FERC accepts MISO penalty overhaul for load modifying resources, subject to condition
- Reforms begin with 2027/2028 Planning Year, effective June 1, 2027
- New seasonal penalty tied to Auction Clearing Price
- MISO must file compliance revisions within 30 days
Photo: Wikimedia Commons - Giorgio Galeotti, CC BY 4.0What changed The order accepts MISO's revision lowering the lower bound of the DRR-Type I Excessive Energy and Deficient Energy thresholds from 6 MW to 0.1 MW.
WASHINGTON, Oct 23 — The Federal Energy Regulatory Commission (FERC) on Oct 23 accepted, subject to condition, revisions to the penalties the Midcontinent Independent System Operator (MISO) applies to Load Modifying Resources (LMRs) that fail to meet their performance obligations, beginning with the 2027/2028 Planning Year.
LMRs are demand resources or behind-the-meter generation that commit to respond to emergencies when called on by MISO, according to the commission's order in Docket No. ER26-1882-001. MISO said that in the 2025/2026 Planning Year they made up slightly less than 10% of all Planning Resources.
MISO said the existing penalties do little to discourage fraud. It gave the example of a 1 MW resource that provides 10% of its required load reduction for four hours: that resource would pay $36,000 in penalties but would have received nearly $80,000 in capacity payments.
The reforms keep the existing real-time penalty and add a penalty based on the Auction Clearing Price, which is assessed at the end of each season. An LMR that achieves less than 25% of its obligation has a complete performance failure, according to the order. An LMR disqualified twice within a three-year period is barred from the auction for three additional Planning Years.
As its condition, FERC directed MISO to file revisions within 30 days. MISO must also add to the tariff its proposed language on how the denominator of the performance ratio used in the auction-price penalty is calculated.
Protesters argued the penalties were overly punitive. The commission said it disagreed.
"If performance incentives or penalties create excessive economic risks for resources to participate, they will exit MISO’s markets, which in turn, would significantly increase the cost of meeting resource and energy adequacy," Commissioners Judy W. Chang and David Rosner wrote in a joint concurring statement.
MISO filed the proposal on March 20, 2026, and amended it on June 22, 2026. The amendment moved the requested effective date from June 1, 2026 to June 1, 2027.