Illinois Commission Launches Inquiry Into Ameren’s Cost-Benefit Analysis of Joining PJM

The Illinois Commerce Commission on Aug. 3 opened an inquiry into Ameren Illinois Company’s cost-benefit analysis of its continued membership in the Midcontinent Independent System Operator (MISO) versus joining PJM Interconnection, which manages the grid in the northern part of the state. The study, released last month, concluded that MISO Zone 4 utilities joining PJM would result in net costs of about $3.4 billion for the state over the 10-year period from 2025-2034.

The study recommends remaining in MISO, which is economically advantageous for both the company and the state, offering substantial cost savings in comparison to joining PJM. The analysis considered several factors including reliability, affordability, and environmental effects that contributed to this conclusion.

The analysis assessed the net costs and benefits across the entire state of Illinois including the service territories of Ameren, City Water, Light & Power, Southern Illinois Power Cooperative, and Commonwealth Edison Company. The net costs and benefits of Zone 4 joining PJM over the 10-year period are summarized below:

• Energy Trade Benefits: Net benefit of $149.9 million
• Transmission Expansion Costs: $202.1 million higher
• Capacity Costs: $3,345.6 million higher.
• RTO Administrative Costs: Net benefit of $18.5 million
• Exit & Integration Fees: Total costs of $28 million pertaining to charges associated with withdrawal from MISO and the costs incurred by PJM for Zone 4 integration

In July 2022, the commission directed Ameren to conduct an independent study which assesses the comparative advantages and disadvantages of continuing its membership in MISO versus shifting to PJM. MISO’s failure to fulfil resource demand in a capacity auction for the period June 2022-May 2023 triggered rising wholesale prices and utility bills for central and southern Illinois customers. This prompted the commission to explore whether remaining in MISO offers maximum benefits to the company’s customers in electric energy. The grid operator’s 2022/2023 planning resource auction resulted in a clearing price of $236.66/megawatt-day for the North/Central region, up from $5/MW-day the year before.

Another factor that prompted the study is Ameren’s position as one of the few non-integrated utilities within MISO, which is mainly located within states with non-competitive electric markets, where utilities serving these regions remain integrated vertically. Further, the statutory restriction on state oversight of RTO membership for electric utilities expired on July 1, 2022.

Initial and reply comments on the study are due by Oct.2 and Nov.1, respectively.