SR0623 99TH GENERAL ASSEMBLY

SR0623 LRB099 12087 GRL 36432 r

SENATE RESOLUTION

WHEREAS, Reliable, affordable, and clean electric service is a basic necessity of modern life and is vital to Illinois' economic growth, jobs, and the overall interests of its citizens; and

WHEREAS, The electric grid consists of interconnected transmission facilities, electric generators, and distribution facilities; and

WHEREAS, The operation of the transmission system affects and is affected by the operation of electrical generators; and

WHEREAS, The goal of restructuring the interstate electric industry by the Federal Energy Regulatory Commission was intended to provide lower prices and a better array of services for retail consumers by the creation of a marketplace where electricity prices were the result of vibrant and vigorous competition; and

WHEREAS, The Federal Power Act grants the Federal Energy Regulatory Commission the primary responsibility of ensuring that regional wholesale electricity markets served by Regional Transmission Organizations operate without market power; and

WHEREAS, The Federal Power Act requires just and reasonable rates in order to "afford consumers a complete, permanent, and effective bond of protection from excessive rates and charges" and to address the complete market breakdown that can result from the unfettered exercise of market power in the electric utility industry; and

WHEREAS, The Federal Power Act mandates that the Federal Energy Regulatory Commission deter and mitigate market power abuses for the benefit of consumers and authorizes the Federal Energy Regulatory Commission to protect consumers when a market produces non-competitive rates; and

WHEREAS, The design of wholesale markets is crucial to ensuring that wholesale and retail electricity prices are just and reasonable; and

WHEREAS, The Federal Energy Regulatory Commission oversees two Regional Transmission Organizations that operate the wholesale market for electricity in Illinois, PJM Interconnection LLC (PJM) and Midwest Independent System Operator, Inc. (MISO); and

WHEREAS, PJM and MISO offer a variety of products and oversee a variety of functions, including auctions for capacity; rates established by PJM and MISO are passed through by buyers to retail customers and may affect rates for electricity sold in bilateral transactions; and

WHEREAS, Capacity prices in Illinois increased by 100% in PJM and 825% in MISO over the prior capacity price, which are significant rate increases; and

WHEREAS, MISO's recent capacity auction yielded a high capacity price for Illinois of $150 per megawatt day, while the second highest capacity price in numerous other MISO states was $3.48 per megawatt day; and

WHEREAS, The average residential bill in MISO territory is expected to increase between $12 and $14 monthly based on the results of the recent capacity auction, which could result in rate shock for some of the State's most vulnerable residents on fixed incomes; and

WHEREAS, Illinois businesses, electric cooperatives, and other institutions and agencies in MISO territory will pay millions of dollars more for capacity than they anticipated based on the results of the recent capacity auction; and

WHEREAS, Capacity clearing prices are currently designed so that the highest bid is used as the rate to compensate all generators who clear the auction, even if their bids were significantly lower; and

WHEREAS, PJM has proposed to modify its auction process and utilize a capacity product called "capacity performance", which is expected to result in significantly higher capacity prices; and

WHEREAS, Utility rate analysts have stated that by withholding a relatively small portion of its electric generation fleet, a generator can increase capacity prices and obtain maximum benefit; and

WHEREAS, Illinois Attorney General Lisa Madigan filed a complaint with the Federal Energy Regulatory Commission (Docket EL15-71) against MISO on May 28, 2015, alleging that the Illinois MISO rate is unjust and unreasonable and that the rate was driven up by a pivotal supplier; therefore, be it

RESOLVED, BY THE SENATE OF THE NINETY-NINTH GENERAL ASSEMBLY OF THE STATE OF ILLINOIS, that we urge the Federal Energy Regulatory Commission, the Illinois Commerce Commission, and the Illinois Power Agency to independently review the PJM Interconnection LLC and Midwest Independent System Operator capacity auction rules and market design and determine why the rules and market design have not protected Illinois ratepayers from significant increases; and be it further

RESOLVED, That we urge the Federal Energy Regulatory Commission to investigate whether all auction rules were followed in the most recent PJM and MISO auctions and, if so, to determine whether additional protections are necessary to ensure to protect ratepayers from excessive rates and charges; and be it further

RESOLVED, That we urge the Federal Energy Regulatory Commission, the Illinois Commerce Commission, and the Illinois Power Agency to independently investigate whether market power was exercised by any auction participants, including the withholding of certain generation assets intended to drive up the clearing price, and whether the market design for capacity auctions allows for the exercise of market power; and be it further

RESOLVED, That we urge the Illinois Commerce Commission and the Illinois Power Agency to participate in Federal Energy Regulatory Commission proceedings that will address the design and operation of the capacity market planning processes and auction practices utilized by PJM and MISO and to promote policies in those proceedings that will ensure greater transparency, prevent the exercise of market power by bidders, and to deliver capacity resources to Illinois consumers at the lowest and most stable prices; and be it further

RESOLVED, That suitable copies of this resolution be delivered to the members of the Illinois congressional delegation, the Federal Energy Regulatory Commission, the Illinois Commerce Commission, the Illinois Power Agency, PJM Interconnection LLC, and Midwest Independent System Operator, Inc.