By Amanda Durish Cook
FERC has begun a non-public investigation over allegations of improprieties in MISO’s April capacity auction and will hold a technical conference on the matter Oct. 20.
The commission’s actions, disclosed last week, are in response to complaints filed by Illinois Attorney General Lisa Madigan, Southwestern Electric Cooperative, Illinois industrial energy consumers and the public interest group Public Citizen over MISO’s Planning Resource Auction, which resulted in a nine-fold price increase in Zone 4, which comprises much of Illinois.
Public Citizen called for an investigation in May into whether Dynegy improperly withheld capacity in Zone 4, an allegation the company has denied. Public Citizen also alleged that MISO brushed aside recommendations by its staff that Zones 4 and 5 be merged due to their concerns about Dynegy’s growing share of capacity in Zone 4 after the company acquired four generators there from Ameren.
Prices in Zone 4 cleared at $150/MW-day, compared with just $16.75 a year earlier.
FERC said it is holding the all-day conference to obtain additional information and “determine what further action, if any, may be appropriate” to address the complaints (EL15-70, et al). The conference, which will be webcast, will include discussions of current market power mitigation rules, the calculations of auction parameters and zonal boundaries.
The conference will be run by staff from the offices of General Counsel, Energy Market Regulation, and Energy Policy and Innovation. Stakeholders will have until Nov. 4 to submit post-technical conference comments.
FERC said the conference will not address the non-public investigation being conducted by the Office of Enforcement into “whether market manipulation or other potential violations of commission orders, rules and regulations occurred before or during the auction” (IN15-10). FERC said the investigation began “shortly after” the auction concluded April 14.
In its complaint in May, Public Citizen suggested that Dynegy could have inflated prices by either not offering some capacity or by offering some of it at such a high price that it would not clear.
Madigan filed a complaint saying that Dynegy’s increased generation portfolio in Zone 4 made it a “pivotal supplier” in the zone. Madigan also complained that in approving the Dynegy acquisition, FERC declined to look at its effect on competition and prices in Zone 4 and instead only considered a competitive analysis of MISO as a whole.
Dynegy CEO Robert Flexon defended the company’s bidding strategy in an interview in June, insisting no capacity was withheld. (See Dynegy Chief Unapologetic over MISO Auction Flap.)
MISO and its Market Monitor also contend the auction was the result of market dynamics, not improper conduct. (See Dynegy: No Evidence of Misconduct in Auction.)
