Illinois Energy Cost Implications you Need to Know to Avoid Overspending

Part 4 in our 6 part blog series identifying price drivers in the core U.S markets directs our attention to Illinois

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As we hit the homestretch in our series we take an in depth look at Illinois. (To view other posts in this series, click here.)

Past, Present and Future Electric Generation

Illinois is home to six operating nuclear power plants and twelve generating stations, the nation’s largest nuclear power generating capacity of any state. The nuclear plants and generation stations have a nameplate capacity of 12,049 MW, roughly equivalent to 12% of the entire nuclear generation capacity in the nation. In 2016, these nuclear plants produced over 50% of the electricity generated in the State.

Nuclear and coal-energy have historically combined to represent the lion’s share of Illinois’ electricity generation, but that trend continues to be bucked as 18 coal generating units have been systematically retired or converted since 2010. They are being replaced or converted into greener energy alternatives of natural gas and wind generation.

Coal plants repurposed into natural gas operations maintain a similar infrastructure but involve differing economics, less pollution and fewer workers. At the Joliet plant, based in Chicago, according to NRG spokesman David Gaierthe, conversion has resulted in projected emissions reductions of:

  • 99.9% sulfur dioxide
  • 97% particulate matter
  • 34% nitrogen oxides
  • carbon dioxide reductions

While Illinois’ energy profile is moving to greener pastures and more sustainable methods, it is also moving to a lower cost fuel with natural gas. This lower cost alternative directly affects your cost of energy as the production needed for natural gas is less frequent and seasonably loaded compared to coal.

Grid Operators

In the early part of the decade, Illinois was a leader in wind generation. The intermittence and lower capacity factors of wind generation have created capacity concerns, driving increases in grid operator costs for capacity.

Two distinct electric grid operators, PJM Interconnection and the Midwest Independent System Operator (MISO), manage electricity supply in Illinois. The greater Chicago area receives electric utility distribution services through PJM. PJM is the largest national grid operator, spanning all the way to the eastern seaboard. The rest of Illinois is within MISO, for procurement it is important to know which grid your facility is part of as both are billed differently and incur different fees.

MISO Auctions

Operations located in MISO are assessed annual capacity charges based on your coincidental peak demand with the MISO system peak from the prior summer. MISO has issued five capacity auctions since 2013, meaning customers have been assessed capacity charges through an auction.

  • In 2014 the cost of capacity sky-rocked to $150.00 per MW-day, resulting in a 20% price increase from June 2016 – May 2017.
  • In 2016, cost was cut to $72.00 per MW-day, leading to a sizable reduction from June 2017 – May 2018.
  • April 2017, the most recent auctions, settled well below expectations at $1.50 per MW-day.
Being abreast the ever-changing cost for MISO located operations is essential for proper energy spend management.

 

PJM

PJM grid capacity and transmission costs have been on the rise due to the loss of coal generating capacity, the growing demand in the region and concerns around transmission. Customer’s peak load contribution will cost an estimated $75.15 per kW-year, or 20-25% of the total electricity supply cost.

Natural Gas Options and your Bill

In Illinois you are not tied to a specific provider for your natural gas needs, customers can purchase from their local provider or from an Alternative Gas Supplier (AGS).

The Illinois Commerce Commission (ICC) maintains a list of certified AGS and current offerings allowing procurement to identify which offering best coordinates with your energy needs and spend goals. The rate you’re charged by AGS is the rate you agree upon in your contract and is not regulated by ICC. If you purchase your gas supply through the local utility they use a regulatory mechanism, the Purchased Gas Adjustment (PGA), to compute your monthly gas supply cost.

Under the PGA mechanism, the price you pay for gas consumed can change monthly. The PGA includes the anticipated cost of gas per month, as well as adjustments from prior periods to true-up under and over recoveries.

Procurement has the opportunity to identify which type of billing will align with your financial needs. In addition, frequently reviewing bills to ensure proper charges will help mitigate the risk of overspending.

Nuclear Energy

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As we have discovered quite astutely in our 6 part blog series every state possesses unique, localized energy attributes that directly correlate to the price you pay. Deciding which offering(s) best fit your specific needs can be complicated. Allowing a supplier partner to assess your current energy environment can help procurement save significant time, resources and cost.

Want to learn more? Watch an on-demand webinar from our partners, the experts at Trane Building Advantage to take a deeper dive into understanding your electricity and natural gas pricing.

More Articles in This Series

OHIO: Understand how to make smarter energy buying decisions in the Buckeye state based on local price drivers.

NEW YORK: Find out how New York’s evolving energy profile affects your cost of energy.

TEXAS: Discover what influences energy pricing in the Lone State state to appropriately manage your energy spend.

MARYLAND: Affect the cost of energy in your Maryland operations based on local energy predictors.

PENNSYLVANIA: Optimize Energy Spend in Pennsylvania and Eliminate Energy Guesswork


Trevor Joelson: Business Development Manager at Trane Building Advantage
As the Corporate United Energy Program Manager for Trane Energy Supply Services, Trevor partners with CU Members to ensure they achieve low cost electricity and natural gas supply for their facilities across North America. Trevor specializes in electricity generation trends and their impact on retail pricing. Trevor received his Bachelor of Arts degree in Sport Administration with minors in Marketing and Political Science from the University of Louisville in Louisville, Kentucky.