MISO Capacity Auction Impacts Midwest Electricity Consumers

Jason Stoffel

Midwest Independent Systems Operator (“MISO”) capacity auction results for planning year 2015/2016 were released April 14th, 2015. As expected, Ameren Illinois Zone 4 prices cleared well above current levels at $150/MW-day, which is almost ten times higher than the current price of $16.75/MW-day. Planning year 2016/17 could see capacity shortfalls with the ongoing retirement of coal-fired generation plants, resulting in continued higher capacity prices.

MISO is a very young capacity market, and with the annual capacity auction completing its third year, it’s difficult to predict forward capacity prices. Given the capacity prices are for one year increments, this price jump is a clear signal that new generation is needed in the MISO region. Existing generating resources in the MISO region are the biggest winners, as they will see a significant increase in capacity payments. Ameren Illinois will be asking MISO for a written explanation for the large capacity increase and how such drastic increases can be prevented in the future.

Customers who have fixed price electric contracts with retail electric providers behind Ameren’s Zone 4 should not see an impact in their contract price if capacity is also fixed. Customers need to review their energy supply agreement to determine whether these new capacity prices will be affecting costs or not.

Customers who do not have an energy supply agreement with a retail energy provider; Ameren Illinois will be releasing their utility rates for June 2015 – May 2016 in late May with an expected 10 percent increase in their rates to reflect the new capacity costs.

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The information in this page is offered only for general informational and educational purposes. It is not offered as and does not constitute legal advice.

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