History of Resource Adequacy at MISO The term “Resource Adequacy” refers to the electric industry’s ability to serve peak demand while also providing enough excess supply to achieve an agreed-upon level of grid reliability. In the MISO footprint, the responsibility for achieving resource adequacy rests with Load Serving Entities (LSEs) with oversight by states as applicable by jurisdiction. MISO facilitates these efforts by administering tariff-defined Resource Adequacy Requirements, which LSEs use to demonstrate their ability to serve peak demand and provide a sufficient margin of excess supply. These requirements help to ensure that the MISO footprint will have ample supply to meet demand in all time horizons. In 2004, MISO began phasing in its approach to support resource adequacy in its footprint. MISO’s approach was designed to complement state mechanisms as a majority of MISO members operate within traditionally regulated cost-of-service utility constructs. Initial efforts focused on energy pricing improvements to enhance reliability across the region. In 2008, a monthly Voluntary Capacity Auction was implemented to allow Load Serving Entities (LSEs) to efficiently buy and sell residual capacity in advance of each month. Since 2011, the Federal Energy Regulatory Commission (FERC) has required that MISO's resource adequacy construct include locational components. In 2012, FERC approved replacing the monthly auction with the annual Planning Resource Auction (PRA), which established seven Local Resource Zones. In 2018, MISO added tariff provisions to incorporate External Resource Zones, as well. Going forward, MISO must address whether there is continued value in refining MISO’s existing resource adequacy construct, or whether future reforms and enhancements must be focused on operational adequacy and energy market reforms. RESOURCE ADEQUACY TIMELINE AND HIGHLIGHTS 2004: FERC approves MISO’s original transmission and energy market tariff, with a short-term resource adequacy provision. MISO is directed to develop something more permanent. 2006: With FERC’s approval, MISO develops a phased-in approach to establish a permanent resource adequacy mechanism. Phase I develops an ancillary services market for contingency reserves; Phase II calls for a longterm integration of shortage pricing into the energy markets. 2007: Phase I of MISO’s ancillary services market is approved. MISO proposes Planning Reserve Margin (PRM) requirements for LSEs on an LSE-by-LSE basis for Phase II. 4
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