Dynegy Files to Move Illinois Into ‘Single, Competitive Power Market’

Dynegy announced on May 26 that the company planned to file the Illinois Generation Reliability Act, which would “preserve vital, high-paying power generation jobs and the related economic benefits by moving the state into a single competitive power market.”

The market to which the company refers is the PJM Interconnection, a regional transmission organization (RTO) that already coordinates the movement of wholesale electricity in all or parts of Delaware, Illinois, Indiana, Kentucky, Maryland, Michigan, New Jersey, North Carolina, Ohio, Pennsylvania, Tennessee, Virginia, West Virginia and the District of Columbia.

Dynegy, itself, operates 35 power stations nationwide that can generate 26,000 megawatts (MW) of electricity – enough to power about 21 million homes. Through its retail electricity providers, Homefield Energy and Dynegy Energy Services, the company serves residential, municipal, business, and industrial customers in Illinois, Ohio, and Pennsylvania.

The ultimate goal of the Illinois Electric Generation Reliability Act, Dynegy said, is to move all of Illinois, including the ComEd and Ameren service areas, into the PJM power market. Currently, Illinois is divided into two separate power markets with northern Illinois participating in the competitive PJM market while central and southern Illinois are in MISO, a hybrid power market designed to benefit traditional utilities in the surrounding states.

Indeed, the company asserted, results from the most recent MISO and PJM capacity auctions “clearly illustrate” an ongoing problem that could be solved by the new measure: Capacity prices  in northern Illinois are nearly three times that of southern Illinois due to less economic plants in the north, while more cost effective plants in southern Illinois sit idle, or shut down, as they don’t receive any compensation to cover operating costs from MISO.

Among the benefits of the proposed measure that the company identified would be:

• Moving Illinois into one reliable, competitive market;
• Relieving capacity shortage and premium pricing in northern Illinois through generation supply from existing and available plants in central and southern Illinois;
• Ensuring consistent reliability throughout the state and eliminates unnecessary and inefficient regional differences;
• Helping maintain jobs and economic benefits of the generation fleet in southern and central Illinois; and
• Protecting consumers against higher rates caused by premature retirement of efficient generation and subsequent shortage pricing, both which are being caused by the poor market design in southern and central Illinois.

“The results from the PJM auction are a valuable and important indication that combining all of Illinois into PJM through the Illinois Electric Generation Reliability Act will be beneficial for the entire state,” commented Dynegy CEO Robert C. Flexon, adding, “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.”

Illinois Senate Majority Leader James Clayborne (D – Belleville) already seems to be onboard. “As the results of the most recent PJM and MISO capacity auctions demonstrate,” Clayborne stated, “there is a huge gap between how generators in northern Illinois and those in southern Illinois are compensated. This 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. We have heard from other energy policy stakeholders as to their needs but we must ensure that any Illinois energy policy is comprehensive and includes downstate Illinois.”