The Midwest Capacity Market Tripled. Most Businesses Missed It.

If you operate a business in Illinois, Indiana, Wisconsin, Minnesota, or anywhere else in the Midcontinent Independent System Operator (MISO) footprint, the MISO capacity auction just reshaped your energy bill. It absorbed one of the sharpest capacity cost increases in the market's history, and most businesses never saw it coming. Many still don't understand what changed.

Here's what happened, where things stand now, and what to do about it.

What is the MISO capacity auction?

The MISO capacity auction — formally the Planning Resource Auction (PRA) — is the annual market where MISO secures enough generating capacity to meet forecast peak demand plus a reliability buffer. It sets a clearing price in dollars per megawatt-day ($/MW-day), and that price flows through to the capacity charges embedded in what your business pays for electricity. When the auction clears high, your supply costs rise with it — usually before most buyers notice.

The 2025/26 MISO capacity auction spike

In MISO's 2024/25 planning year capacity auction, summer capacity cleared at $30/MW-day which is within the historical range.

One year later, the 2025/26 auction cleared at $666.50/MW-day, a more than 2,000% year-over-year increase. 

Three factors caused the spike:

• A new demand curve. The 2025/26 auction was the first to use MISO's new Reliability-Based Demand Curve (RBDC), which replaced the old vertical demand curve. The RBDC is designed to price in reliability risk more precisely, which means prices rise steeply when reserves are tight, rather than clearing near zero even when the grid is stressed.

• Accelerating retirements. Coal and older gas plants have been retiring faster than new capacity has come online, shrinking the pool of available supply.

• Declining surplus. MISO's summer surplus fell from approximately 6.5 GW in 2023 to 4.6 GW in 2024, and to just 2.6 GW in 2025. Less buffer means the market prices risk more aggressively.

2026/27 MISO Capacity Auction Results: Where Things Stand Now

The 2026/27 auction cleared at $424.30/MW-day, a decent drop from last year's record, driven by a 4% increase in offered capacity as new resources entered the market.

The less comfortable reality is that $424.30/MW-day is still among the highest prices in MISO's history, and still 14x what the market cleared in 2024. The structural pressure isn't easing. MISO projects peak load to grow from 121 GW in 2025 to 163 GW by 2035, driven by data centers, AI infrastructure and broader electrification of transportation and industrial processes. New supply is coming online, but it's racing against accelerating demand.

Know your Peak Load Contribution (PLC)

• Your supplier or utility can provide your current PLC. If you don't know this number, you're budgeting blind. Request it, then compare it year-over-year.

Manage demand during peak hours

• PLCs are largely determined by your load during a small number of critical summer afternoons, typically the hottest days in late July and August. Reducing consumption during those windows, even by 10–15%, can meaningfully lower your capacity obligation for the following year. HVAC setpoint adjustments, load shifting and demand response enrollment are all tools.

Think carefully about contract timing

• Capacity costs are embedded in supplier pricing. Locking in a multi-year contract when forward capacity prices are elevated means carrying that cost for the full term. Understanding the forward curve before you renew matters more than it used to.

Revisit your budget assumptions

• If your energy budget was built using pre-2025 capacity baselines, it's likely understating your actual costs. A current rate analysis will show the gap.

The Midwest capacity market has entered a new normal. The auction prices may fluctuate year to year, but the underlying drivers like load growth outpacing new supply, tighter reserve margins, a demand curve designed to price reliability risk, aren't temporary. Planning around last decade's numbers is a liability.

Key Takeaway

MISO's capacity auction cleared at $424.30/MW-day for 2026/27, still 14 times higher than 2024 despite easing from last year's record. The increase reflects a new demand curve, faster plant retirements and shrinking reserve margins, not a one-year fluke. Businesses in the MISO footprint should confirm their Peak Load Contribution, manage demand during peak summer afternoons, and factor current capacity prices into contract timing decisions.