Electricity is a lot like other commodities—it’s bought and sold in markets. But unlike groceries or gasoline, electricity must be delivered the instant it’s used. That’s where MISO’s energy markets come in.
MISO operates one of the world’s largest wholesale electricity markets. Every day, hundreds of companies participate in our markets to buy and sell billions of dollars’ worth of electricity—helping to keep prices as low as possible while ensuring the grid stays reliable.
Here’s how it works:
1. Real-Time Market
This market runs every five minutes, constantly balancing electricity supply and demand across the region. It ensures power flows where it’s needed—at the lowest possible cost—while maintaining reliability.
Think of it as the live scoreboard of the grid, adjusting in real time to keep everything running smoothly.
2. Day-Ahead Market
This market is like a next-day weather forecast—it helps plan for tomorrow’s electricity needs. Buyers and sellers lock in prices a day in advance, ensuring enough resources are scheduled to meet expected demand.
It adds stability and predictability to grid operations.
3. Capacity Market
Imagine a shopping mall parking lot. Most days, there are plenty of open spots. But on Black Friday, you need enough capacity to handle the surge.
The capacity market works the same way. It ensures there’s enough electricity available—even during peak demand or unexpected outages. It also encourages investment in new and diverse energy resources.
4. Financial Transmission Rights (FTR) & Auction Revenue Rights (ARR) Market
When parts of the grid get congested, electricity prices can vary by location. FTRs help market participants manage the financial risk of those price differences—kind of like toll passes that offset congestion costs.
ARRs ensure that the proceeds from FTR auctions are fairly distributed to those entitled to them.
Electricity prices aren’t the same everywhere. They depend on where you are on the grid, how much demand there is, and how easily electricity can get to you.
That’s where Locational Marginal Pricing (LMP) comes in. It’s a market-based system that sets the price of electricity at specific locations, based on:
LMP updates every five minutes, reflecting real-time changes in supply and demand. It helps ensure electricity is delivered efficiently—and that the costs are shared fairly.