Carbon tax, nuke bailout, more cash for renewables

At the same time, the governor is proposing to immediately end the formulaic rate-setting that has boosted utility bottom lines since Commonwealth Edison first won the authority from Springfield in 2011 to re-do its delivery rates every year under a formula that removed much of the authority previously available to regulators. Likewise, on the natural gas side, Pritzker would do away with surcharges by which Peoples Gas now dings the average Chicago household by well over $10 a month.

Pritzker’s goal is to make Illinois’ power-generation industry 100 percent carbon-free by 2050.

With the new legislation, the governor seeks to take some control over a legislative process that has seen separate coalitions propose jarringly different approaches to accomplishing the same goal. A union coalition has put forward legislation that arguably would raise utility bills even more, would provide a higher subsidy to Exelon and would preserve some of ComEd’s formula-rate system. A set of environmental groups, along with the Citizens Utility Board, has pushed the Clean Energy Jobs Act, which would have the state assume oversight of the wholesale power market in northern Illinois with the goal of incentivizing renewable power and disincentivizing fossil fuels. And a coalition of renewable power developers has endorsed legislation, which like Pritzker’s bill, would substantially increase ratepayer charges to finance more projects.

To this point, Springfield has struggled to make choices, with House committees endorsing the various bills on lopsided votes even when they were at cross purposes.

The governor’s bill, Deputy Gov. Christian Mitchell said in an interview, “deals with our energy system from soup to nuts.”

Asked how much more Pritzker’s bill would cost ratepayers, Mitchell said the governor’s office is working on an estimate, which should be made public next week.

Still, he defended the measure against criticisms that it doesn’t appear consumer-friendly. The proposed subsidy for Exelon’s Dresden and Byron nukes, which an independent auditor hired by the administration agreed needed financial help to stave off planned closures this coming fall, is $71 million annually for the next five years—well below the $235 million annually over 10 years that former Gov. Bruce Rauner signed into law in 2016. The end to formula rates and gas-utility surcharges will save consumers “hundreds of millions,” he said.

And the Illinois Commerce Commission, which the Legislature increasingly has sidelined over the past decade at the behest of utilities, is given much more authority to oversee how much utilities spend on infrastructure with more funding to bolster staff and improve its effectiveness, he said.

The ball now is in the court of the various interests with stakes—both financially and policy-wise—in Illinois’ energy future. Observers expect Exelon and its union allies to argue that the nuke subsidy is too low. Asked how Pritzker will respond if Exelon says it will close Byron and Dresden at his proposed subsidy levels, Mitchell said the governor would call on the company to find its own independent auditor (that is, one that hasn’t done work for it before) to produce an alternative.

The new carbon tax is likely to raise power prices, so Exelon’s financially troubled nukes won’t need as much of a subsidy as they would otherwise, according to Synapse Energy Economics, the governor’s auditor.

Likewise, consumer groups may balk at the costs to ratepayers.

The bill includes many provisions aimed at shielding low-income households from those higher costs. Most prominent among them is a call for “tiered” electricity rates, in which those below 80 percent of the median income level for the area would pay less for power than everyone else. Those above that threshold, however, would pay higher rates to make up the difference for the utilities.

That’s likely to exacerbate the higher costs middle- and upper-income households already would be paying for the measure’s various initiatives.

A separate section seeks to dramatically expand electric vehicle adoption in the state, with a goal of 1 million cars and trucks on the road by 2030. It includes $4,000 rebates to purchasers of electric vehicles and financial incentives for the construction of charging stations.

Pritzker proposes a host of ethics reforms meant to respond to the bribery scandal that engulfed ComEd last year when it admitted in an agreement with federal prosecutors to a nearly decade-long scheme to influence then-Speaker Michael Madigan by furnishing no-work contracts to his friends and allies.

They include an end to recovery from ratepayers of charitable contributions by utilities and bribery-linked restitution to ComEd ratepayers to be determined by the ICC.

An unusual reform target in the governor’s bill is the Citizens Utility Board, for decades the most prominent consumer advocate in the state on utility issues. The measure would subject CUB to the Freedom of Information Act and would bar the organization from accepting grants from foundations seeded with utility money. CUB has been accused of being less critical of ComEd, the original source of some of that grant money in the past, than other utilities.

Regarding the FOIA provision, CUB Executive Director David Kolata said, “It’s a little weird. We’re not a government agency.” At the very least, he said, such a requirement ought to apply to utilities as well.

As to the assertions regarding its past stances toward ComEd, he said, “Certainly, there’s no truth to that.”

Referring to federal litigation demanding ratepayer restitution in the bribery scandal, he said, “We’re in a class-action right now, suing them.”

Springfield now has just over a month, with its spring session ending May 31, to agree on a measure that arguably would be the state’s most audacious among the many sprawling energy laws it’s enacted over the past 25 years. Is there enough time?

Mitchell said yes. “We think we’ve put out a pretty good roadmap.”


Reaction is starting to come in. The union coalition, which calls itself Climate Jobs Illinois, is a thumbs down. It says the bill falls short in requiring union labor to be used on more renewable projects.

It also wants more ratepayer money funneled to Exelon. The measure does "not (do) enough to preserve the nuclear fleet," the group said in a statement.

via Crain’s Chicago Business

April 28, 2021 at 09:44PM

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