Dive Brief:

• FERC has determined the results of a Midcontinent ISO capacity auction last year were not fair to consumers, with a portion of the power cost skyrocketing almost 900% and resulting in significant increases to customers' power bills, St. Louis Post-Dispatch reports. 
• The agency issued an order on the last day of 2015 calling for auction changes, including ceasing use of PJM Interconnection prices to set maximum bids and increasing the amount of power available in the Illinois market area.
• FERC is waiting on the results of an investigation into whether Dynegy manipulated the auction, with several parties alleging the generator withheld plants or bid them at uncompetitive points to raise prices.

Dive Insight:

FERC has determined that the rules governing a MISO capacity auction last year need to be revamped, responding to a slew of criticism after prices in Zone 4 cleared $150/MW-day compared to $16.75/MW-day during the same period last year. 

The agency has laid out a pair of significant changes, including telling MISO that the grid operator cannot rely on prices set for the PJM system, which allowed the maximum bid price to be set at $155 rather than $25. Second, FERC found that MISO incorrectly accounted for power exports, and must now increase the amount of electricity that is available to the Illinois market. That, according to Illinois Attorney General Lisa Madigan, could result in refunds.

“It’s great news that FERC has acknowledged downstate electric customers deserve relief from an inflated and absurd pricing process,” Madigan said in a statement. “I am pleased with FERC’s decision to fix the auction rules, but FERC still needs to order refunds to consumers for the outrageously high prices.”

Consumer advocate Public Citizen is predicting there will be refunds due, according to the St. Louis Post-Dispatch, but Dynegy disputed that idea. 

“It would be extremely difficult for FERC to say the auction rules going forward are broken and need to be fixed but those auction rules that were already applied are perfectly fine,” Public Citizen's Tyson Slocum told the Post-Dispatch. Dynegy, however, pointed out that the commission's order did not include refunds and "nor is it Dynegy’s expectation they ultimately will."

Madigan's office, in a statement, said the power auction resulted in an annual increase of $131 for an average residential Ameren customer in Illinois, but she expects FERC’s decision "will rightly result in lower prices for consumers as of June 1."