On April 28, the Midcontinent Independent System Operator (MISO) released the results of its capacity auction (called the Planning Resource Auction or PRA) for the upcoming 2025-26 year starting June 1. Prices spiked to over $20/kW-mo. in the summer season for the entire region and ranged from $1- /kW-mo. for the other 3 seasons (Figure1 provides pricing in $/MW-Day). On an annualized basis, the capacity price is roughly $6.5/kW-Mo. 
This was the third auction MISO has run on a seasonal basis, and, within that construct, prices could theoretically reach levels as high as 4 times the levelized cost (roughly $42.5/kW-mo.) necessary to support the construction of a natural gas combustion turbine capacity resource (a concept that is labeled the Cost of New Entry or CONE which MISO reassesses each year) under the theory that a capacity resource should be able to recover its entire cost in a single season if new entry is needed (prices were actually set to a multiple of CONE in the Missouri Zone 5 in last year’s auction at ~$22/kW-mo.).
This was the first auction that MISO ran utilizing a downwards-sloping (as opposed to vertical) demand curve, labeled the Reliability-Based Demand Curve (RBDC). Like the downwards-sloping demand curve utilized in other capacity constructs, the RBDC is designed to reflect a willingness to procure more or less capacity based on its cost and marginal reliability value rather than procure a single, fixed requirement (assuming adequate resources are available). MISO developed a RBDC for its entire region as well as one for each the North/Central and South sub-regions. In all 4 seasons, the sub-regional RBDCs set the price, and that price was uniform across the MISO region except for in the fall in which the sub-regional transfer limit bound on south to north transfers, resulting in a slightly lower price in MISO South. The south to north transfer limit was also very close to binding in the summer.
Overall, the RBDC achieved exactly what MISO designed it to do. It increased capacity prices across the board, while also providing a significant price signal that summer capacity is needed. On the quantity side, MISO cleared more capacity in each season than it would have without the RBDC. With additional committed capacity, MISO will theoretically be better positioned for reliability in 2025-26. With a high summer price, MISO is theoretically incentivizing the retention of existing resources and the entry of new supply. Moreover, through the design of the RBDC, MISO believes that these reliability outcomes justify the resulting increased cost to load. Unlike some other markets, MISO consists predominantly of vertically integrated, traditionally regulated utilities, so load in MISO is generally well hedged against capacity market prices (as a reflection of this hedging, roughly 85% of capacity supply in MISO participates in the auction as a price-taker).
Despite the novelty of the RBDC and the unique nature of the MISO market, these capacity results are reflective of the same fundamental trends stressing resource adequacy across the country. Very similar to PJM’s most recent capacity auction for the same period, MISO cleared 99.8% of capacity that offered in the summer, indicating a very tight margin and that a historical excess capacity position has largely evaporated. Load is growing (MISO’s coincident peak forecast was 1.3 GW higher year-over-year), traditional resources are retiring (3.3 GW of accredited capacity, consistently most of coal, retired within MISO), new supply entry is limited and consists of resources a lower degree of capacity (MISO had 5.1 GW of new accredited capacity, consisting largely of solar, participate), and capacity market rule changes are emphasizing the reliability challenge (MISO had 4.9 GW lower accredited capacity from thermal resources subject to its more stringent performance-based accreditation rules).
Looking forward, the capacity situation in MISO may worsen before it improves. There are still significant barriers to the entry of new capacity resources, and load growth appears to be accelerating. Deferral of retirements can provide a temporary solution to some degree, but ultimately new capacity supply resources will need to be added in sufficient quantities to overcome retirements and meet load growth. The tail-end section of the curves where MISO cleared in the summer on both the demand (RBDC) and supply curves is very steep, meaning small changes in demand and supply will cause a very large impact on price. MISO capacity prices could be volatile in future years but hopefully new entry of supply is eased so that reliability will not be.
1 https://cdn.misoenergy.org/2025%20PRA%20Results%20Posting%2020250428694160.pdf
For more information or to comment on this article, please contact:
Matt King, Director-Power Supply Planning
GDS Associates, Inc. - Marietta, GA
864.607.3920 or
matt.king@gdsassociates.com