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How MISO’s ‘Forward Resource Auction’ Will Benefit Customers

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Electric choice – and customers in Illinois and Michigan – just got a big win.  

Recently, the Midcontinent Independent System Operator (MISO) – which oversees reliability across all or parts of 15 U.S. states and the Canadian province of Manitoba – unveiled a new proposal to change its planning reserves auction for retail competitive states.

The proposal – also known as a "Competitive Retail Solution" – would require all competitive retail demand to take part in a "forward resource auction" (FRA) process. Under the new rule, MISO will hold a three-year forward auction plan for the pricing of electric capacity. MISO previously used a one-year auction plan that gave a limited one year at a time price for those companies required to purchase generation capacity.

The new auction structure aims to send longer term price signals to the market when new generation capacity is required. Proponents of the FRA argue that the rule will help ensure greater reliability, transparency and affordability for customers.  

“With a three-year forward capacity auction, the market will more clearly indicate to companies how much capacity they can expect to sell for three years in advance, giving generators a better estimate of not only how much power they will sell, but also if there should be a need to build new generation facilities.” according to a statement released by Michigan State Senator Mike Shirkey (R-Clarklake). “There will also be more transparency in the auction process, which will help keep costs down.”

While the proposal still has some final hurdles to clear with other stakeholders, MISO intends to file the rules with the Federal Energy Regulatory Commission (FERC) in August.

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Posted: July 29, 2016