Spot Prices and Forward Premia on the MISO Exchange


  • Kevin Jones University of Houston-Downtown



This paper explores information contained in the basis for wholesale electricity on the Midcontinent Independent System Operator (MISO) electricity exchange.  Utilizing Fama and French’s (1987) approach, the basis is found to have predictive power on changes in real-time (spot) prices but provides only limited evidence of a time-varying forward premium.  This result contradicts Huisman and Kilic’s (2012) theory that the basis in an electricity market which relies primarily on storable forms of power for electricity production (such as MISO) should contain information on both changes in spot prices and provide evidence of a time-varying forward premium.  

Additional Files