In the past two weeks, Illinois lawmakers have twice tried and failed to get a years-in-the-making clean energy bill over the finish line — first at the end of the state's legislative session on May 31, and then again on June 15 during an extended session when last-minute negotiations failed to reach an agreement in the state Senate.
But with the fate of the state’s solar and nuclear power industries on the line — and the clean energy legacy of Governor J.B. Pritzker and fellow state Democrats hanging in the balance — observers expect the legislature to reconvene soon to pass a measure that covers almost every aspect of Illinois’ complicated and contentious path to net-zero carbon energy.
The most disputed issues in the bill have not included its clean energy goals, which have been part of Pritzker’s platform since his 2019 commitment to reduce the state’s greenhouse gases to levels consistent with the Paris Agreement.
Nor has the bill stalled on the issue of how much money the state will spend to rescue Exelon’s nuclear fleet from closing, although that was a key point of contention between lawmakers and the country’s biggest nuclear power plant operator. (In fact, much of the bill centers on reining in Exelon-owned utility Commonwealth Edison, whose cozy relationship with state lawmakers has been shattered by a bribery scandal that’s led to federal indictments of former top ComEd executives and the departure of long-time House Speaker Michael Madigan, a utility ally.)
Instead, the final hang-up in negotiations led by Pritzker’s office and Senate President Don Harmon (D) appears to be a dispute over the fate of fossil fuel power plants set to be closed under the bill’s carbon-reduction roadmap. According to that plan, all coal-fired power would be closed by 2035 and all natural-gas power plants by 2045 through mandates that call for steady reductions in carbon emissions from those sectors on the march toward 100 percent clean energy by 2050.
That 2035 deadline has been challenged by supporters of two coal-fired power plants — the municipally owned City Water, Light and Power plant in the state capital of Springfield and the Prairie State Energy Campus in southern Illinois. The latter plant, the largest carbon emitter in Illinois and the seventh-largest industrial carbon emitter in the country, is a particular target for those focused on hitting the bill’s decarbonization goals.
Exempting Prairie State from that 2035 shutdown mandate “remains unacceptable to the governor, as well as the nearly 50 legislators that have indicated they will not support a bill that does so,” according to a bill summary from Pritzker’s office sent on Friday.
That summary said the latest version of the bill includes $2 million per year in ratepayer-funded support to manage Prairie State’s decommissioning costs, as well as a set of programs to support displaced energy workers affected by the transition away from polluting energy sources.
But workers at the plants and lawmakers representing the areas they serve have objected to that 2035 deadline, saying it could decimate employment and economic activity and lead to higher-priced power being imported from out-of-state fossil-fueled power plants. Prairie State’s retirement “remains a sticking point among Senate Democrats,” Rob Rains, an analyst with Washington Analysis, said in a Tuesday investors' note.
Also at stake is the fate of a 1.2-gigawatt natural-gas plant being built by Competitive Power Ventures in Grundy County. According to a Wednesday report from Crain’s Chicago Business, the developer threatened to halt the $1.3 billion project if the bill was passed without alterations to a mandate for power plants to reduce carbon emissions by 20 percent every five years.
It remains an open question how the legislature will shepherd an agreement between the developer and labor groups and the environmental advocates calling for a clear pathway to ongoing carbon-emission reductions between now and the deadlines for closing fossil-fueled power plants.
But “collapse of this legislation would represent an embarrassing failure for Democrats statewide, and therefore we expect some compromise to be achieved,” Rains wrote.
“If they don’t get something done, it’s going to look absolutely horrible,” he said in a Wednesday interview.
A key rescue package for the state’s solar and nuclear power industries
Rains' view is shared by almost all the key stakeholders in a legislative effort that’s been unable to reach a conclusion since it was launched in early 2019. The bill is viewed as critical because, beyond codifying the state’s climate change path, it will offer relief to two key zero-carbon energy resources: solar power and nuclear power.
Under the bill, solar power would get a boost from changes to the Illinois Power Agency that will increase renewable energy funding in the state to about $500 million per year, or roughly double the funding set by the 2016 Future Energy Jobs Act. That bill helped solar in Illinois grow from 71 megawatts in 2017 to 456 megawatts as of last year, according to the Solar Energy Industries Association.
But the funding for programs created by the Future Energy Jobs Act has now run dry. Community solar funding ran out in late 2019, its large-scale solar funding was depleted in March 2020, and residential solar funding ran out in December, said Peter Gray, spokesperson for the Path to 100 Coalition, a renewable energy group that’s supported legislation to renew this funding.
That legislation failed to pass last year, but most of its proposed policies have been brought into this session’s bill. All told, the new bill will set the state on a path to 40 percent renewable energy over the next decade, up from roughly 8 percent today and 25 percent by mid-decade.
While the cost of funding the development of these renewables will be added to utility customer’s bills, the resulting growth of solar and wind power should reduce the cost of electricity in the state, Gray noted. That’s according to a study conducted by consulting firm The Power Bureau, led by former Illinois Power Agency Director Mark Pruitt, which found that reaching 40 percent renewable energy will create a net benefit for Illinois consumers of $1.21 billion over 10 years by replacing more expensive coal, gas and nuclear power with renewables that don’t need to pay for fuel to produce electricity.
However, Illinois won’t be able to reach its zero-carbon electricity goals without keeping open the nuclear power plants that provide the vast majority of its zero-carbon power today. That’s why much of the wrangling over the bill in past months has centered on the scope of a state bailout for Exelon’s nuclear power fleet.
Last year, Exelon announced plans to close its Byron and Dresden nuclear plants, two of six it operates in Illinois, by the end of this year unless it receives state subsidies to keep them open. It has also warned that it may close its Braidwood and LaSalle power plants by 2023 if it can’t secure state support similar to the zero-emission credits it secured for its Clinton and Quad Cities plants back in 2016.
Exelon’s clout with Illinois lawmakers has been degraded by a bribery scandal linking payments to ex-House Speaker Madigan and other state officials to favorable legislative treatment. A federal investigation led to ComEd, Exelon’s Chicago-area regulated utility, agreeing last year to pay a $200 million fine and submit to a deferred prosecution agreement. The scandal has soured state politicians against offering the company subsidies for keeping its nuclear plants operating, despite their contribution to the state’s carbon-free energy mix.
An independent study recently commissioned by Pritzker’s office determined that the Byron and Dresden plants would need $350 million in subsidies over five years to remain economically competitive. Exelon had sought much more.
After months of negotiations, lawmakers settled on a plan to provide $694 million over five years to keep the Byron, Dresden and Braidwood plants from closing and to keep the LaSalle plant economically viable.
A tighter rein on ComEd
The subsidy plan is one of the few areas in which Exelon is getting what it wants from the Illinois legislature.
Lawmakers dropped from the bill a proposal Exelon made in 2019 to remove its power plants from the interstate capacity market run by mid-Atlantic grid operator PJM. Exelon's nuclear plants haven’t been able to compete in the market to win payments for their always-on power.
The legislation would also deny ComEd’s hopes of renewing a controversial multiyear ratemaking treatment set in place by 2011 legislation, which critics say has allowed it to reap billions of dollars in windfall profits over the past decade. Instead, the bill would task the Illinois Commerce Commission with developing a “performance-based ratemaking” process that will reward or penalize utilities based on measures of grid reliability, customer service performance, success in enrolling customers to reduce peak loads in exchange for compensation, and other measures that “align utility performance with state public policy goals.”
More investment in EVs, grid modernization and efficiency
The bill would expand the state’s push toward electric vehicles, with a goal of 1 million EVs by 2030 driven by rebates of up to $4,000 per EV purchased. It would create rebates for EV charging infrastructure and require regulated utilities ComEd and Ameren to file “beneficial electrification” plans to support EV charging and electrification of building heating and appliances.
Utilities would also be asked to file multiyear “integrated grid plans” to align their grid planning and spending with state clean energy and electrification goals. The bill would authorize the Illinois Commerce Commission to create a Division of Integrated Distribution Planning, which would be tasked with determining how to integrate distributed solar, batteries, EVs and other electrical loads with distribution grid planning. Efforts are underway to do this in California, Hawaii, New York, Nevada, Minnesota and Colorado, and it was taken up in Illinois in 2018 in an ultimately failed effort to create a microgrid services tariff.
Energy efficiency would also get a boost in the form of new cumulative energy savings goals and expanded low-income housing weatherization goals, which are expected to save customers about $9 billion over the next two decades.
Labor and environmental justice
Labor unions concerned about the loss of jobs at fossil fuel power plants were won over with a set of policies to boost retraining and placement for affected workers, including a $215 million “clean energy transition assistance fund." The bill also contains a union-backed provision that requires prevailing wages for wind and solar projects, which have lower rates of unionized workers than the fossil fuel and utility industries.
The bill includes some exemptions to this prevailing wage provision for projects at single-family and multifamily residential buildings, as well as for “equity eligible contractors,” according to the summary from Pritzker’s office. The summary notes that this section was “drafted with an understanding between labor, equity advocates, and the Black and Latino Caucuses and is currently under review.”
Many of the bill’s jobs programs are aimed at “equity-focused populations,” defined as “communities with a high poverty rate and disproportionate health impacts that are attributable at least in part to emissions from dirty power plants” in the draft legislation proposed by Pritzker’s office in April. Many of the key provisions from that draft have been incorporated into the current bill. These include clean jobs workforce networks and pre-apprenticeship programs, low-cost capital and financial support for clean energy businesses, and a “jobs and environmental justice grant program” to provide seed capital for community-owned and -developed renewable energy projects.
The Illinois Clean Jobs Coalition — an alliance of environmental organizations, community and ratepayer advocates, environmental justice groups and faith-based groups that’s been a key player in the state’s energy policy since 2016 — issued a statement calling for quick action on the bill after Tuesday’s breakdown in negotiations.
“Thousands of union workers and solar installers may now lose their jobs, while the climate crisis worsens and Black and Brown communities continue to struggle,” the group wrote. “We are deeply disappointed the Senate adjourned without taking action on a carbon-free energy future, but stand ready to enact the governor’s plan as soon as possible.”
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