Reasonableness of MISO 2015/2016 Capacity Auction Results
On behalf of Sierra Club, Synapse evaluated the reasonableness of the Midcontinent Independent System Operator’s (MISO) 2015/2016 capacity auction, which resulted in a dramatic price spike for Zone 4 (southern Illinois). Synapse’s analysis found that the auction results were an artifact of the auction construct, and did not accurately reflect actual supply and demand conditions. In particular, Synapse highlighted the fact that counter flows from power exports were not accurately accounted for, and that the threshold for investigating possible market power was inappropriately tied to PJM’s clearing prices. As a result, Synapse recommended that FERC reject the results of the auction and that the flaws in the auction construct be corrected. Following a technical conference on this matter, FERC agreed with Sierra Club and other intervenors that MISO’s method for calculating counter flows and for determining the threshold for investigation of market power were not just and reasonable, and ordered MISO to change its methodologies.