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Feds agree to force changes in electric-capacity prices

By: Journal-Courier staff |

The Federal Energy Regulatory Commission wants to see some changes in how electricity prices are set for consumers in Illinois.

The commission says it agrees with Attorney General Lisa Madigan that the rules governing the auction to set electricity capacity prices in downstate Illinois are “not just and reasonable.”

As a result of the auction in April 2015, electricity prices for Ameren consumers increased by close to 900 percent from the previous year’s auction. This resulted in an annual increase of $131 for an average residential Ameren customer.

The decision should result in lower prices for consumers as of June 1.

The commission has ordered the rules must be changed for the next auction, which is scheduled for April and will set prices to begin June 1. The Midcontinent Independent System Operator, the entity that oversees the transmission of power in the Midwest, must file the rule changes with the Federal Energy Regulatory Commission within 30 and 90 days.

Capacity prices are paid by each residential, commercial and industrial customer as part of their electric bill. These prices are set through an auction in which companies that generate electricity submit bids. For Ameren electricity customers in central and southern Illinois, the auction is run by Midcontinent Independent System Operator.

“Our position has always been that the process for establishing capacity costs should be fair and just, and not unduly burden Ameren Illinois customers,” Ameren Illinois President Richard J. Mark said. “We have spent the last several months appealing … on behalf of utility customers in central and southern Illinois in support of a review of the auction. 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.”

The Federal Energy Regulatory Commission decision calls for two major changes to the capacity auction rules. First, Midcontinent Independent System Operator cannot rely on prices set for other power entities that oversee transmission for mainly East Coast states and northern Illinois with different auction rules and different prices.

Midcontinent Independent System Operator erred in setting the maximum bid price to $155 when it should be $25, Madigan’s office said.

“It’s great news that FERC has acknowledged downstate electric customers deserve relief from an inflated and absurd pricing process,” Madigan said. “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.”

Madigan’s May 28 complaint asked the Federal Energy Regulatory Commission to fix the auction rules and create new rules moving forward. The complaint also asked that consumers receive refunds for prices that increased as a result of the flawed auction rules.