Illinois asks FERC to investigate Dynegy after power price spike

[May 30, 2015]  By Scott DiSavino
 
 May 29 (Reuters) - Illinois has asked the federal energy regulator to investigate whether Dynegy Inc manipulated a power auction and to block $113 million in expected overcharges from that auction for the coming year, the regulator said on Friday.

The Federal Energy Regulatory Commission posted a complaint on its website from Illinois Attorney General Lisa Madigan. The complaint sought to block the results of the auction and change the rules of future auctions by the regional power grid operator so rates can be set more fairly.

The Midcontinent Independent System Operator (MISO), which operates the power grid in central and southern Illinois, uses the auction to help ensure the system has enough generating resources to meet expected demand.

The charges will hit Illinois consumers who buy electric supply through Ameren Illinois, the local delivery service provider and a unit of St Louis-based power company Ameren Corp .

Dynegy said in a statement on Friday, "MISO's Independent Market Monitor has publicly stated that 'the auction results are reliable and participants' behavior was in line with all tariff rules and procedures.'"

"The company follows and respects all the rules, tariffs, and obligations in the markets and areas where we operate," Dynegy said.

Madigan said the results of the MISO's 2015-2016 auction for the Illinois zone would increase the price of capacity from $16.75 per megawatt-day in the 2014-2015 period to $150 per MW-day for the 2015-2016 period.

That is more than 40 times the highest capacity price ($3.48 per MW-day) in the other eight MISO zones, and would add around $11 on average to monthly residential bills starting June 1.

MISO operates the power grid in parts of 15 U.S. states from Louisiana to Minnesota and the province of Manitoba in Canada.

Madigan said the capacity price increase occurred in part because the power supply in the MISO Illinois zone is highly concentrated. She noted that Dynegy now owns more than 50 percent of the capacity available in the zone, since FERC allowed the company to acquire generation from Ameren in 2013.

Dynegy acquired 3,152 megawatts of power generation in the MISO Illinois zone from Ameren in December 2013. At that time, the company already had control over 2,980 MW of capacity in the zone, according to Madigan's complaint.

Dynegy said it "offered all of its megawatts into the auction with no physical or economic withholding in accordance with MISO tariffs."

MISO said it was reviewing the complaint and will respond in the FERC proceeding. (Reporting by Scott DiSavino; Editing by David Gregorio)

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