Dive Brief:
- Competitive power provider Dynegy announced this week it will introduce legislation in Illinois that would integrate the entire state into the PJM electricity market, RTO Insider reports.
- Currently, the northern portion of the state is served by PJM, but the south is in the MISO electricity market. Dynegy believes MISO does not properly compensate its generation plants in the region and has been critical of the grid operator's market structure in the past.
- Illinois Senate Majority Leader James Clayborne supports the Dynegy bill, the generator said in a release, along with two branches of the International Brotherhood of Electrical Workers, a power workers union. The legislative session closes May 31.
Dive Insight:
That Dynegy would like to transition out of the MISO market will not come as a surprise to those familiar with the independent power producer.
Company leadership has long been critical of the MISO market structure, which includes both vertically-integrated utilities along with competitive power providers like Dynegy itself. Many of the states in PJM, on the other hand, leave all of the generation business to competitive suppliers while utilities only own the transmission and distribution grids.
“Mixing in those two models creates a real disadvantage for competitive generators,” Dynegy CEO Bob Flexon said at a power generation conference last year. “You either need to be regulated company or an unregulated company. You can’t have a market that starts combining these things.”
Results from recent market auctions in PJM and MISO demonstrate the differences between the markets, Dynegy said in a statement.
"[C]apacity prices ... in northern Illinois are nearly three times that of southern Illinois due to less economic plants in the north, while more cost effective plants in southern Illinois sit idle, or shut down, as they don’t receive any compensation to cover operating costs from MISO."
Integrating the southern portion of the state into PJM would help Dynegy's plants access those higher capacity prices and earn more revenue.
Dynegy's bill is the second major energy legislation to be introduced this year in Illinois. Earlier this month, Exelon Corp. and its Chicago utility subsidiary Commonwealth Edison consolidated three failed bills from the last session into one broad proposal to support Exelon's aging nuclear generation and reform utility regulation in the state.
Exelon says it will close two nuclear plants in Illinois if its bill is not passed in this session, which ends May 31.
