Metro-East News

Federal commission’s ruling could result in lower electricity rates

The new rules could mean lower rates for Ameren Illinois electricity customers.
The new rules could mean lower rates for Ameren Illinois electricity customers. tvizer@bnd.com

In a decision that could bring relief to the pocketbooks of Ameren Illinois electricity customers, a federal commission has ordered new rules for how electricity is sold and supplied.

The Midcontinent Independent System Operator, which operates the electricity grid in all or parts of 15 states, including Southern and Central Illinois, is responsible for holding annual energy capacity auctions that determine how much Ameren and other utilities pay.

Last year, MISO set the maximum bid price too high for its electricity capacity auction, which resulted in an annual increase of about $131 for the average residential Ameren Illinois customers, according to the Illinois attorney general’s office.

As a result, the Federal Energy Regulatory Commission ordered MISO to revise its auction rules so that they are more fair.

It’s not yet clear how much Ameren Illinois customers will save, or whether some of the money they paid this past year will be refunded or credited.

FERC issued a ruling Dec. 31 in the capacity auction case filed by Illinois Attorney General Lisa Madigan. Madigan’s office filed the complaint with the FERC after the capacity auction last year led to downstate electric customers paying more than 42 times higher wholesale prices for electricity supply compared with other MISO territories.

FERC found MISO’s auction provisions for the 2015-16 planning year were “not just or reasonable,” and ordered the grid operator to submit rule revisions in 30-90 days for its April auction for the 2016-17 planning year.

Ameren Illinois said the new auction rules should lead to a “fairer” process and short-term rate relief for electricity customers.

“Our position has always been that the process for establishing capacity costs should be fair and just, and not unduly burden Ameren Illinois customers,” said Richard J. Mark, president of Ameren Illinois. “FERC’s ruling provides an encouraging sign that issues with the capacity auction process are being addressed, and that our customers can expect stable prices in the future.”

It’s great news that FERC (Federal Energy Regulatory Commission) has acknowledged downstate electric customers deserve relief from an inflated and absurd pricing process. I am pleased with FERC’s decision to fix the auction rules, but FERC still needs to order refunds to consumers for the outrageously high prices.

Attorney General Lisa Madigan

Madigan’s office asked for refunds for customers, but a decision has yet to be made on that request. Madigan’s office expects FERC’s decision will result in lower prices for consumers as of June 1.

“It’s great news that FERC has acknowledged downstate electric customers deserve relief from an inflated and absurd pricing process,” said Madigan. “I am pleased with FERC’s decision to fix the auction rules, but FERC still needs to order refunds to consumers for the outrageously high prices.”

MISO also is being required to revise its auction rules. FERC’s decision calls for two major changes to the capacity auction rules.

According to the attorney general’s office, MISO cannot rely on prices set for the Pennsylvania, Jersey Maryland (PJM) power system, another entity that oversees transmission for mainly East Coast states and northern Illinois with different auction rules and different prices.

MISO is studying the order from FERC. As we review the order, we will work with stakeholders to better understand the changes directed by the commission and how they would be implemented for the upcoming auction.

MISO spokesman Andy Schonert

MISO erred in setting the maximum bid price too high in its auction rules, according to Madigan’s office. MISO also did not correctly account for certain power exports, and must now increase the amount of electricity that is available to the Illinois market, potentially lowering the price.

In an email to the News-Democrat, MISO spokesman Andy Schonert said the grid operator is studying the FERC order.

“As we review the order, we will work with stakeholders to better understand the changes directed by the commission and how they would be implemented for the upcoming auction,” Schonert wrote.

The Citizens’ Utility Board Executive Director David Kolata called FERC’s decision a positive development for downstate electricity customers.

“This is a step in the right direction for consumers who suffered through the jolt of last summer’s price spike,” Kolata said in a statement. “A lot of work needs to be done, but the recent FERC ruling aims for reforms that will better protect consumers from unjust increases in their power bills.”

Joseph Bustos: 618-239-2451, @JoeBReporter

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