On April 15th and May 23rd, respectively, the Midwest Independent System Operator (MISO) and PJM released the results of their annual electricity capacity auctions.
While each auction is different, the results were similar in that both sets of results had lower capacity clearing prices than what was expected. For clarity, electricity capacity payments are paid to power supply resources in return for delivering electricity when needed.
The major difference between MISO and PJM is that MISO has its capacity auction in the April right before the capacity performance season. The recent April MISO capacity auction was for the 2017-18 capacity season that starts on June 1, 2017 and ends May 31, 2018. PJM has its capacity auction three years before the capacity period begins, so the PJM capacity auction results released this past month are for the 2020-21 capacity season that starts on June 1, 2020 and ends May 31, 2021. From a market participant perspective, the PJM three-year lead provides much more clarity regarding future pricing. There has been discussion of the MISO switching to the PJM capacity model, but for now, it will remain a one-year auction.