FERC Orders MISO to Redesign Capacity Auction After Ameren Illinois Rate Hikes

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The Federal Energy Regulatory Commission (FERC) has ordered grid operator Midcontinent Independent Service Operator (MISO) to restructure its capacity auction after some Illinois electricity customers experienced a nearly 800-percent rate hike last year.

In a Dec. 31 order, FERC said the process MISO uses to set capacity rates is no longer just and reasonable and must be altered before the next planning auction.  The decision could lead to future refunds for Ameren Illinois customers, who experienced a price hike about 40-times higher than customers in other MISO zones.

FERC didn’t address refunds in the order but said complaints regarding the previous auction and rates already paid by Ameren Illinois customers would be addressed in the future.

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

With more than 1.2 million electric customers in downstate Illinois, Ameren Illinois is a delivery-only company, having sold its power plants to Dynegy.  Ameren Illinois is required by federal law to purchase electric capacity from MISO at auction price, which is set on competitive markets.

FERC’s order requires MISO to recalculate the maximum price paid to power plant operators as well as how much electricity must be sourced from southern Illinois, which could lead to more generators competing in the market.

Other complainants, including Illinois Attorney General Lisa Madigan and the consumer group Public Citizen, joined Ameren Illinois in asking FERC to consider refunds for affected customers.

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

Tyson Slocum, director of Public Citizen’s Energy Program, released the following statement:

“If FERC follows the logic of its New Year’s Eve ruling…then Illinois consumers will be in line for tens of millions of dollars in refunds.”

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