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Pulling An Inside Job

PJM loses luster in a squabble over market monitoring.

Fortnightly Magazine - May 2007

to speak extemporaneously, answering questions posed by the commissioners and Chairman Kelliher:

CHAIRMAN KELLIHER: Now, Joe, is it your suggestion that you think it either should be internal only or both internal and external …

MR. BOWRING: I think … … based on my own experience over the last couple of years and, particularly, more recently, that the market monitoring units [should] be accountable and responsible to some entity other than the RTO. …

Being an employee of the RTO … creates what I think are impossible ongoing differences because, for whatever reason, for better or worse, it’s not an indictment of either market monitoring or the RTO management.…

CHAIRMAN KELLIHER: Mr. Bowring has raised certain allegations. I saw them for the first time this morning. I think he might have given them to us late last night or this morning at some point.

I like Mr. Bowring. I respect him. But I don’t feel comfortable assuming that his version is the complete story … I have reviewed his comments and I think we’ll listen to more than one version of events, though.

Illinois: Auction Gone Haywire?

Imagine waking up one morning in your home in Chicago — let’s say on January 2, 2007 — and discovering that your residential electric bill, courtesy of Commonwealth Edison (an Exelon subsidiary) suddenly has climbed more than 25 percent. Or perhaps 43 or 55 percent, depending on whether you use electricity for heating, and whether you live in single-family or multi-family housing.

Or you might wake up downstate, where service comes from Ameren subsidiaries Illinois Power, Central Illinois Light (CILCO), or Central Illinois Public Service (CIPS), and see residential bill increases running anywhere from 88 to 125 percent (heating), or 49 to 80 percent (non-heating service).

Commercial and Industrial (C&I) classes would see even higher hikes — assuming that the customer still was taking bundled, standard-offer electric service from the local distribution utility.

This turn of events has now come to pass under the retail-choice regime in force in Illinois, one of the few remaining pro-competition states, where ComEd and Ameren no longer own generation, having sold off their plants as directed by state policy on industry restructuring. Thus, they will buy long-run wholesale-generation supply contracts from independent power producers via the state’s newly established generation auction. ( See, www.Illinois-Auction.com.)

The first auction was held for four days last year in early September, in which prices cleared for wholesale-power purchases for some 25,000 megawatts (about one-third of Illinois retail load served by the ComEd and Ameren), over contract terms of 17, 29, and 41 months. In future years, after the pattern gets set, contract terms will run a uniform 36 months.

Citing the afore-mentioned double- and triple-digit increases in retail electric bills, Illinois Attorney General Lisa Madigan has filed a complaint at the FERC. The AG asks federal regulators to set aside or modify the wholesale-power purchase contracts signed by the utilities as a result of the auction, to order refunds, and also to investigate certain allegations of price fixing or manipulation. (See,