Metro-East News

Legislation would remove central, Southern Illinois from MISO grid

Plans to lay off about 2/3 of the union workers at the Baldwin Energy Complex, owned by Dynegy, will have a devastating ripple effect on businesses and the way of life in small communities like Baldwin and other towns in the region. But the plant could remain in operation if legislation sought by Dynegy that strips the region from its current grid in favor of a different one is approved.
Plans to lay off about 2/3 of the union workers at the Baldwin Energy Complex, owned by Dynegy, will have a devastating ripple effect on businesses and the way of life in small communities like Baldwin and other towns in the region. But the plant could remain in operation if legislation sought by Dynegy that strips the region from its current grid in favor of a different one is approved. tvizer@bnd.com

The company that owns power plants in the region said jobs and economic benefits of its fleet of power plants could be maintained if state legislators vote to take central and southern Illinois out of its current electricity grid and place it into a different one.

A statement from Dynegy said all of Illinois would be part of a single grid if an amendment to Senate Bill 2939 is approved. The legislation, sponsored by Sen. James Clayborne, D-Belleville, was filed Thursday afternoon.

The company has blamed capacity auctions that set electricity rates within central and southern Illinois’ current grid — the Midcontinent Independent Service Operator — for the decision to shut down two of the three generating units at the Baldwin Energy Complex and a unit at a plant in Newton. Prices ended up being set too low at the April auction for those plants to recover their operating costs.

Local lawmakers, business owners and citizens who potentially would be affected by the Baldwin shutdown warned of dire economic consequences. If the Baldwin units shut down, approximately 122 of the plant’s 220 employees would lose their jobs.

Under the proposed legislation, PJM — a Pennsylvania-based power grid covering territory in all or parts of 12 states — would take over management of the power grid in central and southern Illinois, uniting the MISO territory served by Ameren Illinois and PJM territory in northern Illinois served by ComEd.

Dynegy spokesman David Onufer said PJM’s grid is set up with protections the MISO grid lacks including limits to how much electricity can be imported from outside Illinois and limits to how low utilities can bid at capacity auctions. He said those protections would guard against the circumstances that prompted the company to announce it would close the units in Baldwin.

Onufer said that the grid switch is aimed at improving conditions for its whole fleet of plants and doesn’t target specific facilities.

Utilities need approval from the Federal Energy Regulatory Commission before they can leave one grid and enter another. Utilities also must pay entry and exit fees to make such a switch.

A PJM spokeswoman reached Thursday morning was not aware of the proposed legislation and said PJM wouldn’t respond to it until it formally received information about the plan.

Dynegy in its statement said consolidation of the state’s power grid could relieve potential power capacity shortages and could lower power rates in the current PJM territory, which contains an older fleet of power plants compared to a relatively newer, more efficient fleet in central and Southern Illinois.

The MISO territory covering central and southern Illinois currently enjoys lower power generation rates than the rates in place in PJM territory in northern Illinois. It’s unclear whether consolidation would drive rates in central and Southern Illinois upward as the difference in rates between the two territories balances out.

MISO in a statement Thursday said: “We are still reviewing Dynegy’s proposed legislation. We continue to work with all stakeholders across Illinois to develop a solution in Southern Illinois that produces an efficient and timely price signal to incent future investment to help ensure reliable electric supply. We hope Dynegy continues to still engage in MISO’s collaborative and open stakeholder process as we finalize our proposal.”

Like MISO, PJM sets power rates via capacity auctions. The PJM auction wrapped up Tuesday with a lower-than-expected rate.

Return to BND.com for updates to this story.

Tobias Wall: 618-239-2501, @Wall_BND

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