Electricity market reforms could add up to significant savings for Midwesterners

A new report finds that electricity market reforms in the Midwest, Great Lakes, and Mid-Atlantic could save consumers over $6.9 billion every year. The report’s conclusions may have major implications for consumer advocates, large industrial companies, businesses, and homeowners in those regions.

The consulting firms Grid Strategies and Milligan Grid Solutions co-authored the report, Quantifying the Consumer Benefits of the Market Reforms in the Report “Customer Focused and Clean,” for the Wind Solar Alliance. It concludes that the average residential customer in the PJM region, which includes the Mid-Atlantic and Great Lakes, could save up to $47 annually with significantly more wind, solar and storage on the grid. Consumers in the Midcontinent Independent System Operator (MISO) region, which includes 15 states and the Canadian province of Manitoba, could save up to $48 annually.

“Consumers are looking for clean, affordable, and reliable energy that will keep their monthly electricity bills low,” said Kristin Munsch, Deputy Director of the Illinois Citizens Utility Board and President of the Board of the Consumer Advocates of the PJM States, which represents over 65 million consumers in 13 states and the District of Columbia.

“There is great potential to achieve those goals with the cost-effective integration of wind, solar, and storage plants into our wholesale power markets.” 

Among the reforms considered, increasing power system flexibility through market structures is the most beneficial for consumers at higher penetrations of renewable resources.

The report also found potential cost savings from improving coordination across the seams between ISO markets and through limiting the self-scheduling of generators.

“Enhancing the current market structures to encourage more flexible, efficient markets that also reflect the current public policy choices of state legislatures could save billions for consumers,” said Michael Milligan, President of Milligan Grid Solutions and report co-author.

“The existing wholesale power market rules were largely developed for slower-to-react, “Ëœconventional’ generators, such as coal and nuclear plants. This report demonstrates the benefits of updating the rules to better accommodate the characteristics and potential contributions of newer sources of low-cost generation.”

“There are currently artificial barriers that are preventing the full participation of renewables, storage, and other new technologies in the PJM and MISO markets,” said Michael Goggin, Vice President of Grid Strategies, and report co-author. “Providing consumers with a real-time price signal that allows them to adjust their demand, rewarding flexible resources for their capabilities through improved market design, and allowing renewable and storage resources to participate in reliability services markets would yield the greatest consumer benefits.”

The projected savings in this new report quantify of some of the primary market reforms recommended in the WSA report, Customer Focused and Clean: Power Markets for the Future, released last November.

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The Clarion Energy Content Team is made up of editors from various publications, including POWERGRID International, Power Engineering, Renewable Energy World, Hydro Review, Smart Energy International, and Power Engineering International. Contact the content lead for this publication at Jennifer.Runyon@ClarionEvents.com.

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