Tall electrical towers follow a north-south pathway through Barrington Hills in 2023. | Stacey Wescott/Chicago Tribune
By The Editorial Board | Chicago Tribune
Electric bills are a sore spot with consumers and for good reason.
They would be set to go quite a bit higher in the next few years but for an artificial cap the regional power-grid manager serving Commonwealth Edison’s territory and all or parts of 12 other states has imposed on the price paid to power generators for promising to deliver when most needed. That cost, reflected in the electric bills all of us pay, is established via an auction held ahead of time by PJM Interconnection, operator of this regional grid that includes northern Illinois.
PJM (one of several U.S. regional grid overseers that reports to the Federal Energy Regulatory Commission) ran its auction just last month for the delivery year beginning June 1, 2028, and ending May 31, 2029. And the results delivered a stark — but largely unnoticed — warning for the Chicago area.
The cost of “capacity” in the period was capped at $325 per megawatt-day, about the same as ratepayers are charged now. But, based on the bids PJM got from generators and other providers, if there had been no price cap, the capacity charge just in the ComEd territory would have been more than double at nearly $777 per megawatt-day, far higher than any such price ever recorded by PJM.
In every other part of the PJM footprint, which runs east from here to the mid-Atlantic, the cost would have been higher without a cap as well. But it “only” would have been about $555 per megawatt-day.
If that price in the ComEd territory had been allowed to stand, monthly electric bills for residents of single-family homes would be increasing $35 to $77 beginning in mid-2028 for that reason alone, according to ComEd. Those in apartments would be paying $17 to $38 more.
You may be wondering why you should care if regulators and politicians have worked to keep such disastrous outcomes from occurring. The reason, as we’ll explain further below, is that price controls of this sort reduce supply and risk future shortages. In other words, which is worse? Nosebleed electricity prices or rolling blackouts when temperatures soar?
That said, why is northern Illinois such an outlier? PJM didn’t say in their auction release. But Joseph Bowring, the independent market monitor for the PJM region (he serves as sort of a referee for the market, assessing bidder behavior and other things), wasn’t so reticent. He told RTO Insider, a trade publication, that the state’s clean-energy law, the 2021 Climate & Equitable Jobs Act, is responsible.
Editorial continues here.
