Illinois AG Seeks Order Requiring Capacity Supplier To Refund $428 Million To Customers -- EnergyChoiceMatters.com

Illinois AG Seeks Order Requiring Capacity Supplier To Refund $428 Million To Customers

February 7, 2022

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Copyright 2010-21 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com

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Illinois Attorney General Kwame Raoul has filed a motion with the Federal Energy Regulatory Commission (FERC) asking that Dynegy, Inc. (Dynegy) be required to refund more than approximately $428 million to customers in central and southern Illinois as the AG alleged such customers, "were overcharged after the company allegedly manipulated Midcontinent Independent System Operator, Inc. (MISO) auction rules in 2015."

As previously reported, in August, the U.S. Court of Appeals for the D.C. Circuit has remanded to FERC a complaint concerning the results of the 2015 Midcontinent ISO capacity auction, finding that FERC's conclusion that the outcome of the auction was just and reasonable, because the auction complied with the applicable tariff, lacked adequate explanation, and was therefore arbitrary and capricious. The case was remanded for further analysis and explanation

See more background on the remand here

Although Public Citizen alleged manipulation in a FERC proceeding, the FERC complaint, and appeal, did not specifically address any market participant behavior, and was focused on the results of the auction. Public Citizen has alleged withholding by Dynegy. Dynegy has said that its offers were competitive, and that there was no physical or economic withholding

FERC's Office of Enforcement did separately open a formal, non-public investigation into whether market manipulation occurred in the auction. FERC closed the investigation, stating that auction pricing did not violate the Commission’s regulations regarding market manipulation, and that no further action was appropriate to address the allegations of market manipulation.

See more background on the FERC proceeding here

Vistra, which now owns Dynegy, provided the following statement concerning the matter:

"This matter has previously been thoroughly examined by experts, including the Federal Energy Regulatory Commission (FERC) and the Independent Market Monitor for MISO. These independent regulatory reviews have repeatedly found that Dynegy acted in accordance with all applicable market rules and procedures and that no market manipulation occurred, denying the claims of the Office of the Illinois Attorney General and Public Citizen.
"The court remanded one limited legal issue back to FERC with a recommendation that FERC provide a more thorough basis for its decision. Vistra supports FERC’s decision that the auction results were just and reasonable and looks forward to FERC providing a more detailed explanation of its rationale. The enforcement investigation into potential manipulation remains closed.
"There are no new facts here related to Dynegy; these claims have previously been adjudicated by independent regulatory authorities, with such authorities clearing Dynegy. The facts that support FERC’s prior decision to terminate its investigation of Dynegy are not in dispute in this matter. We will vigorously defend our actions and our employees and continue to serve our customers and communities with the highest ethical standards and stewardship.
"Furthermore, we have no understanding of the rationale for a figure such as more than $400 million as contained in the Attorney General and Public Citizen’s press release. As noted, we will vigorously defend our actions and remind you that these matters have been thoroughly examined by experts, including FERC and the Independent Market Monitor for MISO."
--- Statement from Vistra

The AG alleged, "The flawed auction in April 2015 caused electricity prices for Ameren consumers in the MISO territory to unnecessarily increase by close to 900% over the previous year’s auction."

The AG alleged, "In May 2015, the Attorney General’s office filed a complaint asking FERC to set a just and reasonable rate, impose civil penalties, fix the flawed auction rules and create new rules for future auctions. In December 2015, FERC issued a decision agreeing that the rules governing the auction were not just and reasonable, and ordered that they be changed for future yearly auctions. In July 2019, FERC declined requests for hearings to determine that Dynegy was manipulating the market. Following an appeal filed by Public Citizen Litigation Group, the court remanded the case."

In the AG's motion, the AG, "argues that Dynegy was a pivotal energy supplier in central and southern Illinois, which allowed it to exercise market power and set the capacity clearing price to manipulate the market and charge consumers an unjust and unreasonable rate. Because of this manipulation, Raoul asserts that Illinois consumers were overcharged approximately $428.6 million during the 2015 to 2016 billing cycle. Raoul further argues that FERC should find that Dynegy manipulated the market, and order Dynegy to refund consumers the money they were unfairly charged."

Docket No. EL15-71

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