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Dynegy’s plans could be bad news for Ameren power bills

The northern Illinois power market hasn’t been working too well for consumers these days. Now a major electricity generator in the state wants to impose the same type of market on Central and Southern Illinois–and that would be bad news for Ameren electric customers.

How different is the power market in northern Illinois vs. the Central and Southern parts of the state? Just look at what ComEd and Ameren will be charging for power as of October:

ComEd: 7.487 cents per kilowatt-hour

Ameren Zone 1: 4.465 cents per kWh

Ameren Zone 2: 4.361 cents per kWh

Ameren Zone 3: 4.441 cents per kWh

Yikes! ComEd’s rate is about 70 percent higher than Ameren’s.

Many consumers probably don’t know that Ameren and ComEd are part of separate regional power grids. Those regional grids have a different way of determining something called energy “capacity costs” embedded in the per kilowatt-hour energy charge.

Suppliers charge these costs to us and pass money on to power generators. The whole idea behind capacity is to make sure generators are able to produce enough power when demand is at its highest–the handful of extremely hot summer days. It’s like a reservation system: We’re reserving power for when we need it most. Capacity costs are determined by an auction three years ahead of when they actually take effect.

But the bottom line is: Where you live in Illinois can make a big difference on what kind of power bills you pay.

That fact hasn’t been lost on Dynegy, owner of 9 Illinois coal plants. It wants to impose the method of determining capacity prices used by northern Illinois’ regional grid on Central and Southern Illinois. Steve Daniels, of Crain’s Chicago Business, reports that could balloon Ameren power bills by 18 percent.

So why are the prices so different up north? ComEd territory is part of PJM Interconnection, which also supervises the power markets for a bunch of Eastern states, such as Pennsylvania, Virginia, Delaware,  North Carolina, and New Jersey.

Power, like a good stiff drink, is simply more expensive on the East Coast, where demand is more intense. That’s a lucrative opportunity for generators, and one of the reasons ComEd parent Exelon first leapt to PJM in 2004. (The move raised eyebrows, since the rest of the state was part of a regional grid called the Midwest Independent System Operator, or MISO.)

Dollar signs also are driving Dynegy’s campaign to move Ameren to PJM, which would require Illinois Commerce Commission (ICC) and Federal Energy Regulatory Commission (FERC) approval. (The power generator also could try to get favorable legislation passed by the Illinois General Assembly–where consumer advocates already plan to battle Exelon over higher power bills.)

So far Dynegy’s idea has been met with skepticism from consumer advocates.

“From Dynegy’s point of view I can understand why they would want to have a market that gives them more money. But that’s certainly not in the consumers’ interest,” CUB Executive Director David Kolata told Midwest Energy News.