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Illinois consumer advocate wants investigation into electricity auction

By: Jacob Barker |

An April auction sent electricity bills for many downstate Illinois customers up more than 10 percent this month, leaving those without fixed power contracts vulnerable to the price spike.

But the Illinois Citizens Utility Board, a consumer advocacy group, says its review of 130 newer contracts showed increases in power prices, calculated separately from delivery charges, of about 30 percent. That’s even though some were negotiated prior to the electricity auction. It wants consumers to demand a federal investigation of the auction.

“These auction results are absurd, unjust and unreasonable when you consider Illinois is a net exporter of power,” Jim Chilsen, a CUB spokesman, said at a press conference in East St. Louis.

The April auction was held by regional grid manager Midcontinent Independent System Operator, or MISO. Part of the electricity price in downstate Illinois, most of which is served by Ameren Illinois, shot up well above last year’s price and above comparable prices in other MISO states. The price increase isn’t related to Ameren Illinois delivery charges.

Illinois Attorney General Lisa Madigan last month filed a complaint with the Federal Energy Regulatory Commission about MISO’s auction design, as did national consumer advocacy group Public Citizen Inc.

The groups also called on FERC to investigate whether Dynegy Inc., the owner of a large portion of downstate Illinois power plants, has too much influence over the region’s electricity prices. Madigan’s office says Dynegy is a “pivotal supplier” that MISO needs to participate in the auction, which gives the generator the ability to set whatever price it chooses.

Dynegy says it followed all the auction rules and the results were verified by an independent monitor.

Chilsen said he didn’t know why power prices in communities like East St. Louis rose even though the city negotiated a contract prior to the MISO auction. East St. Louis negotiated an electricity contract earlier this year with Homefield Energy, Dynegy’s retail arm. Prices were 27.9 percent higher compared to its last contract, Chilsen said.

Dynegy spokesman Micah Hirschfield said East St. Louis’s new contract is longer than its old one. The longer term, combined with a general increase in power production costs, led to higher prices, he said. Other municipalities are now requesting a portion of power from renewable sources, also driving costs up.

“It’s not as cut and dry as CUB would like to make it out to be,” Hirschfield said. “There’s a lot of factors that go into this.”

He added that East St. Louis’s and other recent contracts negotiated with Homefield “are below the Ameren default rate and they still make a lot of sense for consumers.”

Some expect the Illinois Legislature to take up a comprehensive energy bill later this year. Chilsen said CUB would work with legislators interested in adding the issue to its laundry list of energy measures.

“We would look at any proposal, state or federal, to try and fix this,” Chilsen said. “A step forward would be for FERC to launch a formal investigation.”