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Victory! FERC rejects plan that could have sparked higher power bills in Central, Southern IL

CUB and other consumer advocates scored a major victory in Washington this week when federal regulators rejected a proposal that potentially would have cost Central and Southern Illinois consumers millions of dollars in higher power bills.

On Thursday, the Federal Energy Regulatory Commission (FERC) said no to a proposal by the Midcontinent Independent System Operator (MISO), the power grid operator for the southern two-thirds of Illinois and 14 other states. The plan, pushed by big power generators unhappy with Illinois’ relatively low power prices, would have made key changes to the “capacity market.”

Every spring, MISO holds an auction to determine “capacity costs” for the next year (June 1 through May 31). “Capacity costs” are fees wrapped into consumers’ electricity prices that ensure power plants produce enough energy when demand is high.

MISO proposed keeping the same auction for 13 states, but creating a special auction for Michigan and Illinois, two states with restructured power markets. Among other things, the special auction would have determined prices three years ahead of time.

However, FERC wrote that MISO failed to prove that its plan was “just and reasonable.” The proposal would have created too much price volatility and uncertainty, according to FERC’s order.

The plan drew more than 40 comments and protests from critics, including CUB, Illinois Attorney General Lisa Madigan, and MISO’s independent market monitor. In its protest, CUB argued that “the increased costs of this proposal are not commensurate with the consumer benefits.”

This was the latest battle over MISO’s capacity action. Over the last two years, consumer advocates successfully pushed for improvements in the market after Ameren Illinois customers were hit with a 30 percent increase in power prices in June of 2015. CUB was concerned that MISO’s new capacity market plan could have led to even higher price spikes.

“This is a victory for electricity customers in Central and Southern Illinois,” CUB Executive Director David Kolata said. “We have a long way to go to improve the electricity market, but FERC’s order is a step in the right direction.”