Days Before Critical Deadline, Ill. House Approves Measure To Overhaul State’s Energy Future
After a summer of stalemate on major energy and climate legislation that seeks to put Illinois on the path to 100% renewable energy by 2050, the Illinois House on Thursday night finally pushed through a compromise primed for approval from both the Senate and Gov. JB Pritzker.
“For many years, comprehensive energy legislation that puts consumers and the climate first has been debated while scientists around the world have sounded the alarm about the growing impacts of climate change,” Pritzker said in a statement released after the bill’s passage late Thursday.
The urgency of climate change was threaded through the House’s nearly two-and-a-half hour debate on the legislation after a summer marked by natural and manmade environmental disasters both near and far, including another catastrophic wildfire season in western states whose smoke resulted in strings of smoggy days in Illinois and two explosive chemical fires at Illinois companies a month apart. A dire United Nations report on climate change published in August warned humans had already done irreversible damage, which was followed by a string of severe weather events.
But addressing climate change was far from the only consideration in the complicated negotiations, which several veteran lawmakers — including Senate President Don Harmon (D-Oak Park) — called the most difficult they’d ever encountered in Springfield. Arguments over industry jobs, energy reliability, how to contend with complex webs of existing contracts and sunk costs as well as how to shape Illinois’ burgeoning renewables industry to include more Black and brown Illinoisans also proved to be major sticking points at various points in time.
The Senate, which passed its own version of legislation to the House last week in an attempt to break three months of gridlock, is set to return to Springfield on Monday — the same day nuclear giant Exelon set as a strict deadline for state action to prevent the closure of its power plant in Byron, near Rockford.
Despite a shaky afternoon of reopening negotiations even after all parties had signed off on a ratepayer subsidy to incentivize coal-fired power plants’ investment in carbon sequestration, Exelon’s imminent deadline kept stakeholders from walking away from a deal on Thursday.
The final legislation includes benchmarks requiring that by 2030, 40% of Illinois’ power is derived from wind and solar sources, bumped up to 50% by 2040. Currently, only about 7.5% of the state’s electricity comes from renewable sources, but a fee increase on ratepayers’ bills will double the amount of renewable energy credits available to homeowners, schools, businesses and other entities to incentivize renewable energy projects — especially solar panel installation.
The deal also aims to get 1 million new electric vehicles on Illinois roads by 2030 through $4,000 rebate incentives beginning next summer.
What ended up passing the House Thursday night will cost an average residential electric utility customer in Illinois around $3.50 more per month, according to State Rep. Marcus Evans (D-Chicago), who carried the bill for House Democrats. Other estimates are higher, and the potential cost to businesses, which use massive amounts of energy, kept industry groups opposed to the legislation.
The deal includes nearly $700 million in ratepayer subsidies to Exelon over five years in order to save Byron from closure, in addition to two other plants the company says are unprofitable: Dresden Generating station in Morris and LaSalle Generating Station in Marseilles.
A 2016 law gives Exelon $235 million in ratepayer subsidies annually for a decade to keep two of its other plants — in Clinton and the Quad Cities — online.
Protecting thousands of nuclear jobs from Exelon’s threat to close the plants was the only motivating factor for State Rep. David Welter (R-Morris) to vote in favor of the legislation, the Republican said during floor debate. Welter said he was frustrated that GOP members were pushed to the side in negotiations this summer as negotiations shifted to the fate of fossil fuel plants in areas of the state represented by Republicans, though Democratic lawmakers also weren’t directly included as environmental groups and organized labor were told to work out their differences.
“I will be voting yes because the people back home expect me to,” Welter said. “I’m glad we’re saving a lot of jobs but at the same time, we’re pitting communities against each other and that is wrong.”
Welter was one of 11 Republicans who ended up voting for the bill, easily pushing it over the three-fifths majority it needed to pass.
Lawmakers have for months acknowledged that Exelon’s ask for more subsidies paired with a hard deadline — especially as the company is about to spin off its power generation business into a separate publicly traded company — put them in a difficult spot.
And even before Exelon announced that news in February, its subsidiary Commonwealth Edison last summer admitted to a years-long bribery scheme aimed at influencing former longtime House Speaker Mike Madigan (D-Chicago) during the same time period two other major energy laws passed through Springfield.
Despite those uncomfortable considerations, however, most stakeholders came to a common understanding that preserving nuclear power is the only way to preserve energy reliability while building out Illinois’ renewable industry. As lawmakers sought to exclude Exelon and other utilities from the bargaining table as the ComEd scandal plays out, organized labor emerged as a sort of proxy to fight for the nuclear plants’ futures on behalf of members who work at the facilities.
State Rep. Jay Hoffman (D-Swansea), who was aligned with organized labor, was straight up with reporters after the vote late Thursday about his misgivings.
"I'll just be very honest with you: I don't trust Exelon," Hoffman said. "I don't...Exelon has put us in a position of having the pass the bill. I want the nuclear to stay open but I just don't trust them. I'll be honest with you."
The unions also advocated for other provisions like prevailing wage requirements for renewable energy projects.
Coal plant impasse
Exelon originally wanted millions more in subsidies than the $694 million Pritzker and the company finally agreed to at the end of May, but the hard-fought deal quickly became subject to an even more stubborn fight over the future of two municipally owned coal-fired power plants in Illinois: City, Water, Light and Power in Springfield and Prairie State Energy Campus in Marissa.
While most coal-fired power plants in Illinois area nearing the end of their useful lives and will be shut down in the next several years anyway, the two municipally owned plants had no plans to shut down their relatively new power generation operations. But Pritzker and environmental groups said both needed to be subject to firm closure dates as well as gradual carbon emissions reduction, especially as Prairie State is estimated to be the nation’s seventh-largest polluter.
Harmon last week reiterated he felt imposing both was an uneconomic proposition, as carbon sequestration technology — to the extent it exists in 2021 — is extremely expensive. He said he was open to a hybrid model but was skeptical the plants would invest the money into their operations if they also faced certain closure.
Evans’ idea to provide $200 million in ratepayer subsidies to the plants over 10 years in order to incentivize the investments won approval from organized labor and environmental groups earlier this week, but was stripped from the final deal on Thursday afternoon. Asking more of ratepayers proved unpopular, while the plants said $20 million per year was not nearly enough.
Ultimately, Hoffman said negotiators believed subsidies provided by a federal infrastructure plan would better fill that role.
Thursday’s compromise will force the plants offline by 2045 unless they curb their carbon emissions 45% by 2038. They’ll be allowed to remain open until 2045 unless they somehow find a way to completely cut their emissions — a nearly impossible feat that will likely mean closure instead.
Another complicating factor in the fight over coal-fired plants is how to contend with municipal debt that built both CWLP’s generation and Prairie State — plus Prairie State’s giant web of contracts with some 180 towns, cities and energy co-ops in Illinois and elsewhere.
State Rep. Dan Ugaste (R-Geneva), whose district includes the Prairie State-entangled suburb of Batavia, said subjecting the plant to early shutdown is unfair to taxpayers who will be left holding the bag for both the not-yet-matured bonds and the cost of finding an alternative energy supplier.
State Rep. Tim Butler (R-Springfield) agreed, saying his Springfield constituents will be on the hook for paying off CWLP’s plants and not reaping the benefits.
“Guess what? We’re already tapped out on property taxes — every dime that I pay in property taxes goes to pension debt,” Butler said, exaggerating for effect. “Now you’re going to say that every time I pay my utility bill it’s going to an out-of-commission power plant.”
Democrats countered Republican assertions that overhauling Illinois’ energy portfolio would kill one of the state’s few remaining competitive advantages in the eyes of business advocacy groups: cheap, reliable electricity.
House Speaker Chris Welch (D-Hillside) said the cost of doing nothing about climate change is too high, both in philosophical future terms but also in a very practical sense.
“Climate change is costing homeowner right now because of the spike in insurance [costs] after every flood and every tornado in each of our districts,” he said. “I’m getting like a 100-year flood in my district every three years. Insurance is through the roof because the climate has changed.”
An ongoing federal corruption probe has turned Illinois’ political landscape upside down in the last two years, culminating with Madigan’s inability to get re-elected as House speaker in January after being outed as “Public Official A” in ComEd’s bribery scandal last summer.
Madigan has not been charged, but a few close confidants of his have for both allegedly orchestrating the scheme and lying to the feds about it.
With the former speaker’s ouster, negotiations on the energy legislation, which had been ongoing in fits and starts since Pritzker’s first months in office in 2019, took on a wholly different tone than ever before. Madigan was a reliable referee and utilities always had major influence over energy legislation in the past.
But while the feds are taking a close look at Springfield, utilities were kicked to the curb for much of the current energy bill negotiations. Stakeholders acknowledged it made for more chaos than ever before, but was ultimately worth it to get key ethics provisions and fairness for ratepayers.
However, not all of the ethics provisions favored by lawmakers like State Rep. Ann Williams (D-Chicago) and Pritzker made it into the final version of the legislation passed Thursday, though Hoffman defended the process saying those elements hadn’t really changed since May.
Williams, for example, wanted restitution for ratepayers related to any ill-gotten profits utilities may have received in the course of criminal wrongdoing — like the $150 million windfall ComEd admitted resulted from corrupt lobbying practices. While the Illinois Commerce Commission would be authorized to open an investigation under the bill, it’s already begun its own probe.
Critics of the legislation also allege that one of the biggest claims made by legislative sponsors — that the bill would end so-called formula rate hikes — is not actually true.
“Given the ComEd scandal, this year of all years presented the General Assembly the opportunity to make a clean break from the tainted energy policies of the past,” Abe Scarr, director of consumer rights group Illinois PIRG told lawmakers during a Thursday morning hearing. “It is failing to take that opportunity.”
AARP Illinois also opposed the bill, and even State Rep. Fred Crespo (D-Hoffman Estates) was unconvinced the legislation is fair to consumers’ pocketbooks — or even passes muster with a precedent set in a state appellate court.
In 2011, the legislature approved Illinois’ formula ratemaking system in part to help utilities recover the infrastructure costs of improving the state’s electric grid. The utilities’ profits from infrastructure investments were supposed to be calculated based on the average spending on infrastructure in a year.
But in the first year of formula rates, ComEd asked the ICC to recalculate its total annual investment on infrastructure to instead act as if the total annual investment were made on Jan. 1 of the year. The utility wanted to either credit customers or slap them with a surcharge depending on the actual amount of spending — either of which it could treat as an investment to reap high interest rates.
When the ICC declined, ComEd appealed the decision and the state’s First District Appellate Court upheld the ICC’s ruling. In the meantime, however, ComEd pressured lawmakers to change the law to reflect what it wanted from the ICC, including changing the interest rate it was eligible for from less than 1% to 7%.
Crespo was beyond belief that after ComEd last summer agreed to pay $200 million by signing a deferred prosecution agreement acknowledging its wrongdoing, the legislature wouldn’t reverse the lucrative 2013 adjustment made in its favor.
“This was a byproduct of their behavior, which they admitted in the [deferred prosecution agreement],” Crespo said. “Why in the world are we going to allow that to happen?”
Still, the Democrat voted in favor of the bill, saying he the issue he raised was merely an oversight and that it would be addressed in the near future.
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