Understanding the MISO Capacity Market: A Comprehensive Overview

The planning resource auction (PRA)

The Planning Resource Auction (PRA) is a central feature of the MISO capacity market. It is conducted to procure the necessary capacity resources to meet the PRMR for each LSE. The PRA is a sealed bid auction that determines the seasonal Auction Clearing Price (ACP) for capacity resources. The auction clears Zonal Resource Credits (ZRCs) to satisfy 100% of the seasonal PRMR for each LSE, less any capacity associated with the Capacity Deficiency Charge (CDC) and inclusive of any resources used in a Fixed Resource Adequacy Plan (FRAP).

Learn more in our blog post, “What is the MISO Market & What Does It Do?”

Seasonal capacity needs

MISO conducts seasonal PRAs to address the varying capacity needs throughout the year. These auctions are held in April prior to the Planning Year (PY) and cover the summer, fall, winter, and spring seasons. The seasonal approach ensures that MISO can address the specific capacity requirements and potential shortages that may arise during different times of the year.

Integration of renewable energy and demand response

MISO’s capacity market integrates various types of resources, including renewable energy and demand response. These resources are categorized as Planning Resources and can participate in the PRA. Renewable energy resources, such as wind and solar, contribute to the capacity market by providing ZRCs based on their Seasonal Accredited Capacity (SAC). Demand Response Resources (DRR) and Load Modifying Resources (LMR) also play a significant role by offering capacity that can be dispatched during peak demand periods.

Auction clearing prices and capacity deficits

The Auction Clearing Price (ACP) is determined through the PRA and reflects the cost of procuring capacity resources. In cases where there is an inadequate supply of ZRCs to meet the seasonal PRMR, the auction will clear all available ZRC offers at the Cost of New Entry (CONE) price approved by the Federal Energy Regulatory Commission (FERC). This ensures that even in times of capacity shortages, the market can procure the necessary resources to maintain reliability. If a region is short of ZRCs, the entire region will clear at the lowest CONE value of the Local Resource Zones (LRZs) in that region.

Ensuring resource adequacy

MISO ensures resource adequacy through a combination of the PRA, FRAP, and bilateral transactions. LSEs can meet their PRMR by self-scheduling ZRCs, participating in the PRA, or entering into bilateral transactions. Additionally, MISO monitors market participation to prevent market power abuse and ensure fair competition. The results of the PRA are posted on MISO’s website, providing transparency and accountability in the capacity market.

The MISO capacity market is a complex yet essential mechanism for maintaining electricity reliability across its footprint. Through the Planning Resource Auction, seasonal capacity planning, and integration of diverse resources, MISO ensures that there is sufficient capacity to meet demand. By understanding the intricacies of the MISO capacity market, stakeholders can better navigate and participate in this critical aspect of the energy market.

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