The Illinois Attorney General and Citizens Utility Board are asking for an investigation of the auction for Illinois’ power supply after rates for many in the metro-east have increased by about 30 percent for many. However, city of Highland customers are not among those who will see such hikes.
Jim Chilsen, a spokesman for the Citizens Utility Board, also known as CUB, addressed the issue during a press conference Wednesday afternoon at the East St. Louis Public Library. Chilsen said federal regulators need to look into the electricity auction amid the recent rate hikes because Illinois has been operating with a surplus in energy supply.
“This summer, many consumers across central and Southern Illinois are paying electricity prices that have jumped by about 30 percent, and there doesn’t appear to be a logical reason for it,” Chilsen said. “Today, CUB urges central and southern Illinois consumers to help us deliver a strong message to the Federal Energy Regulatory Commission to investigate Illinois’ electricity market.”
CUB, which has represented consumer interests in Illinois for the past three decades, has typically been a nonprofit watchdog over local rates charged by Ameren Illinois and other state utility providers. This time, said Chilsen, the issue lies not with the delivery costs, but the cost of supply.
“Actually, Ameren’s actions are not in question here,” he said. “We do have some issues and some questions with some of the other energy generators in the state with companies that sell electricity to Ameren. But Ameren, by law, is not allowed to profit off the supply portion of your bill.”
Chilen said these auctions are conducted by the Midwest Independent System Operator (MISO) to determine the capacity costs, or fees that consumers pay to power plant generators to make sure that utility companies produce and have enough electricity supply. He said during the latest auction this spring, some power generators “made a windfall” as capacity costs for Illinois were more than 40 times higher than the other 14 states participating in the auction.
Chilsen asked if power generators hold too much influence in determining such prices as the auction rules seem to be stacked against Illinois consumers.
“These auction results are absurd, unjust and unreasonable when you consider that Illinois has a surplus of power,” he said. “Rates shouldn’t be skyrocketing like this in such a power-rich state.”
Illinois Attorney General Lisa Madigan has filed a complaint with the Federal Energy Regulatory Commission (FERC) asking for an investigation, and the Illinois Senate has issued resolution asking for federal and state review.
In her complaint to FERC, Madigan noted the increased the price per megawatt-day for capacity in Illinois went from $16.75 to $150, an increase of close to 900 from last year. The $150 price is more than 40 times the highest price ($3.48 per MWday) in the other eight MISO zones.
“In Illinois, consumers in the MISO area who purchase electricity supply through Ameren Illinois Company (“Ameren”), their local delivery service provider, will pay $112.98 million in capacity charges in the coming year due to the high capacity charges resulting from the 2015-2016 PRA. This is $102.1 million more than was paid in the last capacity year,” Madigan’s complaint reads.
“It seems clear that there is something wrong with Illinois’ electricity market,” Chilen said. “The price tag is a huge red flag that shows how the past auction and the rules that govern it are not working for customers.”
Phillip “Doc” Mueller, senior vice president of governmental affairs for the Illinois Municipal Electric Agency (IMEA), said its customers — which includes the city of Highland and 31 other municipal electric systems and one cooperative in Illinois — would largely be unaffected by the MISO auction.
“Our customers will not see those increases,” he said.
The reason: the agency, through part ownership in the Prairie State Energy Campus in near Marissa and two coal-fired plants in Trimble County, Ky., owns most of the capacity it needs. It purchases only a small amount through the MISO auction.
“That’s the value of owning your own resources — it’s a hedge against the volatility of the market,” Mueller said.
Because IMEA purchases very little of its capacity through MISO, the increase for its customers will likely be only about 1/10 of 1 cent per kilowatt hour, Mueller said.
Results of MISO capacity auction
In April, Midwest Independent System Operator (MISO) completed its third annual Planning Resource Auction across the region for the planning year that began June 1. The price to be paid by Illinois consumers is 40 times higher than two other regions, which also had auctions at the same time.
There were three auction clearing prices in this year’s auction:
▪ Zones 1-3 and 5-7 (MISO North/Central, excluding Illinois) cleared at $3.48/MW-day
▪ Zone 4 (much of Illinois) cleared at $150/MW-day
▪ Zones 8-9 (MISO South) cleared at $3.29/MW-day
Source: Midwest Independent System Operator (MISO)