OREANDA-NEWS. The Midcontinent Independent System Operator's (MISO) market reforms allowing fast-start resources to set market prices more often resulted in slightly higher energy costs in the first month they took effect, with greater effects expected this summer.

The grid operator's extended locational marginal pricing mechanism went live on 1 March, aiming to fix a frequent problem in the way the midcontinent grid operator sets energy prices. Rules in effect prior to the change prevented the higher costs of starting up a unit capable of coming on line fast to set energy prices, forcing those resources to recover costs through make-whole uplift payments.

MISO addressed the issue by allowing fast-start resources, which are typically more costly to run, to set the price as they ramp up or down. The changes affected energy prices 13pc of the time in March, mostly during the morning ramp and peak evening hours, increasing prices by an average of \$1.36/MWh when it went into effect. Real-time energy prices last month averaged \$28.94/MWh.

Potomac Economics, the grid's external market monitor, found extended locational marginal pricing last month had in some intervals increased prices by \$50-100/MWh, based on a presentation released ahead of next week's markets committee meeting of the MISO board of directors.

The market monitor expects the effect of the new pricing methodology will increase more during peak summer conditions, as more fast-start units come on line and set prices.

Other grid operators in the eastern US are considering similar changes. The effect is to allocate the cost of running fast-start resources to consumers whose demand required such resources to run, rather than allocate the cost to all customers served by the grid through uplift payments.