Discussion Papers,
Norwegian School of Economics, Department of Business and Management Science

Abstract: In this paper, we examine the impact on price spreads in the Midcontinent Independent System Operator (MISO) wholesale electricity market due to a 2015 rule change that allowed bi-directional trade between the MISO and the neighboring Manitoba Hydro balancing area. We employ an ARMAX-GARCH model to measure the impact of this rule change on price spreads between the day-ahead and real-time market prices (DART price spreads) throughout the MISO market footprint. After controlling for extreme weather during the 2014 Polar Vortex and fluctuations in real-time generation quantities, we find that average DART price spreads decreased in both the northern region of the MISO (MISO North) and Manitoba Hydro after the implementation of the 2015 rule change. This result provides evidence that this rule change led to improved market alignment between MISO North and the Manitoba Hydro balancing area, possibly via improved utilization of joint network infrastructure.

Keywords: Electricity markets; Price volatility modeling; Structural breaks; GARCH models

JEL-codes: C32; C58; Q41; Q47

Language: English

55 pages, September 22, 2026

Download statistics

• Norwegian School of Economics, Department of Business and Management Science
• Ordering Working Papers
• Home page for this series

Questions (including download problems) about the papers in this series should be directed to Stein Fossen ()
Report other problems with accessing this service to Sune Karlsson ().

RePEc:hhs:nhhfms:2026_012This page generated on 2026-09-22 12:30:17.