By Rao Konidena, Rakon Energy LLC

Midcontinent Independent System Operator (MISO) cleared auction prices much lower ($10) than expected ($250). Last year, MISO cleared seven zones in the north/central region at the Cost of New Entry, which was $236 per MW-day. This year MISO moved to seasonal auctions for the first time, and with the help of 3,600 MW of coal units that delayed their retirement and 3,000 MW of lower summer peak load forecasts – MISO is flush with surplus capacity.

MISO’s new Schedule 53 capacity accreditation method also propped up thermal resources. These lower capacity prices might put the brakes on new renewables hoping to take advantage of the Inflation Reduction Act.

The first time MISO ran seasonal auctions this year

Unlike PJM’s last capacity auction, the MISO auction was not stopped mid-way. All the controversy happened before the auction, resulting in a delay in running this seasonal auction. And that was due to the Federal Energy Regulatory Commission (FERC) issuing a show-cause notice regarding Seasonal Accredited Capacity (SAC) ratios for Schedule 53 resources. MISO re-published new UCAP/ISAC ratios and adjusted Schedule 53 SAC values, which impacted Schedule 53 Zonal Resource Credits (ZRCs) used in Fixed Resource Adequacy Plans (FRAPs) and ZRC Transactions. MISO corrected those SAC values and ran the auction.

MISO’s seasonal auction cleared at $10 per MW-day for all 10 zones in the summer and spring seasons. The fall prices were slightly higher than summer – at $15, and winter was even lower at $2. The big news, if we can call that, is that the Louisiana zone, which includes the east Texas portion of MISO, cleared at $60 in fall and $19 in winter, compared to the rest of the MISO zones. MISO explained that a resource offered at $60 in that zone.

Delayed coal plant retirements are the leading cause of lower capacity prices at MISO

No matter how MISO finesses the message, almost 3,600 MW of coal did not retire after the last auction. As a result, that capacity was available in this auction. Since MISO cannot announce units that applied for suspension unless their retirement studies resulted in System Support Resources (MISO” s name for Reliability Must Run units) or retirements, according to my research based on press releases after April 2022, when the last auction was conducted, a 1,100 MW unit in Wisconsin, 877 MW unit in Indiana and 450 MW in North Dakota have delayed their retirement dates. If we add this 2,427 MW to Missouri’s 1,195 MW RMR unit, we see a delayed 3,600 MW of coal capacity.

This 3,600 MW of coal not retiring could negatively affect potential future emergency events if those units do not function similarly to gas units’ non-performance in PJM during the winter storm Elliott. Higher capacity prices in the last auction should have led to additional demand response programs cleared in this auction, but here at MISO – they had the opposite effect resulting in coal staying longer on the grid. Both state and federal regulators should take note of this. What impact will MISO capacity prices have on new renewables planning to take advantage of the Inflation Reduction Act remains to be seen. Lower capacity prices are not a good sign for new capacity because the MISO auction showed a surplus of 4,700 MW.

Other causes for lower capacity prices

Lower load forecasts were another cause for lower capacity prices in this auction. MISO had modeled 123 GWs of peak summer load in the Loss of Load Expectation (LOLE) study last fall when it announced the Planning Reserve Margin for this 2023-24 planning year. But in this auction, the summer peak demand was 120 GW – a difference of 3,000 MW. This lower demand jumps to 4,200 MW in the winter. The LOLE study had modeled 103,455 MW for winter 2023, but the auction had only 99,188 MW.

If we dig deeper into load forecasts since seasonal auctions show peak winter forecasts and compare summer peak to winter peak, there is a more than 23 GWs difference between summer peak and winter peak forecasts. Compared to annual auctions, this 23 GWs lower demand in winter can explain the need for fewer baseload resources and more flexible resources. These insights are a benefit of seasonal auctions.

In addition to the lower load forecasts, the MISO north region swung from a deficit of 1,200 MW to a surplus of 4,700 MW in the summer is new gas capacity and new renewables. MISO also moved to a new capacity accreditation method for thermal resources like gas, resulting in increased accredited capacity. In a way, MISO’s new Schedule 53 capacity accreditation method benefited non-thermal resources.

Implications for renewables

MISO has much renewable capacity sitting in the interconnection queue. And MISO has yet to move to a new capacity accreditation method for renewables. In this auction, solar got 50% capacity for all seasons except for 5% in winter, and wind received 18-40% capacity credit based on the average Effective Load Carrying Capability calculation. MISO is moving to a 3-year transition process of the marginal Loss of Load (LOL) hours method starting in the 2025 auction. This marginal LOL method will be punitive for new renewable resources. The full effect of this method won’t be felt until the post-2027 auction.

There is 3,300 MW of solar with their Phase 3 study done in the generator interconnection queue post-last auction. But only half of that capacity is under construction. And none of that capacity was available in this auction. Future MISO’s capacity prices could be higher if coal ultimately retires and new solar is under construction.


MISO capacity prices are either higher at the Cost of New Entry or lower because of the vertical demand curve. MISO plans to move to a sloped demand curve as early as the next auction. We can expect changes to MISO’s capacity auction in future years.

About the Author: Rao Konidena of Rakon Energy LLC is an independent consultant focused on providing policy and testimony support, business development, and training in wholesale energy markets. Rao likes helping solar and storage developers and consumer and environmental advocate clients. Most recently, Rao was with Midcontinent ISO (MISO) as Principal Advisor for Policy Studies, working on energy storage and distributed energy resources. At MISO, Rao worked in management and non-management roles around resource adequacy, economic planning, business management, and policy functions. Rao volunteers as an engineering mentor for middle school students participating in the Future City competition. Rao is Co-President of the Finnish American Chamber of Commerce – Minnesota (FACC-MN), and on the Board of Ever Green Energy and Minnesota Solar Energy Industries Association (MnSEIA).

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