ICC Adopts Default Service Procurement Plan Relying on Short-Term RECs

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December 23, 2010

The Illinois Commerce Commission has adopted a default service procurement plan for Commonwealth Edison and Ameren that relies on short-term purchases of RECs to meet renewable compliance obligations (10-0563).

Rejecting a proposed order's recommendation for 20-year contracts for physical renewable energy (11/24), the ICC approved the Illinois Power Agency's acquisition of only unbundled one-year RECs through contracts covering the delivery period June 2011 through May 2012.

The Commission concluded that the statute is "clear on its face" that RECs may meet the renewable requirements under the Illinois Power Agency act.  Furthermore, since a procurement for long-term renewable energy from a prior procurement plan was only completed last week, the ICC said it would be more prudent to analyze the results of that procurement before authorizing additional long-term contracts.

The ICC denied the Illinois Power Agency's (IPA) request for authority to conduct optional procurements, apart from its regular schedule, when market prices are favorable and the IPA has unsubscribe load.  The Commission noted that the prior procurement plan approved in Docket No. 09-0373 has not yet been fully implemented, and was reluctant to give the IPA additional work at this time.

The Commission also rejected, as unsupported, the IPA's proposal to procure a 10% oversubscription of requirements in July and August.  The ICC said that the IPA did not present any quantitative analysis for such oversubscription, while ComEd cited data showing prior oversubscriptions have resulted in excess costs.

The Illinois Power Agency was denied authority to hold a separate procurement to acquire demand response resources, as the Commission said that the legislation does not require any carve-out for demand response.  Furthermore, the Commission said ComEd is already procuring cost-effective demand response through the PJM RPM auction, and doubted that the IPA plan would be cost-effective.  The Commission said that the IPA is not barred from including supplemental demand response measures in a procurement plan, but said that any such proposals require additional justification.

The ICC also rejected the procurement of energy efficiency resources through a carve-out in the procurement plan, as the Commission found that the statutory authority to procure such resources in unclear.  The ICC raised practical concerns as well, noting that the IPA had not defined a quantity or term for energy efficiency resources, and citing the potential for an over-procurement.

The procurement plan, covering June 2011 through May 2016, continues the laddered procurement of standard wholesale products for the base generation requirements as follows:

• 35% of projected energy needs procured two years in advance of the year of delivery
• 35% of projected energy needs procured one year in advance of delivery
• 30% of projected energy needs procured in the year in which power is to be delivered

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