Pay-to-play politics, an uneasy nuclear and green energy coalition led to a flawed 2016 clean energy law. Now, lawmakers are running out of time to fix it. An Inside Climate News | Sun-Times special report.
Five years ago, Illinois lawmakers passed a law that boldly aimed to build a solar power industry from scratch while also saving thousands of jobs at two struggling Exelon nuclear plants.
Beside bailing out the nuclear plants, the Future Energy Jobs Act promised to create tens of thousands of solar power jobs and get the state moving away from fossil fuels to a point where, by 2025, Illinois would be getting a quarter of its power from “clean energy” sources.
Things haven’t worked out as planned. The 2025 target is now far out of reach, the jobs expectations went unmet, and the solar industry is laying off workers as the funding that was promised has dried up, an investigation by Inside Climate News and the Chicago Sun-Times found.
The plans the law promised sputtered from the start.
Now, state legislative leaders are racing to meet a May 31 deadline to fix its biggest problems — including the impending loss of more than $300 million in funding for renewable energy programs.
When environmental groups, unions and consumer advocates came together to support the law, they found common ground in marrying nuclear subsidies with support for renewable energy.
But it was Exelon that emerged as the clear winner under the state’s bold clean energy plan. It got $2.3 billion in subsidies funded by electricity customers over a decade for its two plants.
And now the company is demanding even more money — and threatening to close two other nuclear plants if it doesn’t get what it wants.
“Exelon continues to get $235 million a year, while the solar support has been stripped away,” said Howard Learner, executive director of the Chicago-based Environmental Law and Policy Center, who’s been a critic of the state’s nuclear bailout. “Illinois could’ve been a Midwest solar energy leader.”
Complicating the current scramble is the ongoing federal bribery investigation of Exelon and ComEd, its Chicago utility subsidiary. Prosecutors have said ComEd gave cash, jobs and contracts to associates of former House Speaker Michael Madigan, D-Illinois, with the aim that he would shape the legislation to the company’s benefit.
Madigan, who has said he’s done nothing wrong, hasn’t been charged with any crime, though people who were in his inner circle have been. He resigned in February.
Gov. J.B. Pritzker has said Exelon won’t be allowed to dictate terms for fixing the state’s energy law. But the company and its labor allies have immense power in the Legislature.
Exelon is seeking subsidies for its four Illinois nuclear plants that didn’t get help under the 2016 law and threatening that its Byron and Dresden nuclear plants will close without that aid.
Meanwhile, solar companies are laying off workers following the end of incentive funding tied to the 2016 law.
Supporters of the law talked of a coming boom in solar jobs. But the gains have been modest. Illinois went from 3,480 solar jobs in 2015 — 14th-most among all states — to 5,259 jobs in 2020, which ranked the state 13th, according to the Solar Foundation. a not-for-profit organization “dedicated to advancing the use of solar and solar-compatible technologies worldwide.”
Though few new solar jobs came to Illinois, there has been a surge in the small-scale solar projects that the law aimed to encourage, with more than 20,000 such projects completed.
But solar remains a blip in Illinois’ energy landscape. It provided less than 1% of the state’s electricity generation in 2020.
Solar and wind energy have grown in Illinois, but such renewable sources still account for only about 7.5% of the state’s electricity consumption, far short of the pace needed to reach the 25% that was targeted by 2025.
Some of the problems are specific to Illinois’ political culture. But they also touch on national concerns about how to increase renewable energy while preserving the jobs and carbon-free electricity from older nuclear plants.
Exelon maintains, as it did in 2016, that it would shut down the nuclear plants if it considered only financial factors but that the preservation of carbon-free electricity and jobs is so important that the state should consider every option for keeping the plants open.
In a written statement in response to questions, Exelon says the 2016 law won broad support because “it was, and remains, a good framework for comprehensive energy policy.”
Last year, llinois got 58% of the state’s electricity from Exelon’s nuclear plants. The company says that closing them would leave a void that largely would end up being filled by electricity from fossil fuels.
ComEd spokeswoman Shannon Breymaier said the law “has delivered on its goals of spurring new investment to develop renewable energy, expanding energy efficiency programs and dedicating funding to new programs that train workers for clean energy jobs and help utility customers reduce their bills.”
National environmental groups including the Union of Concerned Scientists and the Natural Resources Defense Council have said they support subsidies for nuclear plants to keep them from closing prematurely.
As their support suggests, much of the criticism of the Illinois law isn’t about the nuclear subsidies but, instead, the taint from the bribery scandal and concerns that the renewable-energy provisions were severely underfunded.
How nuclear bailout took shape
In 2016, Exelon was threatening to close its Clinton and Quad Cities power plants and wanted Illinois lawmakers to require utilities, including ComEd, to charge consumers for a 10-year subsidy for the plants.
At the time, environmental groups, clean energy business groups and environmental justice advocates had their own proposals.
Madigan, who won’t comment now, made clear that any clean energy proposals needed to go through Exelon.
“Being able to pass clean energy legislation was conditioned by the speaker to reach agreement with ComEd and Exelon and labor,” said Jen Walling, executive director of the Illinois Environmental Council, which led the push for renewable energy provisions.
Walling, whose group represents more than 90 environmental and community groups in Illinois, said Madigan’s stance forced environmental advocates to work with Exelon.
Former Gov. Pat Quinn, a Democrat who held that office from 2009 until he lost a 2014 re-election to Republican Bruce Rauner, said the process was unseemly but typical for Exelon.
Exelon wanted “the renewable people to literally crawl to them,” Quinn said. “As long as they could hold up the renewables and the progressive stuff, they’d get more for themselves.”
Federal prosecutors have said ComEd’s actions at that time were an element in a pay-to-play environment for energy legislation in Illinois, with ComEd giving cash, contracts and jobs to people connected to Madigan. The investigation has led to indictments and a deferred-prosecution agreement for ComEd.
Breymaier said ComEd has “substantially strengthened oversight and controls of its lobbying and hiring,” among other steps to prevent actions like those described by prosecutors.
The legislative debate included talk of social benefits on a grand scale.
“We are going to create tens of thousands of jobs around the state of Illinois, in communities of color but also for our brothers and sisters downstate and the rural economy,” then-state Rep. Christian Mitchell, D-Chicago, said of the promise of the solar program.
Mitchell, who’s now Pritzker’s point person on energy and the environment, didn’t respond to a request for comment.
Other than the nuclear bailout, the 2016 legislation had provisions requiring utilities to increase the amount of in-state renewable energy they buy, with funding of about $225 million a year.
The law included requirements to encourage energy conservation, with each utility having to expand energy-efficiency programs and meet certain goals through 2030.
Utilities also got some big benefits that were not widely known, including the ability to expand a loosely defined “smart grid” modernization program that began in 2011 and allowed utility companies to raise rates — and increase profits.
The grid modernization has led to $4.7 billion in added costs for ComEd customers since 2012, with little evidence the money led to substantial benefits for consumers, according to a report in December from the consumer group Illinois PIRG.
Breymaier said the spending tied to the grid modernization has been vetted by regulators and improved the reliability of ComEd’s system while maintaining unusually low electric rates compared to those found in other big metropolitan areas.
‘Legislation isn’t perfect’
On Dec. 7, 2016, then-Gov. Rauner signed the landmark energy bill into law.
He did that at a high school in Port Byron, a small town near the Quad Cities nuclear plant that would get subsidies.
“While this legislation isn’t perfect, it allows us to protect jobs, ratepayers and taxpayers,” Rauner said.
Exelon had only a short wait to start getting paid. It began receiving the bailout money in early 2018.
But state officials spent nearly two years drafting and implementing procedures for the clean energy provisions of the bill. That took time because the state was setting up a process for how to decide which companies would get the limited funding. And the office in charge, the Illinois Power Agency, had fewer than 10 employees.
“These are complicated programs,” said Anthony Star, the agency’s director, who said the small staff wasn’t an issue. “You can’t just turn them on overnight.”
One of the centerpieces of the clean energy provisions was what was called an “adjustable block program,” designed to dramatically increase customer-owned solar power.
Solar entrepreneurs saw that this as an attractive deal, especially for community solar projects, providing a nearly guaranteed profit for developers and discounted electricity for consumers.
The first round of applications in 2018 turned into a feeding frenzy, with projects far outnumbering the available funding.
As developers vied for the limited dollars, a much bigger flaw emerged with the way lawmakers had set up the funding. Money for the renewable energy programs came from a charge on customer bills of about $1.15 per month for households, more for businesses. The charges provided for funding that turned out to be far short of what was needed to get on track to reach 25% renewable electricity by 2025.
Customers began to pay the charges in mid-2017. The money accumulated for about two years while the Illinois Power Agency was designing the programs and selecting the first projects. After those began to get money, many developers were slowed by delays related to the coronavirus pandemic.
The state agency was making decisions based on the idea it could spend all of the available funding. But the projects were coming online so slowly that there was going to be a large unspent balance as of May 31, 2021 — the date the law set for when any balance would be returned to customers as a refund.
As of late 2020, the agency had committed all of its available money and had none to give to companies on the long waitlist for funding.
And the agency was facing the loss of some of the money it already committed, but hadn’t paid, to other companies because the unspent balance would be returned to utility customers. As of March, the balance of committed but unpaid money was $352 million.
Solar industry waits, suffers
Illinois now is facing the consequences of what went wrong with the 2016 law. Lawmakers are working to do something about that by May 31, the final day of the legislative session and the deadline to fix the solar funding.
Exelon is threatening to move forward with plans to close the Byron and Dresden nuclear plants if the Legislature doesn’t approve additional aid.
Among the people who suffered most from the missteps were clean energy entrepreneurs and their employees, many who;d decided to go into the renewable energy industry because of the attention surrounding the 2016 law.
“This year is probably going to be our toughest year,” said Dawn Heid, chief executive officer of Rethink Electric, a solar installer in the Chicago area. “There is a severe cliff in front of us.”
Heid’s company grew from four employees to 70 employees to respond to demand from the solar programs — and then it laid off dozens when the new projects came to a near-stop because of uncertainty about funding.
Even if the legislature comes up with a stable, long-term plan for supporting renewable energy, the state’s credibility on these matters has been damaged, said Josh Lutton, chief executive officer another Chicago-area solar installer, Certasun.
“If you want businesses to invest in Illinois, you can’t encourage them to invest and then say, ‘Ooh, we really didn’t mean it,’ ” Lutton said.
Clean energy advocates defend many aspects of the law, saying the ideas were good, even though some programs were hurt by funding problems.
Will Kenworthy, Midwest regulatory director for the advocacy group Vote Solar, said there are now more than 20,000 rooftop solar and community solar projects that have been built or are in the works, most that wouldn’t have happened without the law.
The 2016 law “was imperfect,” Kenworthy said. “But it was fixing an even bigger mess. In some ways, it was a resounding success.”
Lawmakers have said they are optimistic they can reach agreement on a bill and pass it by May 31, providing new funding for renewable energy.
Pritzker has proposed “measured, short-term state support” for the Byron and Dresden nuclear plants but said Exelon no longer is calling the shots.
“The days of Exelon treating Illinoisans as their piggybank are over,” a spokesman for the governor said.
Brett Chase’s reporting on the environment and public health is made possible by a grant from The Chicago Community Trust.
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May 21, 2021 at 06:09AM