Dynegy allegedly tampered with the 2015/16 capacity auction managed by Midcontinent Independent System Operator (MISO), artificially inflating Illinois electricity prices, according to the Federal Energy Regulatory Commission's (FERC) enforcement office.
Vistra Settles FERC Capacity Auction Manipulation Allegations for $38 Million
In a landmark settlement, Vistra (formerly Dynegy) has agreed to pay $38 million to resolve a long-standing Federal Energy Regulatory Commission (FERC) investigation into allegations of manipulation in the 2015/16 Midcontinent Independent System Operator (MISO) capacity auction. The settlement, which ends the legal action, sees Vistra continuing to deny the allegations but agreeing to the payment to resolve the issue.
The settlement will see Vistra pay $38 million to MISO within ten days of the agreement taking effect. MISO will then distribute the funds, with approximately $1.1 million going to Southwestern Electric Cooperative, $1.3 million to the Illinois Municipal Electric Agency (IMEA), $2 million to Illinois Industrial Energy Consumers (IIEC), and $33.5 million to Ameren Illinois. These entities will pass the payments on to their member municipalities, members, or default supply customers, effectively reimbursing ratepayers impacted by the capacity price manipulation in MISO's Zone 4 (Illinois).
The case was initially brought by Public Citizen, the Illinois Attorney General's office, and Southwestern Electric Cooperative, who alleged that Dynegy's actions had artificially driven up capacity prices. The resolution highlights concerns about the vulnerability of capacity market auctions to manipulation and underscores calls for stronger market safeguards to protect consumers.
FERC staff has alleged that Dynegy took four steps that weren't based on market fundamentals to successfully set the clearing price in the 2015/16 auction. However, these steps have been redacted in the investigation report.
Public Citizen, a consumer watchdog group, is pushing for more transparency in the process. They would like all capacity auction results to be subject to FERC review and public comment, similar to the process for ISO New England. Additionally, they are advocating for the creation of a consumer advocate position or office in MISO, similar to the Consumer Advocates of the PJM States.
The legal proceedings have taken several turns. In June 2021, FERC decided to hold "paper hearings" to consider the court's remand order and examine Dynegy's conduct related to the 2015/16 auction. In February 2022, the Illinois Attorney General and Public Citizen jointly asked FERC to order Dynegy to disgorge $428.6 million in "unlawful profits" and refund the money to Illinois ratepayers.
The settlement comes as the tenure of Chairman Richard Glick at FERC is set to end this year unless the Senate confirms his nomination for a second term. Senator Joe Manchin, D-W.Va., chair of the Senate Energy and Natural Resources Committee, has announced that he will not hold a confirmation hearing for Glick.
This settlement is a significant step towards ensuring that ratepayers in Illinois are compensated for any losses incurred due to alleged manipulation. However, the fight for greater transparency and consumer protection in energy markets continues.
- Despite the settlement, ongoing debates surround the need for improved transparency and consumer protection within the energy market, with consumer watchdog groups like Public Citizen advocating for FERC review and public comment on capacity auction results, and the creation of a consumer advocate position in MISO.
- As the tenure of Chairman Richard Glick at FERC is at stake, with the Senate yet to confirm his nomination for a second term, the settlement's impact on the broader business of energy finance and general-news, as well as sports sectors, remains to be seen.
%2C%20artificially%20inflating%20Illinois%20electricity%20prices%2C%20according%20to%20the%20Federal%20Energy%20Regulatory%20Commission's%20(FERC)%20enforcement%20office.){kind=link}