People who receive their electricity supply from Ameren Illinois could see a double-digit percentage increase beginning in June.
A capacity auction held by MISO Energy, which runs the downstate electric grid, resulted in prices of $150 per megawatt day for Ameren’s southern and central Illinois customers, according to an email from Ameren Illinois spokeswoman Marcelyn Love.
Currently, Ameren Illinois has a price of $16.75 per megawatt day for capacity charges, almost nine times lower than the $150 per megawatt day result. The capacity charge is worked into the supply charge of an electricity bill.
“We plan on asking for a written accounting from MISO to get clarity on how this happened and what needs to be done to prevent it from happening again in the future,” Love wrote. “Until we have more information, we will be working to resolve this inequity to our customers.”
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The rest of MISO’s zones had prices of $3.50 per megawatt day, according to Love.
“This is a difference of over 40 times,” Love wrote. “On the surface, these price disparities appear to be nonsensical.”
David Kolata, executive director of the Citizens Utility Board, said CUB is considering filing a complaint with Federal Energy Regulatory Commission and called this rate hike unjust and unreasonable as Illinois is a net exporter of energy.
CUB estimated a typical household could see a $150 a year increase in their electricity bills because of the auction results, Kolata said. He added there could be a double-digit percentage increase in bills.
“Quite frankly we were shocked,” Kolata said. “This is really disturbing news for Ameren Illinois customers.”
MISO, a non-profit, runs the annual spring auctions and ensures the reliability of the electricity grid, in all or parts of 15 states including Illinois, Iowa, Indiana, Wisconsin and Missouri.
The annual capacity auctions help give incentives to electricity producers to have enough energy on days there would be highest demand for electricity, such as the hottest days during the summer when everyone is running their air conditioning.
Andy Schonert, a spokesman for MISO, said the downstate Illinois zone had more power generators putting their energy capacity into the auction rather than scheduling or reserving capacity for other utilities.
The power plant that met the local clearing requirement set the price at $150 per megawatt day, Schnoert said. The local clearing requirement is set to ensure that a region is able to meet its electricity demands on a peak day, in the event of a catastrophe, such as a plant or transmission line going down.
Schonert said he couldn’t disclose the power generator who set the price.
Love said the electric utility is obligated to procure its electricity capacity at the auction price, and it “will do its due diligence to determine how MISO Energy produced its results.”
“Ameren Illinois is extremely concerned and upset about the results of the recent capacity auction and the impacts it will have on our customers,” Love said.
What the capacity increase will mean for customers’ supply charges has yet to be determined. Rates for the 2015-2016 planning year, which would go into effect in June, are determined by the Illinois Commerce Commission.
Ameren Illinois charges an electricity supply price to customers without any markup, said Jim Chilsen, a spokesman for the Citizens Utility Board.
About two-thirds of Ameren’s customers receive electricity from an alternate supplier, either through municipal electrical aggregation programs or through individual fixed rate contracts. Those people won’t be affected by this auction result, Chilsen said.
However, people who may be shopping for electricity rates this summer will see higher prices, Chilsen said.