Major Illinois energy bill advances with two days left in session

Illinois’ sweeping energy bill may become law this week after an amended version was passed by a state House energy committee Tuesday.

The bill keeps intact the long-awaited fix to the state’s Renewable Portfolio Standard as well as a subsidy for Exelon’s two financially troubled nuclear plants, which is expected to cost ratepayers up to $235 million a year.

The Clean Jobs Coalition is supporting this version of the bill, which was negotiated over the Thanksgiving weekend and introduced Monday, with significant changes from an amendment drafted before the holiday.

The amended bill also raises the cap on the amount the utility ComEd can be reimbursed for investments in energy efficiency, a measure sought by the utility and efficiency advocates. Previously ComEd was not allowed to raise rates more than 2 percent to fund energy efficiency investments. The bill raises that rate cap to 4 percent.

The bill also reduces ComEd’s energy efficiency requirements compared to the previous version. Meanwhile it raises energy efficiency requirements for Ameren, the downstate utility, which has said those targets will increase its costs significantly.

The Clean Jobs Coalition of environmental and community organizations and renewable energy developers had through much of the year been pushing its own Clean Jobs Bill that included the RPS fix. But after months of negotiations that bill and separate bills pushed by Exelon and ComEd were rolled into the Future Energy Jobs Bill currently before the legislature.

The state legislature’s veto session ends Thursday.

“This is the most significant climate bill and clean energy economic development package in Illinois history, all while reducing customer bills. That’s the ultimate win, win, win,” said Andrew Barbeau, a consultant for the Environmental Defense Fund, which is part of the Clean Jobs Coalition.

“The renewable energy and energy efficiency investments will lead to an additional $12 billion to $15 billion in private investment coming into all corners of the state,” Barbeau added, citing his own analysis of economic impacts.

Opposition to nuclear subsidy

Exelon has said it will close at least one of its plants if the bill is not passed this session, since it faces a deadline to initiate closure proceedings this month.

The amount of the nuclear subsidy, to be paid out through zero-emissions credits, was reduced by $50 million a year from the previous version of the bill. The energy bill originated almost two years ago with Exelon’s demand for a subsidy for its plants, and environmental and consumer groups had long vehemently opposed the measure.

Now most such groups have agreed to the nuclear subsidy, seemingly as a tradeoff for the RPS fix and other measures. But some players still oppose the bill because of the nuclear subsidy.

The wind, solar and natural gas developer Invenergy is opposed to the bill because it would “distort markets,” said Amy Francetic, Invenergy senior vice president of new ventures and corporate affairs and co-founder of the Clean Energy Trust.

“It’s all about saving jobs from a dying industry rather than supporting the growth of a new industry and innovation that would create new jobs,” said Francetic. “It’s trying to prevent the death of these plants. We’re very sympathetic [to affected employees and communities] about the large transition that’s underway not only for nuclear but for coal, and we’d rather see some kind of support pulled together for the communities that would be impacted … either through funds that would replace the tax revenue or job training for people who need to find new jobs. How can we do something more progressive than trying to prop up these failing plants?”

Competing sources

Francetic said that while Invenergy would like to see the RPS fix, the company is moving forward with wind developments in Illinois regardless, planning to sell power out of state or to individual large customers like data centers.

“We’re developing wind in the state without an RPS fix, we’re doing it because it competes economically and it’s being bought by folks who want to have low-cost electricity and want diverse sources of electricity,” Francetic said.

The BEST Coalition, a 501(c)(4) organization of companies and others that oppose the nuclear subsidy, released an analysis Monday estimating that the bill would cost Illinois ratepayers a total of $16.4 billion, including $5.3 billion for the nuclear subsidy, $7.6 billion for energy efficiency investments, $1.9 billion for the RPS expansion and $0.3 billion in rebates for solar installations.

The BEST Coalition also said the bill would mean a loss of 43,000 jobs through 2030, calculated using the IMPLAN model, a common economic forecasting tool. According to the coalition, subsidies for the nuclear plants would allow them to offer power to the market at artificially low prices and make it hard for renewables and other sources to compete.

Exelon meanwhile says closing the two nuclear plants would mean $1.2 billion in lost economic activity per year and the loss of 1,500 jobs at the plants and 4,200 jobs total. Local officials have testified before the legislature about the devastating impact closures could have on the areas surrounding the plants.

ComEd says the new bill would raise rates less than 25 cents per month for average customers. The BEST Coalition says the latest version of the bill will raise rates by $4.20 per month.

Bill supporters say the opposition is driven by the interests of natural gas companies, which could stand to gain if the nuclear plants close. That could happen through more energy sales or a greater share of capacity payments being awarded to gas generators for their promises to be ready to provide certain amounts of power if needed.

“What happens if those nuclear plants close? We know for a fact they’ll be replaced with coal, natural gas, more carbon emissions,” Barbeau said at a press conference Tuesday.

Francetic said natural gas generators would not necessarily see sales increase if the plants close, since Illinois exports about 40 percent of the energy generated in-state. Also, PJM — the regional transmission organization covering northern Illinois — has found that the Quad Cities nuclear plant is not needed to maintain adequate supply, she said.

“I’m not sure [the electricity lost from the nuclear plants] would be replaced by anything,” said Francetic, citing the state’s energy exporter status. “In a competitive marketplace, natural gas is the cheapest now. Depending what the need would be, where you’d site projects, we don’t know it would be natural gas [replacing lost power]. It’s not a done deal. That’s part of the propaganda being promoted” in favor of the bill.

Efficiency, solar and microgrids

For months solar companies and consumer groups had stridently opposed the bill because of a demand charge that they said would have chilled the solar market and meant unfair rate increases for low-income and elderly customers. The demand charge was eliminated from the bill during the veto session, and other controversial measures were also stripped out, including an end to retail net metering and a provision that could have kept floundering coal plants open.

The size of programs for low-income customers were decreased in the latest version of the bill, with about $750 million currently slated for energy efficiency, job training and other measures.

The latest amendment also decreases the size of a microgrid program being sought by ComEd. Now the bill allows ComEd to charge ratepayers for the construction of one microgrid at a cost of $50 million. The original bill granted ComEd $250 million to spend on five microgrids. The amendment drafted last week called for $150 million for three microgrids.

Critics have said those amounts are too high and that the microgrids should be funded through federal grants or other sources. Cara Hendrickson, chief of the public interest division of the Illinois Attorney General’s office, told legislators Tuesday that the microgrid provision is unnecessary and should not be addressed during the veto session.

ComEd plans to build a microgrid in the Bronzeville neighborhood on Chicago’s South Side that would connect to an existing microgrid at the Illinois Institute of Technology.

Mohammad Shahidehpour, a microgrid expert at IIT, said such microgrids are the “wave of the future” and that the lessons learned by constructing ComEd’s microgrid in tandem with IIT could apply to other cities around the country.

Shahidehpour said the microgrid at IIT cost $12 million and could have been done for less if it was purely utilitarian, but it was built with “bells and whistles” that make it more useful for research purposes.

“We spend a lot of money to maintain something that needs to be completely overhauled,” said Shahidehpour, referring to the traditional grid. “The system we have here still works but it is old-fashioned. Do we really want to keep these old-fashioned systems or get something that is truly state of the art?”