The Illinois Attorney General’s office is looking for answers following the results of an electricity capacity auction that potentially could lead to a double-digit percentage rate increase for Ameren Illinois customers.
The auction results of $150 per megawatt-day for Ameren’s southern and central Illinois customers were released by the Midcontinent Independent System Operator, the nonprofit that runs the electricity grid.
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. For the 2013-14 planning year, the capacity charge was $1.05 per megawatt-day.
Ameren Illinois charges an electricity supply price to customers without any markup.
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People who receive their electricity supply from Ameren Illinois could see a double-digit percentage increase beginning in June, according to estimates from the Citizens Utility Board.
The attorney general’s office is asking MISO if there were any design changes to the auction this year, and if so, how those changes affected the costs in Illinois. It also wants to know how the auction’s structure and rules were developed.
“The results of this year’s auction will have a substantial impact on Illinois electricity consumers,” Cara Hendrickson, chief of the attorney general’s public interest division, wrote to MISO.
MISO spokesman Andy Schonert confirmed receipt of the letter, but did not comment further.
“MISO ... appreciates the opportunity to provide more information,” Schonert said. “MISO looks forward to continuing the discussion with policymakers in Illinois to address any questions and concerns around the results of the planning resource auction.”
The auction has a local clearing requirement that is meant 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.
In the letter, Hendrickson asked why capacity must be met by resources located within the zone and “isn’t the electrical grid not supported by resources in areas that neighbor (Illinois) such as Missouri, Iowa and Indiana?”
Hendrickson asked if the rules of the auction were followed this year and asked the role of the market monitor in the auction process. Hendrickson also asked if offers and bidding strategies were different this year.
Attorney General spokeswoman Natalie Bauer Luce said in an email the office is looking at a number of options in terms of its next steps.
“We have a public utilities bureau that is actively involved in monitoring and acting in the interest of ratepayers in Illinois,” Luce said. “We regularly appear before the (Illinois Commerce Commission) on behalf of the state to oppose rate hikes. So the action we’re taking here is not unusual in the sense of our role generally speaking. This is an unusual situation based on the various circumstances, however.”
Electricity rates for customers that will go into place on June 1 will ultimately be set by the ICC. Ameren Illinois has yet to provide a rate request with the commission, and has until May 1 to do so, said Marcelyn Love, Ameren spokeswoman.
Love said Ameren’s regulatory team is looking into the capacity charges, investments from the previous year, and other items as it formulates its rate request.
“We’re also concerned about the impact on customers,” Love said.
Among the power generators that participated in the MISO auction was Exelon’s nuclear power plant in Clinton.
Paul Elsberg, a spokesman for Exelon, said the Clinton plant cleared the auction, and has other load obligations, so it could not bid all of its capacity into the auction. He added Clinton could not receive the $150 per megawatt day price for its full capacity.
Elsberg would not disclose how much the $150-per-megawatt-day price would bring to the Clinton plant.
“The auction results reduce Clinton's economic losses, but the plant remains uneconomic and may prematurely shut down absent Illinois legislative changes to outdated policies that do not allow nuclear energy to compete on a level playing field with other zero carbon resources,” Elsberg said.