Illinois General Assembly - Full Text of SR0623
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Full Text of SR0623  99th General Assembly




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2    WHEREAS, Reliable, affordable, and clean electric service
3is a basic necessity of modern life and is vital to Illinois'
4economic growth, jobs, and the overall interests of its
5citizens; and
6    WHEREAS, The electric grid consists of interconnected
7transmission facilities, electric generators, and distribution
8facilities; and
9    WHEREAS, The operation of the transmission system affects
10and is affected by the operation of electrical generators; and
11    WHEREAS, The goal of restructuring the interstate electric
12industry by the Federal Energy Regulatory Commission was
13intended to provide lower prices and a better array of services
14for retail consumers by the creation of a marketplace where
15electricity prices were the result of vibrant and vigorous
16competition; and
17    WHEREAS, The Federal Power Act grants the Federal Energy
18Regulatory Commission the primary responsibility of ensuring
19that regional wholesale electricity markets served by Regional
20Transmission Organizations operate without market power; and



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1    WHEREAS, The Federal Power Act requires just and reasonable
2rates in order to "afford consumers a complete, permanent, and
3effective bond of protection from excessive rates and charges"
4and to address the complete market breakdown that can result
5from the unfettered exercise of market power in the electric
6utility industry; and
7    WHEREAS, The Federal Power Act mandates that the Federal
8Energy Regulatory Commission deter and mitigate market power
9abuses for the benefit of consumers and authorizes the Federal
10Energy Regulatory Commission to protect consumers when a market
11produces non-competitive rates; and
12    WHEREAS, The design of wholesale markets is crucial to
13ensuring that wholesale and retail electricity prices are just
14and reasonable; and
15    WHEREAS, The Federal Energy Regulatory Commission oversees
16two Regional Transmission Organizations that operate the
17wholesale market for electricity in Illinois, PJM
18Interconnection LLC (PJM) and Midwest Independent System
19Operator, Inc. (MISO); and
20    WHEREAS, PJM and MISO offer a variety of products and
21oversee a variety of functions, including auctions for
22capacity; rates established by PJM and MISO are passed through



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1by buyers to retail customers and may affect rates for
2electricity sold in bilateral transactions; and
3    WHEREAS, Capacity prices in Illinois increased by 100% in
4PJM and 825% in MISO over the prior capacity price, which are
5significant rate increases; and
6    WHEREAS, MISO's recent capacity auction yielded a high
7capacity price for Illinois of $150 per megawatt day, while the
8second highest capacity price in numerous other MISO states was
9$3.48 per megawatt day; and
10    WHEREAS, The average residential bill in MISO territory is
11expected to increase between $12 and $14 monthly based on the
12results of the recent capacity auction, which could result in
13rate shock for some of the State's most vulnerable residents on
14fixed incomes; and
15    WHEREAS, Illinois businesses, electric cooperatives, and
16other institutions and agencies in MISO territory will pay
17millions of dollars more for capacity than they anticipated
18based on the results of the recent capacity auction; and
19    WHEREAS, Capacity clearing prices are currently designed
20so that the highest bid is used as the rate to compensate all
21generators who clear the auction, even if their bids were



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1significantly lower; and
2    WHEREAS, PJM has proposed to modify its auction process and
3utilize a capacity product called "capacity performance",
4which is expected to result in significantly higher capacity
5prices; and
6    WHEREAS, Utility rate analysts have stated that by
7withholding a relatively small portion of its electric
8generation fleet, a generator can increase capacity prices and
9obtain maximum benefit; and
10    WHEREAS, Illinois Attorney General Lisa Madigan filed a
11complaint with the Federal Energy Regulatory Commission
12(Docket EL15-71) against MISO on May 28, 2015, alleging that
13the Illinois MISO rate is unjust and unreasonable and that the
14rate was driven up by a pivotal supplier; therefore, be it
16ASSEMBLY OF THE STATE OF ILLINOIS, that we urge the Federal
17Energy Regulatory Commission, the Illinois Commerce
18Commission, and the Illinois Power Agency to independently
19review the PJM Interconnection LLC and Midwest Independent
20System Operator capacity auction rules and market design and
21determine why the rules and market design have not protected
22Illinois ratepayers from significant increases; and be it



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2    RESOLVED, That we urge the Federal Energy Regulatory
3Commission to investigate whether all auction rules were
4followed in the most recent PJM and MISO auctions and, if so,
5to determine whether additional protections are necessary to
6ensure to protect ratepayers from excessive rates and charges;
7and be it further
8    RESOLVED, That we urge the Federal Energy Regulatory
9Commission, the Illinois Commerce Commission, and the Illinois
10Power Agency to independently investigate whether market power
11was exercised by any auction participants, including the
12withholding of certain generation assets intended to drive up
13the clearing price, and whether the market design for capacity
14auctions allows for the exercise of market power; and be it
16    RESOLVED, That we urge the Illinois Commerce Commission and
17the Illinois Power Agency to participate in Federal Energy
18Regulatory Commission proceedings that will address the design
19and operation of the capacity market planning processes and
20auction practices utilized by PJM and MISO and to promote
21policies in those proceedings that will ensure greater
22transparency, prevent the exercise of market power by bidders,
23and to deliver capacity resources to Illinois consumers at the



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1lowest and most stable prices; and be it further
2    RESOLVED, That suitable copies of this resolution be
3delivered to the members of the Illinois congressional
4delegation, the Federal Energy Regulatory Commission, the
5Illinois Commerce Commission, the Illinois Power Agency, PJM
6Interconnection LLC, and Midwest Independent System Operator,