The Midcontinent Independent System Operator proposed changes to its market participation rules for demand response resources to help deter manipulation and fraud, according to a Friday filing at the Federal Energy Regulatory Commission.

The proposal follows four FERC enforcement cases involving MISO’s demand response programs. The companies involved in the cases include Voltus, Ketchup Caddy, Big River Steel and Linde.

“As MISO learned of these various market activities through the enforcement orders, it worked with its stakeholders, its [independent market monitor], and [FERC’s enforcement office] to identify and propose tariff revisions to better ensure that MISO’s markets receive the energy and capacity benefits that [demand response resources] are paid to provide,” the grid operator said.

MISO noted it has an existing right and obligation to vet and verify resources submitted into its markets. “Nonetheless, MISO seeks to reinforce these requirements given the abuses that came to light in the recent enforcement orders,” the grid operator said. 

MISO said the proposal focuses on four interrelated issues:

• Payment for nonexistent or overstated curtailments;
• Inaccurate or inflated baselines that curtailments are based on;
• Fraudulent registration of resources; and, 
• Tariff changes dealing with issues such as audit rights, and changes to testing and “make whole” payments.

In one change, demand response resources will no longer be allowed to self-schedule, according to the proposal. “A DRR must adjust load when called upon,” MISO said.

MISO also proposed clarifying that an entity offering into its markets must have the legal right to make a resource available.

“Though this requirement was already clear and, formally, MISO believes that it needs no explicit mention in the tariff, because of the frauds of [Ketchup Caddy] and Voltus in offering in uncontracted, and often uncontacted, [load modifying resources], MISO is inserting the requirement of contractual language throughout its tariff to make clear that any [market participant] offering LMRs into MISO’s markets must have clear evidence showing they have the legal title and ability to have the LMR perform,” the grid operator said.

Also, because of the “egregious” behavior of Ketchup Caddy and Voltus in submitting availability information and getting paid for non-existent resources, MISO proposed requiring an officer of companies that aggregate demand response resources to attest that the company follows the grid operator’s rules and will not engage in fraud, market manipulation or gaming.

MISO asked FERC to let its proposal take effect by July 19.

MISO plans to propose additional rule changes aimed at enhancing its resource adequacy construct in the second and third quarters this year. They will include reforms to demand resource and emergency resource accreditation, and demand resource testing and registration, MISO said.