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1		SENATE RESOLUTION
2		WHEREAS, Reliable, affordable, and clean electric service
3		is a basic necessity of modern life and is vital to Illinois'
4		economic growth, jobs, and the overall interests of its
5		citizens; and
6		WHEREAS, The electric grid consists of interconnected
7		transmission facilities, electric generators, and distribution
8		facilities; and
9		WHEREAS, The operation of the transmission system affects
10		and is affected by the operation of electrical generators; and
11		WHEREAS, The goal of restructuring the interstate electric
12		industry by the Federal Energy Regulatory Commission was
13		intended to provide lower prices and a better array of services
14		for retail consumers by the creation of a marketplace where
15		electricity prices were the result of vibrant and vigorous
16		competition; and
17		WHEREAS, The Federal Power Act grants the Federal Energy
18		Regulatory Commission the primary responsibility of ensuring
19		that regional wholesale electricity markets served by Regional
20		Transmission Organizations operate without market power; and

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1		WHEREAS, The Federal Power Act requires just and reasonable
2		rates in order to "afford consumers a complete, permanent, and
3		effective bond of protection from excessive rates and charges"
4		and to address the complete market breakdown that can result
5		from the unfettered exercise of market power in the electric
6		utility industry; and
7		WHEREAS, The Federal Power Act mandates that the Federal
8		Energy Regulatory Commission deter and mitigate market power
9		abuses for the benefit of consumers and authorizes the Federal
10		Energy Regulatory Commission to protect consumers when a market
11		produces non-competitive rates; and
12		WHEREAS, The design of wholesale markets is crucial to
13		ensuring that wholesale and retail electricity prices are just
14		and reasonable; and
15		WHEREAS, The Federal Energy Regulatory Commission oversees
16		two Regional Transmission Organizations that operate the
17		wholesale market for electricity in Illinois, PJM
18		Interconnection LLC (PJM) and Midwest Independent System
19		Operator, Inc. (MISO); and
20		WHEREAS, PJM and MISO offer a variety of products and
21		oversee a variety of functions, including auctions for
22		capacity; rates established by PJM and MISO are passed through

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1		by buyers to retail customers and may affect rates for
2		electricity sold in bilateral transactions; and
3		WHEREAS, Capacity prices in Illinois increased by 100% in
4		PJM and 825% in MISO over the prior capacity price, which are
5		significant rate increases; and
6		WHEREAS, MISO's recent capacity auction yielded a high
7		capacity price for Illinois of $150 per megawatt day, while the
8		second highest capacity price in numerous other MISO states was
9		$3.48 per megawatt day; and
10		WHEREAS, The average residential bill in MISO territory is
11		expected to increase between $12 and $14 monthly based on the
12		results of the recent capacity auction, which could result in
13		rate shock for some of the State's most vulnerable residents on
14		fixed incomes; and
15		WHEREAS, Illinois businesses, electric cooperatives, and
16		other institutions and agencies in MISO territory will pay
17		millions of dollars more for capacity than they anticipated
18		based on the results of the recent capacity auction; and
19		WHEREAS, Capacity clearing prices are currently designed
20		so that the highest bid is used as the rate to compensate all
21		generators who clear the auction, even if their bids were

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1		significantly lower; and
2		WHEREAS, PJM has proposed to modify its auction process and
3		utilize a capacity product called "capacity performance",
4		which is expected to result in significantly higher capacity
5		prices; and
6		WHEREAS, Utility rate analysts have stated that by
7		withholding a relatively small portion of its electric
8		generation fleet, a generator can increase capacity prices and
9		obtain maximum benefit; and
10		WHEREAS, Illinois Attorney General Lisa Madigan filed a
11		complaint with the Federal Energy Regulatory Commission
12		(Docket EL15-71) against MISO on May 28, 2015, alleging that
13		the Illinois MISO rate is unjust and unreasonable and that the
14		rate was driven up by a pivotal supplier; therefore, be it
15		RESOLVED, BY THE SENATE OF THE NINETY-NINTH GENERAL
16		ASSEMBLY OF THE STATE OF ILLINOIS, that we urge the Federal
17		Energy Regulatory Commission, the Illinois Commerce
18		Commission, and the Illinois Power Agency to independently
19		review the PJM Interconnection LLC and Midwest Independent
20		System Operator capacity auction rules and market design and
21		determine why the rules and market design have not protected
22		Illinois ratepayers from significant increases; and be it

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1		further
2		RESOLVED, That we urge the Federal Energy Regulatory
3		Commission to investigate whether all auction rules were
4		followed in the most recent PJM and MISO auctions and, if so,
5		to determine whether additional protections are necessary to
6		ensure to protect ratepayers from excessive rates and charges;
7		and be it further
8		RESOLVED, That we urge the Federal Energy Regulatory
9		Commission, the Illinois Commerce Commission, and the Illinois
10		Power Agency to independently investigate whether market power
11		was exercised by any auction participants, including the
12		withholding of certain generation assets intended to drive up
13		the clearing price, and whether the market design for capacity
14		auctions allows for the exercise of market power; and be it
15		further
16		RESOLVED, That we urge the Illinois Commerce Commission and
17		the Illinois Power Agency to participate in Federal Energy
18		Regulatory Commission proceedings that will address the design
19		and operation of the capacity market planning processes and
20		auction practices utilized by PJM and MISO and to promote
21		policies in those proceedings that will ensure greater
22		transparency, prevent the exercise of market power by bidders,
23		and to deliver capacity resources to Illinois consumers at the

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1		lowest and most stable prices; and be it further
2		RESOLVED, That suitable copies of this resolution be
3		delivered to the members of the Illinois congressional
4		delegation, the Federal Energy Regulatory Commission, the
5		Illinois Commerce Commission, the Illinois Power Agency, PJM
6		Interconnection LLC, and Midwest Independent System Operator,
7		Inc.