Rare Probe Into Soaring Downstate Electricity Prices

Federal energy regulators smell a rat in downstate Illinois.
Energy-regulators-investigate-Illinois-electricity-price-surge.jpgThe Federal Energy Regulatory Commission has taken the unusual step of ordering a formal investigation into the results of a power auction last spring that caused the energy price paid by Ameren Illinois customers to jump 31 percent beginning in June. After several months of informal probing, FERC, which oversees the functioning of wholesale power markets, gave its enforcement staff subpoena authority on Oct. 1.
The order says FERC investigators will probe any potential evidence of market manipulation or other rules violations.

The officials to be put under oath may well include executives with Houston-based Dynegy, which dominates the power generating market downstate and has acknowledged that a bid by one of its Illinois plants set the “capacity” price that caused downstate electric bills to surge.
At issue is the auction held in April by regional grid operator MISO Energy to determine the price consumers pay power plants for their promise to deliver during high-demand periods when they're most needed. Those capacity costs are embedded in the overall electricity price households and businesses pay.

In that auction, the cost of capacity in downstate Illinois in the year beginning June 1 spiked nearly 9 times to $150 per megawatt-day, from $16.75 the 12-month period before. That will cause the average Ameren Illinois household to pay more than $130 more for electricity this year.
After the price spike, Illinois Attorney General Lisa Madigan asked FERC to overturn the result and conduct a formal investigation. FERC said no to reversing the outcome, but yes to the probe.
“We are pleased FERC has responded strongly on the MISO capacity markets as a result of our complaint,” Madigan's office said in a statement. “We will continue to actively pursue relief for Illinois consumers.”

Read the rest of the story by Steve Daniels in Crain's Chicago Business.