  

LMR Replacements in Capacity Auctions?

Finally, MISO is considering switching up its auction rules in the future to permit load modifying resources to make substitutions when originally contracted load reductions can’t honor reduction promises. 

MISO allows its more traditional resource types to replace zonal resource credits, but that allowance doesn’t extend to LMRs. The RTO uses zonal resource credits to measure its resources’ capacity.  

MISO is contemplating allowing LMRs to make similar, limited replacements if the end-use customers it contracted for reductions must terminate contracts.   

Shafer said MISO’s replacement proposal is “encouraging” and will be helpful in the event facilities close and zonal resource credits need to be replaced.