Tuesday, March 19, 2019

Dynegy Introduces Bill to Move All of Ill. Into PJM

By Amanda Durish Cook

Dynegy announced Thursday that it would propose legislation with the Illinois General Assembly that would transition the entire state into PJM.

If passed, the Illinois Electric Generation Reliability Act would move the Commonwealth Edison and Ameren service areas in Central and Southern Illinois from MISO Zone 4 into the PJM power market. ComEd, an Exelon subsidiary, also serves load in the Chicago area, which is part of PJM.

Dynegy claims the bill would “provide economic benefits to consumers and help Illinois preserve vital, high-paying power generation jobs.” The company said cost-effective plants in MISO-controlled Southern Illinois “sit idle, or shut down, as they don’t receive any compensation to cover operating costs from MISO.”

Dynegy, PJM, MISO

Dynegy’s Baldwin Energy Complex in Illinois

Dynegy CEO Robert Flexon said a comparison of PJM’s recent Base Residual Auction outcomes alongside MISO’s Planning Resource Auction results in April illustrates the need to combine all of Illinois with PJM, even as two of Exelon’s nuclear generators in PJM failed to clear. (See PJM Capacity Prices Fall Sharply.)

“Illinois legislators have a great opportunity to take control of an issue that is debilitating communities across the state while at the same time bring lower power prices to consumers through a more efficient market design that can exist throughout the state,” Flexon said.

Illinois is the only state in MISO’s territory that fully offers retail choice. (Michigan currently allows 10% of its load to choose their suppliers.) The bifurcated nature of the state has caused controversy.

Zone 4’s high prices in last year’s capacity auction led to accusations by Illinois officials and stakeholders of market manipulation against Dynegy, which serves most of the load in the zone. Dynegy’s proposed legislation comes three months after the company responded to MISO’s request for auction reform suggestions by proposing a separate, PJM-style three-year forward auction for Zone 4. MISO is currently in the thick of contentious debate over this proposal. (See MISO Board Orders Negotiation in Longtime Auction Disagreement.)

According to Dynegy, Illinois legislators and labor leaders, including Senate Majority Leader James Clayborne and two Illinois branches of the International Brotherhood of Electrical Workers (IBEW), support the transition.

Clayborne pointed to MISO’s unpredictable results in the last two annual capacity auctions and said the legislation would remedy the “huge gap” in how generators in different regions of the state are compensated.

The disparity, he said, “is leading to the shutdown of generation in Southern Illinois, which is threatening electric reliability, jobs, taxes and related economic development. This legislation is designed to address this gap, level the playing field and ensure electric generation reliability, jobs and the economy are protected.”

Clayborne said that bringing downstate Illinois into the deregulated fold will bring congruity to the state.

Spokesmen from IBEW 702 and IBEW 51 said the bill would protect customers from high scarcity pricing, uphold statewide electric reliability and preserve jobs by stopping premature plant closures.

Exelon, Illinois’ other power-producing giant, also is seeking relief from state lawmakers. The utility is seeking low-carbon-emissions subsidies for nuclear generators in order to keep its cash-strapped Quad Cities plant operational through 2032, when the plant’s license expires.

The General Assembly’s legislative session ends May 31.

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