The Midcontinent Independent System Operator says higher-priced local energy resources, which were needed to meet requirements of a capacity auction, helped lead to higher electricity capacity prices for southern and central Illinois.
MISO has responded to an inquiry from the Illinois Attorney General’s office about the results of a recent electricity capacity auction.
The capacity auction resulted in prices of $150 per megawatt-day for the southern and central Illinois region, which is almost nine times higher than the current $16.75 per megawatt-day cost.
MISO, which runs an electricity grid spread over parts of 15 states, had prices of $3.50 per megawatt-day for its other zones.
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In a response written by MISO lawyer Kari Bennett, the grid operator said higher-priced local resources were needed to meet a local clearing requirement.
MISO used energy sources from both inside and outside out of the southern and central Illinois region. The region was able to import 1,568 megawatts at a lower cost from other zones. However, at least 85 percent of its capacity had to come from within the southern and central Illinois. That percentage is lower than six other MISO zones.
In southern and central Illinois “higher priced local resources were needed to meet the local clearing requirement,” Bennett wrote. “Additionally, more capacity was procured through the auction rather than by direct contracts between parties as compared to last year. This resulted in more exposure to price sensitive capacity offers in this year’s auction.”
Bennett added incremental changes made to the auction process did not affect the southern and central Illinois region any more than they affected other MISO zones.
MISO said there is an independent market monitor who reviews actions of the owners and operators of planning resources, who reviews and analyzes conditions, functions or actions affecting the competitiveness of the auction, and establishes mitigation measures to allow prices to rise efficiently to reflect legitimate supply shortages while mitigating increased prices from artificial shortages, among other things.
Bennett also wrote that MISO plans to make market participant offer data publicly available, but the identities of the participants will be excluded. The data is scheduled to be released in mid-May.
“The Independent Market Monitor reviewed the offers and determined that the final results were not impacted by physical or economic withholding and other conduct prohibited by MISO’s Tariff,” Bennett wrote.
After Madigan’s office sent a letter questioning the MISO process, she received support from State Rep. Jerry Costello II, D-Smithton.
“Some southern Illinoisans could see their bills go up by as much as $150 annually or more under these new rates without any explanation,” Costello said. “These families deserve a process for determining rates that is open and accountable and does not punish middle-class families for living in central and southern Illinois.”
“A rate hike this extreme could mean some southern Illinois families must choose between paying their energy bills and putting food on the table,” Costello added.