Ameren "Staying Active" in Retail Market, Discusses Default Service Procurement Required Under Smart Grid Bill

Ameren is "staying active" in the Illinois retail electric market, executives said during an earnings call Friday.

Reminding investors that retail supply is not a new thing for Ameren, executives said that about 45% of the sales from its merchant generation are, "going to sort of physical delivery, physical end use."

"[T]hat's something we're going to continue to focus on and we're going to target something greater than 50% of our generation to go to physical delivery customers as we move forward," executives said.

Ameren executives also discussed a default service procurement provision contained in the so-called ComEd smart grid trailer bill (SB 1652), which was recently enrolled.

The act provides that, "In order to promote price stability for residential and small commercial customers during the infrastructure investment program described in subsection (b) of Section 16-108.5 of this Act, and notwithstanding any other provision of this Act or the Illinois Power Agency Act, for each electric utility that serves more than one million retail customers in Illinois, the Illinois Power Agency shall conduct a procurement event within 120 days after the effective date of this amendatory Act of the 97th General Assembly and may procure contracts for energy and renewable energy credits for the period June 1, 2013 through December 31, 2017," which satisfy certain pricing benchmarks.

Specifically, the large utilities are required to conduct a procurement for 24 hour by 7 day supply over a term that runs from June 1, 2013 through December 31, 2017.

For a utility that serves over 2 million customers, the energy contracts shall be multi-year with pricing escalating at 2.5% per annum.

The energy contracts may be designed as financial swaps or may require physical delivery.

The megawatt volume of the contracts shall be based on the updated load forecasts of the minimum monthly on-peak or off-peak average load requirements shown in the forecasts, taking into account any existing energy contracts in effect as well as the expected migration of the utility's customers to alternative retail electric suppliers.

The evaluation of bids in the competitive procurement events for energy and RECs shall incorporate price benchmarks set collaboratively by the Illinois Power Agency, the procurement administrator, the staff of the Illinois Commerce Commission, and the procurement monitor.

The cost of administering the procurement event shall be paid by the winning supplier or suppliers through a supplier fee.