This issue is a sub-component of RASC011 - Resource Adequacy Construct
The MISO Capacity Market is not designed to be the sole source of capacity for an LSE; this design feature is evident in the capacity prices – which do not reflect the cost of maintaining reliability.
Nevertheless, currently, some LSEs choose to ignore reasonable long-term resource planning and instead procure all or nearly all of their annual capacity needs by purchasing Zonal Resource Credits in the PRA. This behavior results in unreasonable cost shifting, allowing such LSEs to “free ride” on the capacity investments of other LSEs without incurring any meaningful risk.
The ultimate consequence of such free riding behavior is:
• Unreasonable cost shifts / Unjust and unreasonable allocation of the costs of maintaining reliability and capacity adequacy in the MISO markets;
• Long-term diminishment of and harm to reliability; and
• Decreased efficacy of the PRA as a tool to address important resource adequacy needs in MISO.
Although it is possible for states to attempt to address these issues, there are many states in MISO, and unless all states take effective action, the problem will persist. A MISO-wide solution would be more practicable and efficient. Nonetheless, any solution must respect the authority and retail jurisdiction of the states. FERC has, on multiple occasions, rejected Eastern-style RTO capacity market features such as a sloped demand curve and/or minimum offer price rule. These features are not a reasonable solution to the concerns outlined above. Rather, MISO should consider adopting rules that would require LSEs to demonstrate a minimum level of long term procurement in order to have access to the PRA. Such rules would be conceptually consistent with those that FERC has recently approved for SPP, which require LSEs to procure long-term capacity to cover 100% of their load (exclusive of reserves) for the following summer peak period. Entergy would propose a solution that is conceptually similar to what FERC has approved for SPP, as an addition to, not a substitute for, the PRA.