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The Risk of Rolling Blackouts

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Less than two years ago, we heard about rolling blackouts in California and Texas.  As concerning as it was, the blackouts happened a long distance from Illinois.  Such events have never happened here, and we thought it unlikely they ever would.  But recently, we are starting to see stories in the media that warn of possible rolling blackouts in other parts of the country, including the Midwest.  Could it actually happen here?

We are beginning a transition from traditional means of power generation to renewable energy resources.  We at Illinois Electric support this transition.  We have made substantial investments in both wind and solar over the last several years.  Renewable energy is the future, but we caution that the transition must be done in a reasonable manner.  Moving too quickly could compromise affordability and reliability.

Since 2009, over 7,000 MW of generation have been retired in Illinois, and another 7,000 + MW of generation is scheduled to be retired by 2028.  Some of this capacity has been replaced with renewable resources, but to a much lesser extent.  Due to the change in the generation capacity now available, we are concerned that there could be a shortfall during periods of high demand.

One thing we must keep in mind, renewables are intermittent by nature.  If the sun’s not shining or the wind’s not blowing, they produce no power.  Traditional power plants are “dispatchable.”  They can deliver power 24/7, 365 days a year.  Dependable, dispatchable power plants will be needed for some time to ensure enough capacity is available to supply power during periods of high demand, and when renewables are not producing.

Those of us in the industry have been voicing our concerns for some time, but it seems to have been unnoticed until recently.  The articles you are seeing in the news today are the product of the recent MISO capacity auction.  MISO is the Midcontinent Independent System Operator.  They are responsible for operating the transmission grid in the central United States.  MISO has been voicing the same concerns about the early closure of baseload power plants.  Miso holds an annual auction called the Planning Resource Auction.  It’s an auction for capacity.  If you are a utility that owns generation and you have excess capacity, you can offer it in the auction.  If you are a utility that doesn’t own generation, you can purchase capacity.  Until recently, capacity has had very little value.  In last year’s capacity auction, the price cleared at $5 per MW day.  This year’s auction results were much different.   The same MW day closed at $236.  It demonstrates the simple rule of supply and demand.   If demand exceeds supply, the price goes up.  It also confirms what we’ve been saying about the premature closure of baseload power plants, and the possible capacity shortfall.  We have moved too quickly, and have already compromised reliability.  We are now hearing about it in the news because the auction results have caught the media’s attention.

So, could rolling blackouts happen here?  Unfortunately, the answer is yes.  It has nothing to do with Illinois Electric’s distribution system.  We have made substantial investments in the system, and it is in excellent condition. We are fully capable of delivering the capacity you need.  The risk is primarily due to the early retirement of baseload power plants.  This summer, we do see a capacity shortage risk, and that risk will only increase in the future as more plants are retired.

So, what can we do?  We need to stay engaged and make our voices heard.  Last year I sent you a letter voicing concerns about proposed legislation that would have called for the closure of the Prairie State Plant by the year 2030.  I asked you to go to the website “Voices for Cooperative Power.com,” where you could send a letter to your Representatives and the Governor.  More than 1,800 of you responded, allowing us to send letters on your behalf.  I believe your response made a substantial difference.  The final version of the legislation calls for a 45% reduction in carbon emissions by 2038, and a 100% reduction by 2045.  Although not ideal, it’s much better than the original language.

Your cooperative is committed to providing you with the safest, and most reliable service possible, just as we have for more than 80 years.  We at Illinois Electric will continue to monitor the situation for any future proposed legislation that would unduly increase your cost of power, or compromise reliability.  If that happens, I will be sending you another letter asking you again to take action.

 

Thanks for your support,

Randy B. Long
General Manager
Illinois Electric

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