In a gift to generators complaining about capacity prices despite huge spikes in auction clearing prices, the Midcontinent ISO has issued a draft MISO Staff proposal to institute a mandatory three-year forward capacity market applicable to retail suppliers, "in portions of the MISO footprint that rely on markets to assure resource adequacy, like Zone 4 in southern Illinois."

The new carve-out capacity market (Forward Local Requirements Auction, FLRA) would be a three year forward auction procurement for local resource requirements and include a variable (downward sloping relative to price) demand procurement volume for all resources procured to meet participating demand

Delivery under the first mandatory capacity auction for retail choice areas would be for the 2019-20 delivery year.

Specifically, mandatory FLRAs would be held in the spring of 2018 for the 2019-20, 2020-21, and 2021-22 delivery years, with the 2019-20 and 2020-21 delivery years not being conducted a full three years in advance

In other capacity markets, such transition auctions have produced excessive prices with no attendant benefit to load (since they do no provide the alleged forward price signal needed)

Under the draft, the MISO would default retail suppliers to mandatory participation in the FLRA based on “bright line” administrative criteria, defined as an LSE whose demand is eligible for state authorized competitive retail access.

The draft states that, "all LSEs fitting this criteria will be provided the opportunity to opt-out of the FLRA by using a Fixed Resource Adequacy Plan (FRAP) in advance of the FLRA."

However, such an opt-out is not feasible for independent retail suppliers, as it requires a showing of local capacity requirements three years in advance -- a concept incompatible with retail choice

Click here to see more on MISO's draft