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Illinois Power Agency Submits Final Proposed Procurement Plan to ICC

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September 30, 2010

The Illinois Power Agency submitted to the Illinois Commerce Commission (10-0563) its final proposed plan for the procurement of electricity for non-hourly default service customers at Commonwealth Edison and the Ameren utilities for the period June 2011 through May 2016.

The main tenets of the plan compared with the draft posted for stakeholder comment in August are unchanged (Only in Matters, 8/18/10), including the three-year laddering of energy supply procurements under the following schedule:

o 35% of projected energy needs procured two years in advance of the year of delivery

o 35% of projected energy needs procured one year in advance of delivery

o 30% of projected energy needs procured in the year in which power is to be delivered

The final IPA plan also retains the proposal for optional procurements of up to an additional 10% of projected energy portfolio requirements in any month for the second and third planning year that is below the 100% subscription level.  The optional procurements would be triggered only when market indices demonstrate that prices for energy supply contracts for the targets months are at least 10% below the average weighted price of fixed price contracts already secured by the utilities for those months and such prices are below the prices for the most recently completed planning year procurement event.  The optional procurements would only be authorized with ICC approval.

Modifications were made with respect to procurements of demand response, energy efficiency, and RECs.

The IPA proposes to allow Energy Efficiency from programs that are evaluated in a manner equivalent to the existing Energy Efficiency Portfolio Standards programs administered by the utilities to be treated as an energy supply resource in the procurement plan.  The products would be procured after the spring 2011 solicitations for the more traditional physical and swap energy products through a competitive solicitation. The combined costs of traditional energy, capacity, and renewable energy assets within the IPA portfolio after the spring 2011 procurement events will be used to develop a cost-effectiveness benchmark for the energy efficiency procurements.

The IPA's final plan proposes that both utilities conduct a separate procurement for demand response resources.  Previously, the IPA had proposed to procure demand response only at ComEd, with demand response resources at Ameren rolled into the procurement of capacity.

The IPA notes in its final plan that the statutes requiring the procurement of cost-effective demand response do not provide that that these assets are procured in lieu of capacity.  "Therefore, demand response will be procured independent of the Capacity Resource plans," the IPA said.

For both utilities, a separate demand response procurement would be conducted in the spring of 2011.  The procurement would be limited to demand response from "eligible retail customers" as defined in statute.  There would be no volume target for demand response, and demand response would be procured to the extent such resources are cost effective.  Demand response resources would be offered contracts of five or 10 years.  

At Ameren, demand response would have to be registered as qualifying Planning Resource Credits by the Midwest ISO and can not have been bid into MISO's Voluntary Capacity Auction.  At ComEd, demand response would have to be registered as qualifying capacity resources in the PJM Reliability Pricing Model auction.

The only modification from the draft plan with respect to REC procurements is the addition of the North American Renewables Registry as an option for use by market participants in meeting the REC registry portion of the plan.  The PJM Environmental Information System Generation Attribute Tracking System (PJM-GATS) and the Midwest Renewable Energy Tracking System (M-RET) are already eligible REC tracking registries for the Illinois RPS.

RECs would be procured for a single compliance year (June 2011 through May 2012).  The IPA proposes to continue the consolidation of the REC procurement processes and procedures started in 2010, and seeks to unify standard terms and conditions between Ameren and ComEd with regard to REC contracts.  Therefore, the utilities' REC contracts should include (1) collateral requirements that equal 10% of remaining contract value; and (2) unsecured credit limits for creditworthy REC suppliers, the IPA said.

   
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