Illinois Power Agency Files 2016 Default Service Procurement Plan (MidAmerican Included For First Time)
September 29, 2015 Email This Story Copyright 2010-15 EnergyChoiceMatters.com
Reporting by Karen Abbott • email@example.com
The Illinois Power Agency has filed with the Illinois Commerce Commission its 2016 procurement plan for default service power suppliers.
The IPA recommended that the energy and renewable resources requirements for Ameren Illinois, ComEd, and MidAmerican Energy (incremental purchases only) be procured by the IPA through two block energy procurements (spring and fall), a spring renewables procurement, and an early summer distributed generation procurement. In addition, the Plan calls for a capacity procurement for Ameren Illinois to be held as a Fall 2016 procurement event.
The IPA recommends a minor change to the energy hedging strategy in which the October requirements will be hedged to 75% in the spring procurement and to 100% in the fall procurement event.
More specifically, for energy supply, the IPA's proposed risk management strategy will continue to bifurcate the first delivery year (2016-17) into periods with different hedging levels -- with June hedged at 100% of average load, July and August hedged to 106% of average on-peak load and 100% of average off-peak load, fall hedged to 100% of average load, and the balance of the year hedged to 75% of average load at the time of the spring procurement event. The IPA recommends that the Commission pre-approve a fall energy procurement event, which would bring the hedging level for the balance of the first delivery year (October through May) to the fully hedged level (100% of load).
The IPA recommends hedging 50% of the expected load for the second delivery year, and 25% of the expected load for the third delivery year. The IPA recommends the procurement of half of these volumes in the spring 2016 procurement event and the balance in the fall 2016 procurement event.
Additionally, for Ameren Illinois, the IPA recommends purchasing 75% and 25% of forecasted capacity requirements in bilateral transactions through a fall 2016 procurement event to satisfy a portion of the capacity requirements for the second and third delivery years respectively.
In other words, for 2016-17, 50% of Ameren default service capacity was purchased bilaterally in September 2015, with the remaining 50% to be purchased through the MISO capacity auction. For 2017-18, the IPA recommends that 75% of Ameren default service capacity be purchased bilaterally in the fall of 2016, with 25% procured through the MISO capacity auction. For 2018-19, the IPA recommends that 25% of Ameren default service capacity be purchased bilaterally in the fall of 2016, with 50% procured bilaterally in the fall of 2017, with the remaining 25% procured through the MISO capacity auction
For ComEd, forecast capacity requirements are recommended to be secured by ComEd through the PJM Reliability Pricing Model and Capacity Performance processes. For MidAmerican, the IPA recommends that the forecast capacity shortfall be secured by MidAmerican through the annual MISO capacity auctions, known as the Planning Resource Auction
This is the first IPA plan to include procurements for MidAmerican Energy. The IPA notes that only a single retail supplier is active in the MidAmerican Energy territory, with competitive load at 3% of total load and only forecast to grow marginally. Switched load is expected to grow from 11 MW in 2015 to 14 MW in 2021, MidAmerican Energy told the IPA
"The low level of switching among MidAmerican’s eligible customers relative to the much higher switching levels for Ameren Illinois and ComEd is likely due to a combination of market conditions in MidAmerican’s service area including: a relatively low cost of MidAmerican-owned resources allocated to its Illinois load which would lead to little or no municipal aggregation activity, and little profit opportunity for ARES," the IPA noted.
As noted above, the IPA proposes to continue with block energy purchases, eschewing full requirements contracts