CLINTON — A shocking result from an electricity auction designed to keep the lights on during times of peak demand means Ameren Illinois customers are facing a surcharge estimated at $150 on their annual power bills.
One beneficiary of the price increase will be the financially troubled Clinton Power Station owned by Exelon Nuclear. The station participated in the auction and looks as if it could earn a windfall valued in the tens of millions of dollars, according to estimates from consumer advocates.
That news comes in the wake of state legislation being pushed by Exelon designed to save the Clinton station and two others from threatened closure by requiring guaranteed utility power buys from low greenhouse gas sources such as nuclear plants.
Exelon officials said the consumer impact from the proposed “Low Carbon Portfolio Standard” would be capped at $2 a month for individual power customer bills. Critics charge the total price increase associated with the law would add up to a $300 million annual charge on all Ameren Illinois and Commonwealth Edison power bills.
Consumer groups have attacked the law change as unnecessary and, given that controversy, the timing of the unrelated auction result, far beyond anything seen previously, is particularly sensitive.
The “planning resource auction” was conducted by an organization called the Midcontinent Independent System Operator. This is a nonprofit group which oversees the smooth distribution of power across 15 states and takes in the Ameren Illinois territory.
MISO wants to make sure adequate power is available in high summer and other peak times and its auction locks in supplies from power companies and sets the peak price for a year, beginning June 1. But while the price, expressed in “megawatt-days,” actually dropped in some states (Missouri's went from $16.75 to $3.48 a megawatt-day) the Illinois cost soared from $16.75 to $150 a megawatt-day. That's an increase of close to 800 percent.
Explaining how the cost of keeping the lights on at peak times suddenly soared so dramatically isn't easy. The auction procedure is complex and MISO said it's affected by requirements that certain amounts of power have to be produced locally, even when cheaper power is available from outside the state, to make sure Illinois customers aren't overly reliant on distant sources of power.
MISO spokesman Andy Schonert said the auction process was fair and was overseen by an independent market monitor. “They review everything for any sort of examples of improper behavior and make sure none of that occurs,” he said.
Schonert said the energy marketplace in Illinois is changing and future power prices would be influenced by the pending retirement of coal-fired plants squeezed out by heightened environmental regulations and a “host of other economic factors.”
But the Citizens Utility Board consumer watchdog group claims Illinois is awash in locally produced power and is, in fact, a net exporter of power.
“So Illinois consumers are now faced with paying 50 times more for power capacity to meet peak demand than the rest of the MISO network?” asked David Kolata, executive director of CUB. “We think that, on its face, is an absurd result.”
He said CUB was now working with the Illinois Attorney General's office, state and congressional legislators and other groups to see what can be done to force an investigation into the power auction results.
“And even if we can't stop it this year, we need to at least reform the rules so it doesn't happen again,” Kolata said. “What's happened is horrible and unjust.”
Ameren Illinois, a power delivery utility which passes the cost of buying power on to its customers, called the auction result “a bit surprising.”
Utility spokeswoman Marcelyn Love said an Illinois Senate committee has already held a hearing on the issue and Ameren Illinois was considering its options. “We're concerned about the impact on our customers,” Love said.
Exelon, for its part, acknowledges the Clinton station will benefit from the sky-high auction power prices. But it maintains its threat to close the plant if it doesn't get legislative relief still stands.
Exelon claims the wholesale price spike generated by the MISO auction would be a small price compared to what would happen to power prices if Clinton went dark.
“Closing the Clinton plant alone would cause wholesale energy prices to rise by $240 million to $340 million annually for families and businesses in the region,” Exelon said in a statement.