Federal Commission Requires Rule Changes On Grid Operator's Electricity Auction

An electricity grid operator, whose electricity capacity auction led to a large rate hike last year for Ameren Illinois customers, has been ordered to revise its auction rules by a federal agency so that they are no longer unjust and unreasonable.

The Federal Energy Regulatory Commission issued a ruling Dec. 31 in the capacity auction case filed by Illinois Attorney General Lisa Madigan, against the Midcontinent Independent System Operator, which operates the electricity grid in all or parts of 15 states, including southern and central Illinois.

Madigan's office filed the complaint with FERC, after a capacity auction last year led to southern and central Illinois electric customers paying $150 per megawatt day for electricity. Other MISO areas paid $3.50 per megawatt day.

The hike resulted in an annual increase of $131 for an average residential Ameren Illinois customer.

FERC found MISO's auction provisions for the 2015-16 planning year were not just or reasonable, and ordered the grid operator to submit rule revisions in 30 to 90 days to for its April auction for the 2016-17 planning year.

It's great news that FERC Federal Energy Regulatory Commission has acknowledged downstate electric customers deserve relief from an inflated and absurd pricing process. 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. Attorney General Lisa Madigan Madigan's office also asked for refunds for customers, but a decision has yet to be made on that request. Madigan's office expects FERC's decision will result in lower prices for consumers as of June 1.

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

MISO also is being required to revise its auction rules. FERC's decision calls for two major changes to the capacity auction rules. According to the attorney general's office, MISO cannot rely on prices set for the Pennsylvania, Jersey Maryland PJM power system, another entity that oversees transmission for mainly East Coast states and northern Illinois with different auction rules and different prices.

MISO is studying the order from FERC. As we review the order, we will work with stakeholders to better understand the changes directed by the commission and how they would be implemented for the upcoming auction. MISO spokesman Andy Schonert

MISO erred in setting the maximum bid price to $155 in its auction rules. It should have been $25, the attorney general's office said. MISO also did not correctly account for certain power exports, and must now increase the amount of electricity that is available to the Illinois market, potentially lowering the price.

In an email to the Belleville News-Democrat, MISO spokesman Andy Schonert said the grid operator is studying the FERC order.

"As we review the order, we will work with stakeholders to better understand the changes directed by the commission and how they would be implemented for the upcoming auction," Schonert wrote.