CARMEL, Ind. — Midcontinent Independent System Operator Inc. has successfully implemented five-minute settlements across its energy market after a year-long collaboration with customers and stakeholders. The move aligns generator energy payments in real time with five-minute system dispatch and pricing signals.
“This is an important step forward for MISO and the industry that improves the efficiency of our market operations and ensures pricing transparency for the energy being delivered in real time,” said Shawn McFarlane, MISO executive director of Market Operations. “It is an effort that required close coordination with both internal MISO teams and external partners.”
MISO signals changing power needs and corresponding prices to electric generators every five minutes. Until now, those prices were averaged across the entire hour. The new five-minute settlement function allows energy payments based on each signal and actual price.
“This allows the market to compensate generators for the true value of energy and its production cost, which can vary from each five-minute interval depending on changing demand and market conditions,” McFarlane explained. “The five-minute settlement is expected to help incent generator flexibility in adapting to conditions as signals change.”
The transition was enabled by a new settlements system introduced in the spring that delivers flexibility to meet future needs and growth. MISO began five-minute settlements July 1 after several months of intensive systems testing and close collaboration with market participants.
“MISO established direct communication and ensured transparency among DTE vendors and our settlements team before the launch of five-minute settlements, and we are proud to have played a role in the successful implementation process,” said Nick Griffin, manager of Wholesale Market Development and Integration for Detroit-based DTE Energy. “DTE’s collaboration with MISO is an important element in our overarching commitment to providing reliable, affordable and quality energy to our customers across Southeast Michigan.”
The Federal Energy Regulatory Commission and MISO’s Market Monitor each identified five-minute settlements as an opportunity to bring greater operational consistency and pricing transparency between market operators and generators. FERC Order 825, which MISO supported, requires all regional transmission operators to implement five-minute settlements.
Todd Hillman, MISO senior vice president and chief customer officer, concluded, “This is an example of the industry, stakeholders and regulators working together to find effective solutions that improve operational effectiveness, create greater transparency and support competitive, reliable markets.”
MISO ensures reliable operation of, and equal access to, high-voltage power lines in 15 U.S. states and the Canadian province of Manitoba. MISO manages one of the world’s largest energy markets, with more than $24.7 billion in annual gross market energy transactions. MISO was approved as the nation’s first regional transmission organization in 2001. The not-for-profit organization is governed by an independent board of directors and is headquartered in Carmel, Indiana.