The American Public Power Association on July 7 submitted comments on the Federal Energy Regulatory Commission’s June 4-5, 2025, technical conference addressing resource adequacy challenges in Regional Transmission Organization and Independent System Operator regions.
In its comments, APPA notes that Steven Lieberman, Vice President of Transmission & Regulatory Affairs, at American Municipal Power Inc., was a panelist on the fifth panel at the Technical Conference, where he addressed resource adequacy challenges in the Midcontinent Independent System Operator, Inc. region and, more generally, addressed the role of public power utilities in ensuring resource adequacy.
APPA’s comments echo and elaborate on Lieberman’s pre-filed statement, as well as the post-technical conference comments filed by other APPA members.
“Specifically, APPA emphasizes the core principle that resource adequacy constructs in RTO/ISOs ought to be designed to make it easier and more cost-effective for load-serving entities to fulfill their obligations,” it said.
Public power load serving entities are responsible for ensuring they have sufficient resources to meet their communities’ electricity demand, either by building those resources themselves or by procuring the resources in bilateral or market transactions, the comments noted.
“For decades, public power utilities have met that responsibility of ensuring reliability while keeping rates affordable and selecting resources consistent with local preferences. Fulfilling that responsibility, however, is becoming increasingly challenging. As demand forecasts grow—driven by manufacturing, electrification, and data centers—several factors are threatening reliability and affordability: federal policies, overly burdensome permitting processes, increased reliance on natural gas for electricity generation, and supply chain constraints,” APPA said.
APPA urged the Commission “to focus its inquiry on the real-world impacts of any future changes on the ability of load serving entities to meet their resource adequacy obligations at the lowest reasonable cost.”
The Technical Conference “highlighted that each RTO/ISO has a unique resource adequacy construct, which considers the needs of its region. One similarity among them all, however, is that each construct is intended to ensure that load serving entities have a mechanism and pricing signal to obtain—by constructing or purchasing—adequate capacity to serve their loads.”
APPA noted, for example, that MISO explains that its resource adequacy objectives are formally communicated through the resource planning obligations on LSEs, while SPP similarly states that it resource adequacy program requires each load responsible entity to maintain a specified planning reserve margin by owning or contracting for generation capacity, under the oversight of SPP and our state regulators.
“In short, the purpose of all resource adequacy constructs is to enable load serving entities to fulfill their reliability obligations. It is the Commission’s responsibility, therefore, to ensure that each construct is designed to achieve that reliability objective at the lowest reasonable cost,” APPA said.
Ensuring just and reasonable resource adequacy constructs in each region “must be more than an academic exercise in economic theory. Idealized assumptions about market participant behavior must yield to practical realities: each megawatt of capacity is not fungible, load forecasts are not based on perfect information, and supply chain constraints and permitting challenges do pose significant barriers to market entry.”
The Commission “should therefore look at the reality of how each resource adequacy construct affects load serving entities—the buyers of the resource adequacy product,” APPA said.
AMP’s Lieberman explained many of those practical realities from the perspective of public power load serving entities, APPA said. “For example, he compared the benefits of MISO’s truly residual auction that reduces load’s exposure to price volatility to the practical reality of PJM’s auction being the ‘principal source of capacity procured on behalf of captive load since inception.’”
Lieberman also explained the significant practical challenges that arise when price signals are not actionable; that is, when load serving entities do not have enough time to make investments to respond to auction results.
He also explained the practical consequences of “rule churn” that undercuts the ability of market participants to make appropriate investment decisions, APPA noted.
“These examples demonstrate that the unremarkable conclusion that merely sending ‘price signals’ through market-based resource adequacy constructs is not sufficient to actually enable load serving entities to procure sufficient resources to serve their load at the lowest reasonable cost,” APPA argued.
FERC “must bridge that gap between theory and practice, along the lines Mr. Lieberman has suggested. So, as the Commission considers changes to resource adequacy constructs in RTO/ISOs, it must evaluate whether each proposal is intended to—and likely will—create an environment in which load serving entities can invest in reliable, affordable resources to serve their communities.”
