Dynegy accused of market manipulation to increase electricity rates

The Public Citizen advocacy group and the Illinois attorney general are accusing Houston-based Dynegy of manipulating a Midwestern wholesale power market to dramatically increase electricity costs for many Illinois residents.

Dynegy, which denies the claims, is accused of using a power auction by the Midcontinent Independent System Operator — a regional transmission organization in the Midwest — to push prices up for parts of Illinois from $16.75 per megawatt-day last year to $150 this year, an increase of 800 percent.

Public Citizen and Attorney General Lisa Madigan filed complaints with the Federal Energy Regulatory Commission on Thursday in an attempt to block the rate hikes. The complaints reference the “highly excessive, unjust, unreasonable and unduly discriminatory rate increases” that could have resulted from the “illegal manipulation and gaming of the auction bidding process, specifically capacity withholding.”

Essentially, they are accusing Dynegy of indirectly causing the hikes by using its leverage and threatening to leave MISO for another system operator.

Dynegy, in a prepared statement, is says all the power auction information was properly disclosed and that there was no wrongdoing.

“Dynegy follows and respects all the rules, tariffs, and obligations in the markets and areas where we operate,” the company stated. “Dynegy offered all of its megawatts into the MISO auction with no physical or economic withholding in accordance with MISO tariffs and as approved by the Independent Market Monitor.

“MISO’s Independent Market Monitor has publicly stated that “the auction results are reliable and participants’ behavior was in line with all tariff rules and procedures,” Dynegy added.

Public Citizen is arguing that, even if illegal manipulation did not occur, the dramatic rate increases  are still a violation of the Federal Power Act’s fundamental requirement that rates be just and reasonable.

FERC on Friday asked for comments in response to the complaints to be filed by June 17.

 

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