On June 4–5, 2025, the Federal Energy Regulatory Commission (FERC or Commission) hosted a commissioner-led technical conference to discuss resource adequacy challenges facing regional transmission organizations and independent system operators (RTO). The conference is a response to the growing concern that multiple RTO regions across the country may not have sufficient supply available in the coming years to meet demand due to resource retirements, the pace of new generation entry and higher load growth arising from the construction of data centers and reindustrialization.
Chairman Christie opened the conference by questioning the continued viability of organized markets for capacity. After noting that RTO regions had relied on these “administrative constructs” for over 25 years, Chairman Christie encouraged participants in the conference to consider whether FERC-jurisdictional markets have failed and should be replaced. Chairman Christie also questioned whether FERC has been asking RTOs with multi-state footprints to do the impossible by maintaining reliability in the face of divergent public policy objectives where certain states want to “build and retain coal, gas, nuclear” while “other states want to shut them down and build nothing but wind and solar.”
Despite the relatively dramatic start to the technical conference, the other Commissioners and most panelists took a more measured and moderate tone over the two-day conference. While the other Commissioners acknowledged the challenges facing RTOs due to unprecedented increases in demand, these Commissioners also acknowledged the benefits that organized markets have delivered in terms of affordability and resource adequacy. These Commissioners emphasized the importance of FERC, RTOs and state regulators working together to accelerate the interconnection of new capacity and to build on recent market enhancements to ensure that markets are sending signals to invest in the capacity needed to maintain reliability and deliver benefits to consumers. Commissioner Chang also observed that although the technical conference was focused on RTO markets, the reliability challenges facing the Commission are not limited to regions with organized markets.
The two-day conference was organized into eight panels discussing capacity markets and resource adequacy in RTO regions, with a particular focus on PJM Interconnection, L.L.C. and the Midcontinent Independent System Operator, Inc. (MISO), and possible state and federal policy solutions to address emerging challenges. Recurring themes included:
- The transition to greater reliance on intermittent resources is creating new challenges for resource adequacy planning, particularly in multi-state RTOs where state-level energy policies disincentivize development of dispatchable generation that can replace retiring units that have traditionally maintained grid reliability.
- The interconnection process is impairing the ability to bring new generation capacity online on a timeline that aligns with reliability needs. This presents a significant obstacle to maintaining resource adequacy and is driving up capacity prices. Interconnection reform is a pressing issue that is inextricably linked to the ability of grid operators to maintain reliability.
- Capacity markets and resource adequacy planning processes must evolve to better reflect the changing dynamics of the energy sector. Multiple panelists observed that existing capacity markets were not designed for, and are ill-suited to address, the growth in large loads.
- State regulators took the position that they should play an expanded role in ensuring resource adequacy in RTO markets, as they ultimately are responsible for resource adequacy and rates in their states. Several state regulators suggested that increased state-level coordination and information-sharing would promote efficiency and better functioning of the capacity markets.
FERC has issued a notice inviting interested parties to submit comments on the technical conference discussion no later than July 7, 2025. Once comments are submitted, the Commission will have the option to use the record in the proceeding to support additional FERC action, such as using its authority under Section 206 of the Federal Power Act to initiate an investigation into the resource adequacy constructs used in individual RTO markets or initiate a rulemaking proceeding.
With Chairman Christie’s term drawing to a close and the more moderate tone taken by the other Commissioners, the possibility that FERC will take the extreme step of directing individual RTOs to abandon the use of capacity markets in favor of reliance on bilateral contracting for capacity or other construct seems remote. Even if the Commission were inclined to take more aggressive measures to shore up capacity in RTO markets, it is difficult to cast capacity markets as the primary culprit responsible for the resource adequacy challenges that are being experienced in markets across the country. Indeed, RTO markets that rely on bilateral contracting for capacity to maintain resource adequacy, such as the California Independent System Operator Corporation (CAISO) and Southwest Power Pool, Inc. (SPP), have been far from immune from the resource adequacy challenges being experienced in PJM and other markets. But the fact that the Chairman of FERC even raised the question of whether organized capacity markets have failed and should be abandoned is telling about the current state of the markets and FERC policy.
A brief summary of each of the panels held over FERC’s two-day technical conference can be found here.
