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Dynegy Proposing Illinois Legislation To Move Ameren To PJM Market To Bailout Downstate Generation

May 26, 2016

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Copyright 2010-16 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com

Dynegy today announced plans to file legislation in the Illinois General Assembly which would move Ameren from the Midcontinent ISO to the PJM market, in order to provide more compensation to downstate generation capacity, such as Dynegy's power plants

Dynegy said that such a move, "[r]elieves capacity shortage and premium pricing in northern Illinois through generation supply from existing and available plants in central and southern Illinois."

The ComEd zone in PJM's 2019-20 BRA just cleared at $200/MW-day for the capacity performance product. In MISO's 2016-17 capacity auction (the most forward auction conducted), the Ameren zone cleared at $72.00/MW-day

However, the current capacity price (2015-16) at Ameren is $150.00/MW-day, highlighting the vagaries and volatility of capacity market clearing prices, and indicating that adding downstate generation to PJM may not necessarily produce any meaningful savings for Illinois customers

Meanwhile, recent comments by Dynegy CEO Bob Flexon served to highlight the advantages capacity markets create for incumbent asset-owning retail suppliers, and challenges faced by independent retail suppliers competing against such suppliers in a world where capacity purchases are mandated but in which auction prices are volatile (see story here)

Dynegy said that its legislation would, "preserve vital, high-paying power generation jobs and the related economic benefits," by retaining needed generation -- a statement which, although we wish to be clear that Dynegy's solution to the claimed economic challenges facing its generation are much different than solutions being sought in Ohio, still sounds like it could have come from one of the Ohio utilities Dynegy is always blasting in the press.

Dynegy's bill is supported by Senate Majority Leader, James Clayborne (D – Belleville.), who stated, "As the results of the most recent PJM and MISO capacity auctions demonstrate, 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."

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