Partial Victory in Market Manipulation Complaint; Consumers Could See Refunds
Statement of Tyson Slocum, Director, Public Citizen’s Energy Program
Note: On Dec. 31, the U.S. Federal Energy Regulatory Commission (FERC) issued an order regarding Public Citizen’s market manipulation complaint against Dynegy, Inc.
In a potential victory for Illinois energy consumers, the Federal Energy Regulatory Commission (FERC) has ruled that the Midcontinent Independent System Operator (MISO) rules for the upcoming 2016-17 power auction are not just and reasonable.
Public Citizen’s May 2015 complaint alleged that the auction for 2015-16 violated the Federal Power Act’s requirement that all electric rates be just and reasonable, because Houston-based Dynegy, Inc. had manipulated the capacity auction.
While FERC’s New Year’s Eve ruling said that a future order will address Public Citizen’s allegations surrounding the 2015-16 auction, FERC should find the 2015-16 auction to have violated federal law in the same way that FERC’s Dec. 31 order found that the upcoming 2016-17 auction violates the just and reasonable standard. Why? Because FERC identified unlawful parts of MISO’s auction that are the same for both the 2015-16 and 2016-17 auctions.
The complaint alleged that because of Dynegy’s manipulation and flaws in the auction process, auction prices for a zone in Illinois increased from $16.75 per megawatt-day in 2014-15 to $150 in 2015-16, which inflated electricity costs for the average Illinois family by $140. Public Citizen’s complaint was echoed by a similar filing by the Illinois Attorney General.
In anticipation of the ruling on the auction that already occurred, FERC set an effective refund date. So if and when FERC finds the past auction to be illegal, it will be able to order refunds to harmed consumers.
FERC also acknowledged that the formal, non-public market manipulation investigation into Dynegy is ongoing. If FERC follows the logic of its New Year’s Eve ruling, and regardless of whether the commission finds Dynegy manipulated the market, then Illinois consumers will be in line for tens of millions of dollars in refunds.