MISO’s Independent Market Monitor has released four new market improvement recommendations for MISO concerning transmission congestion, the Midwest-South transmission link, market-to-market coordination and price settlements after grid devastation.

IMM David Patton said the recommendations, provided as part of his annual State of the Market Report, should better position MISO for load growth combined with a renewables-heavy future.

Patton said he wants MISO to maximize its Midwest-to-South transmission limit by being less conservative with the space it reserves for unforeseen flows.

MISO actively derates its Midwest-South transfer constraint to keep flows in either direction below the contractual limit. Unmodeled flows over the constraint can push flows up and violate the limit.

But Patton said MISO’s caution has caused the transfer’s utilization to be just 84% of what’s contractually allowed. He said MISO should work in extra, lower-value steps to the transmission limit’s demand curve and raise its energy-plus-short-term reserve limit to the highest penalty step on the transfer to use the transmission more. He said a more detailed curve and relaxed limits could increase the path’s utilization when the value of transfers is high.

Patton also said the changes could reduce the burden on MISO operators to “constantly monitor and adjust the … limit in the real-time market.”

Think Before You M2M

Patton advised MISO to stop accepting SPP’s requests for constraints to be moved to market-to-market coordination unless it’s “clearly warranted.” He said MISO should accept monitoring responsibility of SPP’s flowgates only if it can provide “significantly more” efficient relief on the constraint than SPP.

Patton said in some cases, MISO has accepted an M2M designation for flowgates from SPP even when it cannot deliver economic respite.

“They end up being a lot more costly in the MISO dispatch than in the SPP dispatch. And that costs MISO customers a lot of money,” Patton said of market-to-market flowgates.

Though he didn’t mention it in his presentation, Patton was among the first to alert stakeholders that MISO could offer little relief for a MISO-SPP flowgate in North Dakota strained by a new cryptocurrency mining facility. The situation in 2023 spurred complaints from the MISO side and a FERC refusal to refund about $40 million in congestion costs. (See FERC Again Declines Changes, Refunds on Crypto-burdened MISO-SPP Flowgate.)

More Frequent FTR Auctions

MISO should move to a primarily monthly or seasonal format for auction revenue rights (ARRs) and financial transmission rights (FTR) auctions, Patton said. He said MISO should shift the bulk of its transmission capability from the existing annual FTR auction to seasonal or monthly auctions.

Patton said more lines joining a more frequent FTR/ARR auction process would limit overselling of FTRs or over-allocating ARRs on constrained lines, especially when MISO isn’t made aware of its transmission owners’ outages.

He said MISO’s transmission owners often report outages too late to be reflected in the annual FTR auction, with the network more accurately modeled in MISO’s less-attended monthly auctions.

But Patton said MISO’s current monthly auctions deliver less net FTR revenues than the value of day-ahead congestion, indicating a lack of participation.

The Market Subcommittee launched a renewed effort to improve the FTR/ARR market at the same July 10 meeting where Patton presented his State of the Market report. MISO’s Tony Hunziker said MISO would dig in at the August meeting, exploring ways to bolster FTR market performance and participation, improve model accuracy, ensure funding and better link the day-ahead market to the FTR market.

More Inclusive Impetus for ‘Forced-off’ Pricing

Finally, Patton said MISO could improve its criteria for pricing when an extreme event forces portions of the grid offline.

Patton said the recommendation applies to MISO’s “forced-off asset” event declaration, which sets real-time prices equal to day-ahead prices. MISO created the new settlement practice in 2024 for generators physically disconnected from the grid during extensive transmission outages triggered by extreme events. It’s designed to prevent generation from receiving excessive penalties or undeserved windfalls. (See FERC OKs MISO Settlement Rules for Widespread Tx Outages.)

Patton said even though 2024’s Hurricane Beryl forced transmission offline that disconnected most loads in the Southeast Texas Load Pocket, the storm failed to qualify as a forced-off asset event. He said MISO should tweak portions of the declaration, namely its constraint management and dead bus criteria, to trigger the settlement style.

Patton said MISO defines its revenue inadequacy criteria too narrowly to have activated the pricing and that to address the issue, MISO should add price volatility make-whole payment criteria to the revenue inadequacy criteria when making the call on forced-off asset declarations. He said MISO also should limit the forced-off asset dead bus criteria to load buses only.

Patton said the two adjustments should “ensure that prices in areas affected by transmission damage during extreme weather events are set at reasonable levels and avoid cost-shifting.”

You Must Decommit

Before wrapping his report, Patton took time to call back to a 2023 recommendation that MISO develop tools to recommend decommitment of resources that have been committed in the day-ahead market.

Patton said in early July, MISO racked up $38 million of congestion because there were two gas turbines committed in the day-ahead market that MISO refused to switch off. He said the transmission constraint in question was in violation for six to seven hours. Patton said that sort of circumstance has a simple fix: turning off one or both of the gas turbines.

However, Patton said “MISO will do virtually anything other than” decommit a resource. Patton said there didn’t appear to be a good reason behind MISO steadfastly refusing to decommit resources. Beyond that, Patton praised MISO’s market performance over 2024.

“In many respects, MISO’s markets are more advanced and well-developed than other RTOs, leading to superior performance,” Patton said.

Patton said MISO’s all-in energy price was an average $31/MWh in 2024, lower than the previous year due to an 8% decrease in natural gas prices. He said there was “little change” in average load from 2023.

MISO will review the Monitor’s report through September and post a public response to the recommendations in October. MISO’s response will include to what extent it agrees with the recommendations and how doable it believes each one is.