New Federal Rule Undermines Illinois’ Clean Energy, Increases Costs

CHICAGO – The Federal Energy Regulatory Commission today imposed rules on the country’s largest wholesale electricity market, which includes Northern Illinois, that will reward fossil fuel generators with billions of dollars in unnecessary payments from electricity customers. The order could prevent power generators supported by Illinois policies from competing in the 13-state PJM region’s capacity market, leaving the state’s consumers paying twice for the same power.

The order could cost Illinois consumers as much as an additional $864 million every year, according to research by Grid Strategies. The average residential electricity bill could go up by as much as $5.00 a month.

The Clean Energy Jobs Act includes provisions that would reform the capacity market and could allow Illinois to avoid significant cost increases if the Act is signed into law next year. Advocates say that having a state-managed capacity market, instead of through PJM, would both save Illinois on energy costs and significantly expand renewable energy investment in the state.  

The following is a statement from J.C. Kibbey, Illinois clean energy advocate for the Natural Reources Defense Council:

“Illinoisans shouldn’t have to pay hundreds of millions of dollars every year into a broken regional electricity market rigged against clean energy, when we could run our own more sustainably and for a lower cost. This should be a wakeup call for our state’s elected officials that we have to act now to protect residents from billions of dollars of unnecessary costs. The Clean Energy Jobs Act will give Illinois the freedom to get to 100 percent renewable energy and avoid the terrible consequences of this new federal rule.”      


PJM, the grid operator for 13 states and the District of Columbia, proposed changes to its capacity market that would impose a Minimum Offer Price Rule (MOPR) on all capacity resources that benefit from state incentives. FERC approved a version of that so-called MOPR today.

Capacity markets are used in PJM to ensure that enough power is available at all times. They differ from the day-to-day energy markets. In capacity markets, power generators pledge to provide electricity when needed, or consumers pledge to reduce their electricity use when supply is tight and are compensated for that promise.

FERC's order threatens to force PJM customers to buy more capacity than necessary because it would subtract many state-incentivized solar, wind and nuclear plants from the equation. But those resources will still actually be running, so the proposed rules will, in effect, force consumers to pay twice for the same capacity. The result would be PJM buying capacity – most likely from gas-fired power plants – to serve customers that are already being served by the state supported resources.


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