For Immediate Release
Public Citizen Files Emergency Complaint Alleging Possible Market Manipulation by Dynegy, Urges Investigation of Midwest Power Auction
Auction Led to Electricity Rate Spike for Illinois Consumers; FERC Should Halt Pending Rate Increase
WASHINGTON - Alleging possible illegal market manipulation, Public Citizen has filed an emergency request for the Federal Energy Regulatory Commission (FERC) to block a pending utility rate increase that would inflate electricity costs for the average Illinois family by $140 annually. The new rate is scheduled to go into effect on June 2. Public Citizen also is calling for FERC to investigate.
At issue is a power auction conducted by the Midcontinent Independent System Operator (MISO), the results of which were announced on April 14, 2015. The auction was intended to procure adequate supplies through 2016 for most of downstate and midstate Illinois.
In its complaint, filed late Thursday, Public Citizen alleges that the auction results suggest that Houston-based Dynegy, Inc. may have intentionally withheld several of its power plants from the auction or bid them at uncompetitive prices. The bidding strategies of Dynegy and other suppliers, combined with the rules under which the auction was conducted, pushed auction prices up for much of Illinois from $16.75 per megawatt-day last year to $150 this year, an increase of 800 percent.
Even if illegal manipulation did not occur, the dramatic spike – resulting in a rate for Illinois that is more than 40 times that in neighboring states despite abundant generating capacity in Illinois – indicates a violation of the Federal Power Act’s fundamental requirement that rates be just and reasonable.
The Illinois attorney general filed a similar complaint with FERC late Thursday, also calling on the agency to block the increase.
This is not the first time that Dynegy has been suspected of manipulating energy markets. The company has in the past settled allegations that it engaged in illegal gaming of the California power market; accepted a $5 million penalty from the U.S. Commodity Futures Trading Commission to settle allegations the company intentionally reported false natural gas prices to a key index for the purpose of manipulating the price; and paid a $3 million civil penalty for committing securities fraud for the company’s illegal energy trades.
“Such a sudden and extreme rate increase could cause consumers to have to choose between keeping the lights on or buying groceries,” said Tyson Slocum, director of Public Citizen’s Energy Program. “For those with businesses, it may make the difference between profit and loss.”
One key problem, Public Citizen’s complaint notes, was that a top Dynegy executive served as vice chair of the MISO working group tasked with designing and helping implement auction rules. MISO last year dropped a proposal to make changes that could have resulted in a more competitive auction for Illinois after Dynegy objected.
Read Public Citizen’s complaint.
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