Residents of central and southern Illinois could face another summer of brutally high electricity prices if the region gets hit by another heat wave.
That was the blunt warning last week from Ameren Illinois, which delivers power from LaSalle County in Chicago’s far southwest suburbs all the way to the Ohio River.
The utility based its warning on the latest capacity auction through which it reserves space for future electricity shipments on the grid run by the Midcontinent Independent System Operator (MISO).
Along with neighboring grids like PJM Interconnection, which serves northern Illinois, the District of Columbia and 12 other states, MISO is scrambling to keep up with rising electricity demand from data centers.
In the wake of the MISO capacity auction, Ameren Illinois customers will pay 11 cents per kilowatt-hour for electricity supply for the summer months beginning June 1.
This rate is lower than last year’s 12.2 cents, which was driven by record supply and distribution costs and a June heat wave. But it remains well above the 4.8 cents seen in 2021.
Supply and distribution costs make up about half of a typical residential bill.
“Yes, supply prices came in a little bit lower than last summer. But these are still historically high supply prices, some of the highest we’ve seen,” Brice Sheriff, senior director of regulatory affairs and energy supply at the utility, said in a Friday interview.
Last May, Ameren Illinois predicted the MISO auction would add $45 to the average $151 summer bill.
Actual increases were much higher and helped trigger criticism of the utility. But the monthly bills jumped more than expected last year in part because downstate Illinois had 10 straight days of triple-digit heat in June.
Illinois weather is simply too unpredictable for Ameren Illinois to give an updated forecast this year, said Matthew Tomc, vice president of regulatory affairs and energy supply.
“In trying to come up with a dollar impact per customer, utilities use a term called ‘normal weather.’ That’s an oxymoron these days, at both ends of the spectrum,” Tomc said.
“(During the summer) we’re seeing these heat waves come in where we see a lot of usage, a lot of high bills that customers are struggling with,” Tomc said. “During the winter months, we’re seeing these polar vortexes, where unstable air causes the Arctic air mass to move and hover over the Midwest. So we’re getting these prolonged cold spells.”
Tomc concluded, “What is clear is that bills will increase this summer at levels comparable to last summer due to continuing high supply prices.”
At ComEd, monthly residential bills will rise $2 or $3 on June 1 because of PJM’s recent capacity auction, said spokesperson Lauren Huffman.
ComEd’s increase would have been higher if Gov. JB Pritzker hadn’t joined Pennsylvania and other states in pressuring PJM to cap its capacity auction increases, and if ComEd hadn’t included a rebate for unspent nuclear subsidies.
Illinois has an electricity surplus now due to its 11 nuclear reactors, the most of any state. But shortfalls are looming as Illinois prepares to close 28 gigawatts of coal and gas plants by 2045 to clean the air.
As things stand now, neither ComEd nor Ameren Illinois has sufficient resources to reliably meet 2030 requirements in several possible scenarios, according to a December report by the Illinois Commerce Commission, Illinois Environmental Protection Agency and Illinois Power Agency.
Six months ago, the legislature authorized the agencies to begin a centralized resource planning process and to offer new long-term incentives to match the state’s energy supply with rising demand. These include construction subsidies for 3 gigawatts of battery storage by 2030.
But for the most part, the agencies won’t present their initial recommendations until November and may not begin implementation until the end of next year.
Scott Bernstein, co-founder of an environmental group called the Center for Neighborhood Technology, criticized this approach: “The slow timeline in Illinois signals a lack of urgency.”
Bernstein said that in 2000, California responded to a similar crisis by adopting conservation measures that reduced peak electricity demand by 10% in a single year.
It’s a measure of how fragile the nation’s electricity system has become that MISO, which delivers power to 15 U.S. states plus Manitoba, announced its capacity auction with a headline saying the result “shows sufficient capacity for (the) coming year.”
According to MISO, its grid will enter the summer with reserve capacity equal to 11.4% of projected demand.
This margin is considerably higher than in New York, where the state’s independent grid announced a reliability margin of just 1.2% on April 28.
This margin is so small it would be wiped out by just three days of 95-degree weather, New York grid officials said in a statement. Such an event would trigger emergency responses, including voluntary industrial curtailments.
Amid these concerns, Tomc worries that Ameren Illinois is relying too heavily on imported power from neighboring states, which are also wrestling with rising demand from data centers.
At times on Jan. 23, when a severe snow and ice storm lashed the U.S. from New Mexico to New England, Ameren Illinois imported almost half its power from surrounding states, the utility said.
“If you think about being import-dependent at a time when neighboring states are running out of headroom, that puts you in a very precarious and vulnerable place,” Tomc said.
“And much of the surplus energy being imported into the Ameren Illinois territory is generated by natural gas and other baseload power plants,” he said.
John Lippert is a freelancer.
