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    Column: Fixing Illinois’ energy crisis


    May 26, 2022 - Tim Benson Heartland Institute

     

      Something is going on with the power supply in Illinois, and the Illinois legislature should take a look before it finds itself facing some angry constituents.

      In mid-April, the organization in the federal government that manages the power grid conducted a periodic auction of power capacity, and the results suggest parts of Illinois may find themselves facing steep price increases and short of the power needed to meet customer demand during peak periods this summer.

      Power companies bid to be paid to provide energy loads that Illinoisans can access during times of peak use. The price of these power auctions serves as early warning signals for areas for concern.

      Last year, the price paid to power companies operating in the Midwest to supply backup energy was $5 per megawatt-day. At the auction in mid-April, the price jumped to $236.66 per megawatt-day. It's not a nationwide problem, either. The same auction for the southern U.S. produced a price of $2.88 per megawatt hour.

      Manufacturers and other large power users were expecting an increase to $60 or $70 per megawatt hour, but no one expected it to be four times that, especially after a survey by the grid operator last year found providers expected there to be enough generating capacity for 2022-23.

      Federal rules require utilities to use this source to buy extra power in times of high demand, so there is no escaping the nearly 50 times increase in the rate or the $13-$22 per month it is expected to add to the average monthly utility bill in downstate Illinois.

      The Midcontinent grid can access power from the Southern grid in times of emergency, but this is limited because only one transmission line connects the two. Other backup sources that it can access by contractual agreement also have limitations in how much power they can send to the grid.

      "If we're going to say reliability is an imperative, we need to fix this," said David Patton, independent market monitor for the Midcontinent Independent System Operator.

      Patton says the grid operator's market rules have led to suppressed prices in previous years and the retirement of otherwise economically viable power plants. The Illinois AARP and others say Illinois' Energy Transition Act, which is supposed to end fossil fuel use for power in the state by 2050, is handcuffing the state from taking action to reduce costs and maintain reliability.

      The new law will force half of Illinois' coal-generating capacity to go offline before 2030 — which will be long before solar and wind power are ready to take up the slack. Even if renewable projects were in the works, it takes years for them to gain approval and actually begin to operate. There's a squeeze now, and, given international tensions, momentum away from fossil fuel plants and other factors, it's only going to get worse.

      "Mandating the use of one technology type for generation limits Illinois' ability to support other technologies to meet its electricity needs and reduce emissions," wrote the Illinois Chamber of Commerce in a recent release. "Renewables provide a great value to consumers and the environment but cannot support all Illinois' electricity needs alone."

      What's needed is some alterations to the Illinois Energy Transition Act that will slow down the rate at which coal and especially natural gas plants are retired. Natural gas is cleaner, less expensive, and more reliable and plentiful than coal or renewables at this time.

      Ameren, which provides natural gas to Southern Illinois, says it is equipped to handle customer demand this summer, but the news that the grid operator is warning of controlled outages raises concerns. It said that, "In addition to significant global events and pressures on energy markets, we have been sounding the warning bell that the transition to renewable generation must occur in a steady and measured fashion and that moving too fast could drive up prices downstate,. It also remarked that "it is likely to have a substantial impact on heating and cooling costs starting in June."

      Members of the Illinois statehouse, don't let Illinois run on energy fumes. Make some smart changes today while you still can.

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