We’re already seeing some early signs of price instability and rising rates. We are also seeing drastic cuts to base load capacity due to generation plant retirements.

Due to a poor economy, we’ve had plenty of reserve generating capacity mainly because of a decrease in industrial demand. Although we currently have about eight gigawatts (GW) of over capacity in our region, very soon plant retirements could drastically reduce our supply. We all understand that a reduction in supply means there will normally be an increase in price.

Assuming there isn’t an uptick in the economy and therefore no growth in demand, MISO could be 3,000 megawatts (MW) short of the generation needed to meet its minimum 14.2 percent planning reserve margin by 2016.

What does that mean? It could mean we are at the lowest levels since the 1960s, that emergency operations procedures would be needed, and as a last resort those procedures could mean curtailing load across the grid to avoid brownouts or blackouts. It already happened in September in Indiana, Michigan, Ohio and Pennsylvania.

Power reliability is essential to our economic health. The good news is I think that Illinois is probably, based on its transmission infrastructure, able to survive without blackouts or brownouts. My concern, however, is on consumer pricing and what that does to the cost. There is always the price of power and then there is a premium that is paid for volatility.

So how much will prices increase? Here’s my prediction. If you take all of the expected plant retirements and exports of capacity out of the MISO market, we could see the cost go from $32 to $42 a MWH, almost a 25 percent increase. That kind of increase could happen between 2017 and 2019.

Who is looking out for citizens?  Evidently nobody.

.

.

.