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U.S regulator upholds complaint over Midwest power auction

January 4, 2016

Federal regulators agreed in part with the Illinois attorney general and a consumer advocacy group that say the rules governing an auction for future power supplies in the U.S. Midwest are flawed.

The Federal Energy Regulatory Commission said in a ruling last week that changes should be made to the Midwest Independent System Operator Inc.’s forward capacity auctions. Carmel-based MISO manages the electricity network for 15 U.S. states spanning from Minnesota to Louisiana.

Public Citizen Inc. and Illinois’ Lisa Madigan had challenged the outcome of the 2015-16 auction, in which prices for the reserve power surged to $150 a megawatt per day from $16.75 the previous year in one of the grid operator’s zones.

The commission in October began an investigation into market manipulation based on the complaints. Thursday’s ruling didn’t address that issue. The attorney general alleged that Dynegy Inc. or other suppliers used their market power to bid up the cost for capacity at an auction. The company has denied any wrongdoing.

FERC ordered MISO to revise for the next scheduled auction in April calculations used to determine how much supply is available to meet demand on the system and the costs that generators can factor into their bids.

“MISO is studying the order from FERC," Andy Schonert, a spokesman, said Monday in an e-mailed statement. "As we review the order, we will work with stakeholders to better understand the changes directed by the Commission and how they would be implemented for the upcoming auction."

Public Citizen said in a written statement that consumers could potentially be in line for tens of millions of dollars in refunds under the ruling.

FERC rejected complaints that the capacity zones are unjust and should be combined and that the integrity of the auction process was undermined, saying there wasn’t sufficient evidence to support those allegations.

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