Surprise Illinois energy bill turns up heat on nuclear, solar debates

In the latest act in a years-long drama over Illinois’ energy future, ComEd and Exelon have announced a new bill they say reconciles the state’s competing interests.

Company officials say the legislation fulfills the goals of both companies, along with the solar industry, environmental and consumer groups. The companies had previously been pushing their own legislation independently, competing with a third proposal from the Clean Jobs Coalition.

Experts say legislators are unlikely to pass a bill during the session that ends this month; and also unlikely to pass a bill that doesn’t have the support of all the major players.

During a press call Thursday afternoon, Exelon and ComEd officials insinuated that their Next Generation Energy Plan does indeed fit that description. They mentioned the Environmental Defense Fund and Citizens Utility Board, and described the bill as meeting the aims of the Clean Jobs Coalition based on eight months of discussions with its members.

But in comments and statements released hurriedly after the press conference, members of the Clean Jobs Coalition were hesitant.

They praised the dialogue that has happened so far and said they look forward to ongoing discussions. Some also said the bill is better than proposals previously put forth by Exelon and ComEd.

But the clean energy and environmental groups did not explicitly support the bill, which they had not seen in advance, and the announcement took many by surprise.

Some said the new proposal still puts up serious impediments to rooftop solar development, saddles customers with unfair costs to prop up Exelon nuclear plants and fails to adequately address problems with Illinois’ “broken” Renewable Portfolio Standard (RPS).

The bill significantly increases ComEd’s commitments to energy efficiency, though Ameren Illinois, the utility serving downstate customers, is not included in those provisions.

“We were not involved directly in the drafting. We do not support it as is. But it is significantly better than what they’ve introduced before and is really strong on efficiency,” said CUB executive director Dave Kolata, noting that EDF, the Sierra Club and the Natural Resources Defense Council have the same position.

“We still need to determine how we embark on this effort to remake the utility of the future, and how a forward-looking transmission policy will help us reduce barriers to the massive growth of solar and wind energy in Illinois,” added EDF director Dick Munson. “There are less than four weeks to get this done in May, and EDF will be working closely with all parties to find a path forward.”

A better bill or another bailout?

The bill includes supports for the two Exelon nuclear plants that the company has maintained are in danger of closing if left to market forces. It calls for an independent review of the plants’ financial prospects, and if “available market revenues are insufficient, the plants will be eligible for compensation for their zero emissions attributes,” as described by Joe Dominguez, Executive Vice President of Governmental and Regulatory Affairs and Public Policy for Exelon, which holds its latest earnings call Friday morning.

Previously, Exelon had asked for guaranteed extra revenue of about $300 million for its nuclear plants under a proposed “low carbon portfolio standard.” The new proposal is based on a plan crafted for New York’s nuclear plants, Dominguez said, and as the legislation is written only Exelon’s Quad Cities and Clinton nuclear plants would be eligible for aid.

“Unlike the RPS or Low Carbon Portfolio Standard where the cap is met by a procurement, the cap in this program serves a purely prophylactic purpose,” said Dominguez, referring to payments for energy from the plants that would be guaranteed under the legislation. “By design, this will deliver zero compensation to units that do not need the money.”

Dominguez said that customers bills would only increase by about 25 cents per month as a result of all the provisions in the bill.

Dave Lundy, director of the BEST Coalition which opposes support to Exelon, said that bills will likely increase much more if the companies get their way.

“Exelon has proven themselves to be completely untrustworthy when it comes to the numbers,” Lundy said. “They’re using fuzzy math to add hundreds and hundreds of millions and claiming it will cost almost nothing.”

Previously Lundy and other critics had blasted Exelon for proposals that failed to fix the state’s RPS.

This bill includes changes to the RPS that could address some of its problems and drive $140 million annual investments in solar, according to ComEd. But the bill would change rate structures in ways that solar companies and their advocates say could be devastating for rooftop solar. The bill calls for effectively ending net metering as it currently exists, and basing consumers’ bills more heavily on a “demand charge” determined by single high spikes in energy use.

Nick Magrisso, Midwest states legislative director for the Natural Resources Defense Council, declined to comment on the bill’s impacts on nuclear and solar energy. He praised the energy efficiency components for ComEd and said they should be extended to Ameren.

“The goals ComEd has proposed as part of this comprehensive energy package would put them as leaders among their peers” on energy efficiency, he said. “It’s a really positive indication that ComEd has heard the message loud and clear from customers who want to save money. But Ameren Illinois is left out of the energy efficiency goals – that is a gaping hole.”

A statement released by the Clean Jobs Coalition shortly after the companies’ press conference reiterated the goals of the Clean Jobs Bill that they back, and said:

“The Coalition has engaged in productive discussions with ComEd and Exelon Generation about legislation that achieves these goals. At this time, those discussions have not concluded, and we have not yet reached an agreement.

“We look forward to reviewing the details of this new proposal, and continuing discussions toward comprehensive energy legislation that achieves the goals of the Illinois Clean Jobs bill.”

Fixing the RPS

ComEd vice president of energy acquisitions Scott Vogt said that the bill would amend the state’s RPS in ways meant to drive the procurement of more solar, to the tune of about $140 million per year spent on rooftop and community solar installations smaller than 2 MW, until the state reaches a total goal of 2,000 MW of solar capacity by 2030.

Specific solar projects would be determined at auctions, with the money coming from residential, commercial and industrial customers of ComEd and Ameren.

“The funding is there and it’s to be spent on solar,” Vogt said. “If people bid too high [in their solar proposals at auction], the prices may not clear. But the intent is for that $140 million to be spent on solar every year, until the solar targets of the RPS are met, and then the dollars would roll over for other resources.”

Clean energy advocates said the proposed bill does address some problems with the RPS, particularly complications caused after Chicago adopted municipal aggregation in 2012 and ComEd’s customer base was reduced. But they said the proposed bill is not a true “fix” of the RPS, and some of the improvements are becoming less relevant as customers switch back to ComEd after the end of municipal aggregation in Chicago.

Solar stress

Fidel Marquez, ComEd Senior Vice President of Governmental and External Affairs, touted the proposed bill as a way to “jump-start solar” in Illinois.

On April 21, ComEd announced a new solar rebate program against the backdrop of the 10-MW solar farm that Exelon owns on the far South Side of Chicago.

The rebate on “smart invertors” needed to connect solar to the grid is also enshrined in the proposed bill. Customers can get back $1,000 per kilowatt for residential and $500 per kilowatt for commercial and industrial installations. Marquez described the rebate as a way to compensate for the changes in net metering in the bill, and said ComEd’s existing 400-some customers with solar panels could keep their current net metering agreement or opt for the rebate instead. New customers would get the rebate without net metering.

ComEd is also proposing a community solar project and it is building microgrids that would facilitate distributed solar generation. The company is even sponsoring a program to educate students about the value of solar, notes a letter announcing the rebate from Val R. Jensen, ComEd senior vice president of customer operations.

“We look forward to helping to create more solar customers like you in Illinois in the years to come!” concludes Jensen’s letter.

But during the Illinois Solar Energy Association (ISEA)’s fourth annual lobby day at the capitol on Wednesday – the day before the bill was announced – solar installers and advocates blasted the provisions they expected to be included in the bill.

“Creating a stable solar industry does not happen in a vacuum,” said Amy Heart, senior manager of public policy for the national rooftop solar company SunRun, during a press conference during the lobby day. “We also need stable solar policies like net metering and stable rate design. That’s where we turn to the proposals from ComEd. Not only are the rate design and those policy changes being proposed by ComEd unproven, they are unprecedented across the country. “

She continued that a residential demand charge “does not exist anywhere in the country. It takes away the ability for customers to manage and control their energy bills.”

“The rate design is certainly something that people are very concerned about,” said Will Kenworthy, vice president of regional operations for the Midwest for the company Microgrid Solar.

Kolata said that solar companies could be affected differently depending on their business model, and not all would suffer.

“It’s undeniable that with this bill, we’ll get a lot more solar than we have now,” he said. “So it’s unfair to say it’s an anti-solar bill. But it changes the mechanisms, it’s that kind of debate about how solar should be compensated.”

Mixed messages

A major reason so few Chicagoans have solar panels on their homes is that they live in large multi-unit buildings where they don’t control their rooftops. Nationwide, community solar is a popular option for such situations, since it allows a group of residents or homeowners to jointly invest in and reap the benefits of solar installations on shared rooftops or plots of land akin to community gardens.

ComEd has a policy preventing net metering for community solar, meaning participants are not paid retail rate for the energy the installations send back to the grid.

This spring a state administrative body called the Joint Committee on Administrative Rules (JCAR) was considering a rule that would have allowed community solar net metering. Chicago Mayor Rahm Emanuel supported the concept, and the Illinois Commerce Commission had adopted the rule with a unanimous order in November.

But ComEd pushed to block a needed approval by JCAR. As Crain’s Chicago Business put it, “ComEd recently went out of its way to halt a state rule aimed at jump-starting one of the most promising new technologies – solar energy fields built to serve groups of customers in densely populated areas like Chicago.”

Marquez said ComEd’s objection to the rule change was based on a “technical issue” and that in the bigger picture, “the next generation energy plan really provides for community solar moving forward including low-income community solar, because this is what our customers are desiring.”

He said that under the proposed bill, the issue of net metering for community solar brought before JCAR would essentially be moot, since net metering in its current form would be ended.

Even as ComEd officials lauded the solar-creating potential of its proposed bill, a company fact sheet uses the same argument that utilities across the country have used to attack distributed solar installations, describing them as a luxury of the elite.

“Under the current rate structure, people who do not use, or can’t afford solar, pay to subsidize solar users,” the sheet says.

ISEA executive director Lesley McCain is among the solar advocates who don’t buy that argument, and said ComEd needs to do much more than what’s in the bill to truly support solar.

“It appears that solar is great when the utility owns it, and can charge ratepayers for it, but we need a policy climate that allows for a wide variety of stakeholders to have the opportunity to develop solar,” she said.

4 thoughts on “Surprise Illinois energy bill turns up heat on nuclear, solar debates

  1. So, small subsidies to support existing (emissions-free) nuclear plants are “unfair” whereas much larger subsidies for renewable sources are not “unfair”. In fact, even more support for those sources is demanded. (For example, net metering amounts to a huge solar subsidy.) Renewables subsidies are not a “bailout”, whereas nuclear subsidies are (both sources being non-emitting). The stench of prejudice against nuclear and for renewables permeates everything being said in the article above.

    Even Exelon has given up on the principle that all nuclear generation also deserves financial credit for its non-polluting nature. Instead, they are now talking about getting just enough support for all its plants to (barely) remain open. That is, nuclear plants that are not losing money will get no support for their non-polluting nature. This, of course, opens Exelon up to questions about whether it’s lying about whether its plants are losing money. The truth is that that question shouldn’t even be relevant.

    That isn’t right. Nuclear deserves as much support for not emitting pollution and CO2 as renewables do. And the fact is that keeping existing nuclear plants open is the most cost-effective means of reducing CO2 emissions that you’ll ever find. These “environmental” groups (who only care about expanding renewables, and NOT about reducing CO2 emissions) should be ashamed of themselves. If the nuclear industry can’t get fair treatment through the political process, it should consider turning to the courts (to demand equal protection under the law, i.e., equal treatment of all non-emitting sources).

    • Exelon is willing to prove they are losing money in the plants in question. But you are correct that should be irrelevant.

    • Many anti-nuclear groups would agree with you for that “equal protection.” For years we’ve argued that the 30+ subsidies that nuclear enjoys should also be repealed if the subsidies to renewables are to be done away with:

      “The [2014 Union of Concerned Scientists] report, “Nuclear Power: Still Not Viable Without Subsidies,” found that more than 30 subsidies have supported every stage of the nuclear fuel cycle, from uranium mining to long-term waste storage. Added together, these subsidies often have exceeded the average market price of the power produced.”

      Get rid of the Price Anderson Act, and the socialized cost of high-level radioactive waste disposal, and we’ll be on board with your idea to terminate renewables subsidies.

      We would also point out that, since you and Exelon want to reward energy resources “after the fact” for their societal benefits, since renewables neither produce nuclear wastes, nor contribute to homeland security- threatening nuclear weapons, materials, terrorism and expertise proliferation, these positive societal benefits should be rewarded and paid to renewable energy resources and energy efficiency.

      As for opening your books to scrutiny, anyone reading this who goes to a bank asking for money for a loan, especially a LARGE loan, has to do the same. Why not Exelon?

  2. “The bill calls for effectively ending net metering as it currently exists, and basing consumers’ bills more heavily on a demand charge determined by single high spikes in energy use.” How much more heavily? The devil is in the details here, as I’m on hourly pricing and this is already a factor. Does this mean for customers with grid-tied solar, that no electricity can be sold back to ComEd? If so, that is short sighted policy.