"Evaluating the Potential for Transmission Constraints on the Operation of a Competitive Electricity Market in Illinois"

Illinois Commerce Commission, University of Illinois–Urbana Champaign, Argonne National Laboratory

             The purpose of this study is to determine if the transmission system in Illinois and the surrounding region would be able to support a competitive electricity market, allow for effective competition to keep prices in check, and allow for new market participants to effectively compete for market share.  The study will determine if there are conditions that could reasonably be expected to occur that would enable a company to exercise market power in one or more portions of the State and thereby create undue pressure on the prices charged to customers and/or inhibit new market participants from entering the market. The study also will identify where new market participants are potentially economically competitive but have limited ability to connect to load centers.  It will determine what penalties are being paid, in the form of higher prices, for the inability to bring this power to where it can be used.  The intent is to see if the limitations of the transmission system represent a substantial barrier to new market participants.

The anticipated benefits of the study are summarized as follows:

·              It will provide the State with an evaluation of the transmission system’s ability to support a competitive electricity market;

·              It will give the State the ability to understand how different participants in the energy market might behave and how different market strategies employed by these participants might impact electricity prices to consumers;

·              It will give the State an identification of opportunities for new market participants that are inhibited by the lack of adequate transmission capability to bring power into load centers;

·              It will identify generation and transmission resource additions and market rules that may prevent the exercise of market power and the exclusion of new market participants; and

·              It will provide the State with a set of tools and methodologies to continue monitoring the development of the electricity markets in the State and the surrounding region and to make informed decisions, based on sound analytical results, regarding appropriate actions to take.

            Total Project:  $350,000

Board Commitment:  $50,000

Progress Report :The UI/Argonne team has submitted second draft report to ICC staff. Staff is reviewing the report and is recommending modifications.