Metro-East News

Your electric bill could increase if this bill passes

Electricity rate adjustments are expected to take place in the coming months.
Electricity rate adjustments are expected to take place in the coming months. BND

Southern and central Illinois electricity customers, who use about 10,000 kwh a year, could see an increase in their monthly bills if a piece of legislation passes, but by how much depends on who you ask.

Dynegy, an electricity producer is pushing legislation in the state general assembly that it says would prevent even larger increases in electricity bills, and it would help its eight Southern Illinois power plants to stay financially viable.

Opponents of the proposal say is nothing more than a bailout for Dynegy.

Under the proposal the state would handle capacity procurement rather than the Midcontinent Independent System Operator, which has had huge price swings for electricity supply in recent years. Proponents of the proposal say having the state handle capacity procurement, which MISO has requested, would stabilize the Illinois market, which has an excess of supply.

MISO has annual auctions in the spring in order to determine capacity prices and to make sure there is enough electricity available on peak usage days in the summer.

Dynegy says downstate Illinois has lost 20 percent of its power generation capability in the past two years, and more is at risk because of a lack of a functioning capacity market. The energy producer says an additional 30 percent of power plant resources could be lost in the next three years because there is an inability to cover operating costs.

“Dynegy has a number of plants that are currently losing money and are at risk to be shut down,” said Dean Ellis executive vice president of government and regulatory affairs for Dynegy. “If this doesn’t go into place, we will have to continue make hard decisions around plant shut downs.”

Decisions on whether power plants would shut down need to be made by the middle of 2018, Ellis said.

Dynegy has a number of plants that are currently losing money and are at risk to be shut down. If this doesn’t go into place, we will have to continue make hard decisions around plant shut downs.

Dean Ellis executive vice president of government and regulatory affairs for Dynegy

Dynegy says further shutdown of power plants could lead to a $23 a month increase in customer bills because further shutdowns would lead to electricity shortages higher prices.

The Illinois Clean Jobs Coalition called the proposal a bailout deal for Dynegy.

“It’s a significant bailout. If it walks like a subsidy, talks like a subsidy and quacks like a subsidy, it’s a subsidy. Inside the market itself, they’re trying to create this new market that is effectively subsidizing their units,” said Andrew Barbeau, who is a senior clean energy consultant for Environmental Defense Fund. “They’re putting their thumb on the scale of the market, to force the prices higher and eliminating those who can participate.”

Barbeau said Dynegy is trying to set up a market that would favor its own energy producing plants. He added Dynegy wants prices similar to what is paid in northern Illinois which is about $150 per megawatt day capacity price. That price would lead to a $115 more a year, or an average of $9.58 a month, for the average residential customer, who uses about 10,000 kwh of energy a year.

The legislation calls for Illinois to enter into long-term contracts for at least three years, for electricity capacity, rather than the annual auctions that MISO currently runs.

Dyengy plants are predominantly coal and much of its revenue comes from capacity costs, which are passed onto consumers.

It’s a significant bailout. If it walks like a subsidy, talks like a subsidy and quacks like a subsidy, it’s a subsidy. Inside the market itself, they’re trying to create this new market that is effectively subsidizing their units. They’re putting their thumb on the scale of the market, to force the prices higher and eliminating those who can participate.

Andrew Barbeau, senior clean energy consultant for Environmental Defense Fund

Barbeau says the legislation it would make it harder for renewables to get into the market.

Barbeau said Dynegy is looking to block out competitors by putting in restrictions that would favor local in state plants.

“If you constrain the market, then you can increase the price you can potentially win at in Illinois,” Barbeau said.

Dynegy estimates bills would go up $2 to $3 a month for the typical residential customer, if the state handled the procurement process.

“This is being characterized as a subsidy for our facilities, it’s absolutely is not,” Ellis said. “There’s no guarantee our facilities would be selected in this process. We’ve come up with a market-based competitive process.”

In the MISO auctions, about half of the resources must come from within the state meant to meet basic instate reliability criteria, Ellis said. Under the legislation, that requirement would stay in place.

Dynegy said electricity producers in other states are able to sell their excess electricity into Illinois at lower rates because costs of producing the power is already paid for.

While we have not formulated a position on the bills that were introduced, we have previously stated and continue to believe that Illinois does not need to procure capacity for delivery prior to June 1, 2020 (or 2021). We have always advocated for a plan to ensure long-term resource adequacy and minimize price volatility for Ameren Illinois customers.

Ameren Illinois spokeswoman Marcelyn Love

Ameren Illinois, which passes on the electricity supply costs to its customers without any markup, has yet to take a formal position on the bill.

“While we have not formulated a position on the bills that were introduced, we have previously stated and continue to believe that Illinois does not need to procure capacity for delivery prior to June 1, 2020 (or 2021),” Ameren Illinois spokeswoman Marcelyn Love said. “We have always advocated for a plan to ensure long-term resource adequacy and minimize price volatility for Ameren Illinois customers.”

During testimony in front of legislators during the recent veto session, Ameren’s Senior Director of Energy Supply and Corporate Initiatives Jim Blessing said Ameren Illinois does not believe there is a resource adequacy issue in the short-term.

“Our concern with the bills is that they would have the (Illinois Power Agency) begin procuring capacity immediately, for deliveries beginning in June 2018,” Blessing said. “By beginning procurement immediately, our customers would not benefit from expected lower prices in the short term.”

Joseph Bustos: 618-239-2451, @JoeBReporter

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