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In Illinois, a Scheme to Prop Up Dynegy’s Uncompetitive Coal Plants

March 13, 2018

Midwest Energy News:

Stakeholders say an Illinois proposal to create a new state-run capacity market to reward baseload generators is a money grab by companies and unnecessary to maintain adequate generation and grid reliability.

The push is driven by Dynegy, which said it needs higher capacity payments in order to keep its financially struggling coal plants open.

Critics of the proposal, including consumer and clean energy groups and the state attorney general, say the coal plants are not needed and that ratepayers should not have to pay higher bills to help Dynegy’s plants, especially given Dynegy’s recently-completed $4 billion merger with Vistra Energy.

On February 26, the Illinois Commerce Commission released a 164-page report summing up stakeholder input on its proposal, a move ordered as part of Dynegy’s pursuit of legislation to create new state payments for capacity — the promise to be ready to provide power if needed.

Legislation introduced in the state’s November veto session, and likely to be considered again this spring, would significantly increase the payments Dynegy gets for capacity. The proposed legislation would allow the Illinois Power Agency to pay generators for capacity along with procuring the power that is used on a daily basis on behalf of the state’s utilities, ComEd and Ameren.

Currently, capacity payments are determined through an auction run by the MISO regional transmission organization. In those auctions, Dynegy is competing with plants in regulated states, where generators can charge customers for their investments in infrastructure and operations. Since Dynegy sells its power on the market and cannot get directly reimbursed for investments under Illinois’ deregulated system, it says the auction is an unfair competition.

Dynegy has been pushing for revenue supports since 2014 after it acquired five financially struggling coal plants in a deal where Ameren basically paid Dynegy to take the fleet off its hands.

More: After lucrative merger, Dynegy keeps fighting to boost its coal fleets

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