Daily file photo by Linus Höller
A Federal Energy Regulatory Commission ruling in December could increase some Illinois residents’ electricity bills, the Citizens Utility Board executive director testified to a Illinois House legislative committee hearing last Friday.
The FERC ruling will expand the “Minimum Offer Price Rule” for PJM Interconnection LLC, which is a regional transmission organization that manages the power grid in northern Illinois and other states.
MOPR establishes a price control for almost all energy providers in PJM’s capacity market that receive a “state subsidy,” which could mean any financial benefit that would support a new or existing capacity, according to FERC news release.
Capacity is the commitment by an energy source to provide power when needed for a specific period of time, like in the future or during emergencies, according to PJM’s website. In PJM’s capacity auction, energy sources bid to provide capacity to the grid for the chance to receive payments from PJM. Those payments are determined in the auction.
A Grid Strategies analysis estimates the MOPR change could raise costs for northern Illinois consumers up to $864 million a year. However, not everyone agrees that it will impact consumers in this way. The Independent Market Monitor for PJM doesn’t support the claim that the modifications will “result in large increases in capacity market prices,” according to a Monitoring Analytics news release.
Gavin Taves, policy director at the Illinois Environmental Council, said the ruling could negatively impact the clean energy market.
“Essentially, this ruling makes it much harder for renewables to competitively be on the capacity market,” Taves said.
The IEC is part of the Illinois Clean Jobs Coalition, which supports the Clean Energy Jobs Act. CEJA proposes that the government-run Illinois Power Agency would procure Illinois’ capacity instead of PJM, according to an ICJC news release.
“We’re attempting to remove ourselves from that market and have Illinois administer the capacity market auctions,” Taves said, “so we’re in control of the type of energy we’re looking to procure and we’re not going to fund dirty energy sources anymore.”
Todd Maisch, Illinois Chamber of Commerce president and CEO, said that to switch to a state-run auction would mean Exelon, one of the main energy providers in Illinois, could manipulate the energy marketplace.
He said Exelon wants to restrict competition by excluding power producers from other states that can currently apply for the capacity auction.
“In CEJA, we believe they tip the scales to make sure that nuclear power is given an advantage over coal and natural gas and wind to make sure they get the most amount of money,” Maisch said. “This is a complex way to subsidize [Exelon’s] nuclear plants.”
Taves said it wasn’t part of CEJA’s goals to make sure Exelon’s plants would profit. Instead, he said the IPA running the auction would save ratepayers money while also allowing renewable energy to stay competitive.
Discussions around PJM’s capacity market are wrapped up in larger discourse about clean energy legislation as the Illinois General Assembly legislative session continues.
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