Todd Mizener/The Dispatch via AP

Illinois Gov. Bruce Rauner celebrates after signing Senate Bill 2814, the Future Energy Jobs Bill, at a ceremony at Riverdale High School Wednesday, Dec. 7, 2016, in Port Byron, Ill.

Illinois energy bill: After race to the finish, what does it all mean?

The dust is barely settling after the frenetic race to pass a sweeping energy bill in Illinois, on the last day of the state legislature’s veto session December 1.

Many of the clean energy developers, environmental advocates, consumer watchdogs and community leaders involved in grueling negotiations are still trying to make sense of the “shotgun legislating,” as Wind on the Wires public policy manager Kevin Borgia described it.

“Where you introduce an amendment, have a hearing 10 minutes later, introduce another one, have another hearing, with seven amendments in 48 hours.”

Governor Bruce Rauner signed the billed Wednesday, and it takes effect in June 2017.

Stakeholders have variably described the bill as a landmark victory for clean-energy, a ratepayer-funded bailout for powerful companies, a triumph for solar or a loss for natural gas interests, depending on where they stand on the issues.

Meanwhile, the legislation was a surprising example of bipartisan cooperation between a Republican governor and a Democratic legislature which has failed to pass a state budget or much else. And despite their sometimes bitter differences during negotiations, most of the clean energy, environmental, consumer and community groups involved say it was an impressive example of collaboration that they hope will continue in the future.

And these groups will not have much of a breather. “Trailer legislation” is expected to be introduced when the state legislature briefly reconvenes in January, to address inconsistencies, technicalities and unintended issues enshrined during the rush to revise and pass the bill last week. The details of multiple provisions of the bill will also be hammered out before the Illinois Commerce Commission in lengthy proceedings involving many stakeholders.

An RPS fix, at long last

For several years, renewable energy developers and environmental groups have been pushing for a fix to the state’s Renewable Portfolio Standard. Without this arcane but crucial structural revision, funds meant for renewable energy were not sparking the development of wind or solar in Illinois and instead credits were being purchased from out-of-state projects.

An RPS fix was the cornerstone of the Clean Jobs Bill introduced by a coalition of clean energy developers and advocates, a competitor to separate bills introduced by Exelon and ComEd last spring. The Clean Jobs Bill would have increased the RPS target, to 35 percent clean energy by 2030, up from 25 percent in the existing standard.

After state legislators indicated they would only pass a bill supported by all the major interests, the three bills were rolled into one. The resulting Future Energy Jobs Bill passed December 1 included the RPS fix but kept the target at 25 percent by 2030, rather than increasing it.

Proponents say the RPS fix will mean about 1,300 MW of new wind power and up to 3,000 MW of new solar constructed in Illinois by 2030.

There is typically no penalty if RPS targets are not reached, and no guarantee that the targets will be achieved. The Illinois Power Agency (IPA) is tasked with procuring power for the state’s utilities, ComEd and Ameren, and the bill orders the agency to make a plan for meeting the RPS targets. Supporters of the RPS fix said various analyses show the state will be able to meet the RPS targets and comply with the provisions that renewable energy come from in-state sources.

“The law requires the IPA for the first time to think about renewable energy in a long-term way,” said Brad Klein, senior attorney for the Environmental Law & Policy Center. “So the process going forward will have to maintain the strong coalition we’ve developed and engage with the Illinois Commerce Commission and IPA to hit those targets and develop programs that will allow people to benefit, to really achieve the goals of the statute.”

Dave Lundy is director of the BEST Coalition, a 501c4 organization of business and consumer groups that vehemently opposed the bill. Though Lundy has long supported an RPS fix, he said the state is highly unlikely to meet its RPS targets, because the nuclear subsidies in the bill will “artificially depress market prices” for energy so that wind and solar will not be able to compete. The RPS does not mean wind and solar will be directly procured by the IPA; the agency will purchase renewable energy credits that help fund wind and solar.

Borgia said wind developers would have liked to see the state embrace much more ambitious targets. He noted that the Minneapolis-based utility Xcel Energy is investing $2 billion in 1,500 MW of wind to come online by 2020, more wind power than the RPS is expected to spark over 13 years in Illinois.

Borgia said it’s also important to fix a provision of the bill that as currently written requires the Illinois Commerce Commission to develop certification and training standards for wind developers. He said it took the commission about two years to develop and implement similar standards for builders of solar installations and electric vehicle charging stations, and he’s afraid new wind development will be stalled for many months unnecessarily if a similar process is carried out.

“We don’t need a two-year shutdown for a training program, we’ve built more than 2,200 wind turbines in Illinois all of which were done without a training program,” Borgia said, noting that wind construction in Illinois will inherently employ many skilled union laborers. “This is something where reasonable people can come together and work to understand each other’s goals, something that can be cleaned up in a trailer bill.”

Solar victory

If the bill has one big winner — other than Exelon — it is arguably the solar industry, which gained important provisions and defeated controversial proposals, proving its political power and forging important alliances in the process.

The RPS fix could exponentially increase the state’s installed solar capacity, from 55 MW to an additional 3,000 MW according to projections.

Carveouts in the RPS mean that more than half the new solar must come from distributed (mostly rooftop) installations, community solar and solar farms built on brownfields. And not only will solar benefit from the RPS fix, but solar companies defeated several proposals backed by ComEd that they said would devastate solar development.

Going into the veto session the bill included a demand charge, which solar advocates said could kill the residential solar market by basing electric bills on consumers’ highest demand spikes and making it hard to calculate or earn savings from installing solar. Consumer groups also opposed the provision.

Illinois Attorney General Lisa Madigan repeatedly voiced her opposition to demand charges, and during the bill’s final stretch a memo from the governor’s office was leaked wherein his adviser called demand charges “insane.”

ComEd had hoped to pair the demand charge with an elimination of retail net metering. While this provision was also eliminated from the bill, the rebate that ComEd had proposed as a replacement for net metering remained.

“This speaks very loudly and clearly that there is a definite momentum against mandatory demand charges across the country,” said Amy Heart, director of public policy for the solar developer SunRun.

“It also shows the popularity of solar – Republicans and Democrats on the House floor were speaking in favor of solar, in favor of the RPS fix, because they wanted to be able to support economic development and job growth. In Illinois, one of the most divisive states politically, everyone was able to come together and agree that rooftop solar plays a role in the energy future.”

Energy efficiency arguments

Nick Magrisso went into the Thanksgiving holiday thrilled about the latest version of the energy bill. A controversial support for coal plants had been deleted and the bill included mandates for major investments in energy efficiency, a focus area of the Natural Resources Defense Council where Magrisso is the Midwest legislative director.

That version of the bill required ComEd to reduce its customers’ overall energy demand by a cumulative 23 percent by 2030 and also allowed the utility to for the first time profit off its energy efficiency investments and spend more than the existing rate cap of 2 percent of total energy sales on energy efficiency. Ameren was required to reduce its demand a cumulative 15 percent.

But some consumer groups, large industrial users and Ameren argued that the energy efficiency targets would be way too costly.

In the bill that ultimately passed, ComEd’s energy reduction requirement is 21.5 percent and Ameren’s is 16 percent. And large industrial users are allowed to opt out of the program, meaning they do not need to help subsidize system-wide energy efficiency investments. Or they can “self-direct” investments, meaning they can essentially receive credit for investments in energy efficiency at their own facilities.

The bill also raises the cap from 2 percent to 4 percent, by 2030, of energy sales that can be invested in energy efficiency. And the new cap is calculated on a different baseline, which means the total amount is even larger, proportionally.

Magrisso said he was disappointed in the changes in the final draft but the bill is still a major win for energy efficiency and renewable energy. He wishes the rate cap had been removed altogether, so utilities could invest even more in efficiency programs, which include rebates and incentives for customers to install efficiency measures.

“The cap could limit both utilities, especially Ameren, from achieving their goals,” Magrisso said. He also hopes industrial users will not opt out of the program, and that there is rigorous monitoring of any self-directed investments to make sure they are really saving energy. He noted that Illinois’ low energy prices, a major draw for industries, are thanks in part to efficiency investments the state has already made.

“If the largest users opt out, they start to tug at that thread that gives them the great benefits they claim to enjoy,” he said.

Lundy meanwhile said that only a fraction of industrial and commercial users meet the threshold to be able to opt out, and many companies will see their bills rise so much because of the energy efficiency programs that they might cut production or leave the state. The bill caps commercial and industrial customers’ rate increases at 1.3 percent, but Lundy charges the baseline used to calculate this increase is set artificially high, meaning the increase will actually be much greater.

Nuclear intrigue

The massive energy bill basically originated with Exelon’s request several years ago for subsidies to keep its financially struggling nuclear plants open. Exelon had originally demanded almost $400 million per year to keep three of its six Illinois nuclear plants running.

The bill ultimately calls for subsidies of up to $235 million per year to keep two plants open, with an assurance that residential rates will not go up more than an average 25 cents per customer per month in ComEd territory and 35 cents in Ameren territory.

Multiple critics have said the rate caps in the bill are too loosely defined and unenforceable, and rates are likely to go up much more. The BEST Coalition has pegged the likely rate increase at about $4 per customer per month on average. And Lundy said that since this is an average, customers who don’t take advantage of energy efficiency programs could see greater increases.

“I’m absolutely certain that this is a disastrous bill,” said Lundy. “It’s exceedingly costly, the rate cap numbers are a fiction.”

Exelon’s demand for subsidies had originally drawn ardent condemnations from numerous environmental, consumer and social justice groups. Most groups involved directly or indirectly in the bill negotiations ultimately consented to live with the nuclear provision in order to pass the bill. Some groups are still declaring their opposition to the “nuclear bailout,” as critics call it, while others have said the nuclear plants need to be kept open to avoid heavier reliance on coal and natural gas.

Abe Scarr, director of Illinois PIRG, said the consumer group opposes the bill because of the nuclear supports.

“We have a problem with the nuclear bailout and think it’s unfortunate that the reality right now in [the state capitol] is in order for good policies to pass, Exelon and ComEd have enough power to force a compromise like this more tilted toward their interests than the best interests of Illinois,” Scarr said.

Anti-nuclear and environmental justice groups also continue to oppose the nuclear subsidy.

Natural gas interests did not openly weigh in during the negotiations. But bill proponents charged that natural gas companies were working behind the scenes to oppose the legislation since the closing of nuclear plants could benefit the gas industry through a larger market share, increased capacity payments and reduced fees related to congestion on electricity transmission lines.

Business groups traditionally seen as allies of Gov. Rauner also staunchly opposed the nuclear subsidy.

“We’re not anti-nuclear by any means, but we’re not for state bailouts of companies no matter who they are,” said Timothy Benson, a policy analyst for the free market think tank Heartland Institute, which promotes climate change denial and often the interests of fossil fuels. He said the institute also opposes the RPS fix.

“I can see Exelon’s point that they have to compete with these renewable sources, the RPS bandaid and whatnot,” Benson said. “But if we’re going to subsidize one industry that doesn’t mean we should subsidize another.”

Environmental justice leadership

For the Little Village Environmental Justice Organization (LVEJO) and other environmental justice groups statewide, a major victory happened months before the passage of the bill. That’s because LVEJO was included among the select core group of negotiators hashing out the bill’s text behind closed doors.

Environmental justice leaders said this is the first time the EJ community has had such a formal, insider role in crafting state law. And they see it as a major improvement from the high-profile campaign to close Chicago’s two coal-fired power plants, when environmental justice and community leaders said they were excluded from negotiations between major environmental groups and elected officials.

LVEJO policy director Juliana Pino negotiated the bill on behalf of both LVEJO and other statewide environmental justice groups, conferring with them about demands and developments. The bill includes significant provisions for low-income and minority communities, including $25 million annually in low-income energy programs; a promise that distributed and community solar will be built in environmental justice communities; and that solar and energy efficiency-related jobs will also go to these community residents.

Though the low-income program was cut in half from $50 million to $25 million in the final stretch of negotiating, Pino said it is still a major victory.

The bill provides job training and incentives to employers meant to ensure that at least 2,000 jobs will be made available to alumni of the foster care system and to people with criminal records that make it hard for them to find work.

Up to $200 million from the RPS funding pool will underwrite rooftop and community solar projects in low-income communities where people might otherwise have struggled to build solar. 

“What we were looking for out of this bill was to be able to access the benefits of a clean energy economy, both environmentally and the economic benefits,” said Pino. “We definitely did get some of that, in both community solar and rooftop solar development in EJ communities, and job training and partnerships for people developing solar. So it’s a targeted match for training opportunities and job opportunities, as opposed to what we saw in the past when people would train for jobs that weren’t there or they would see jobs and not have the training.”

Dawn Dannenbring is an organizer of Illinois People’s Action, a statewide community and faith-based group. Chapters in the Rust Belt central Illinois cities of Peoria, Decatur and Bloomington-Normal were especially mobilized around the bill, Dannenbring said, including through Mt. Zion Baptist Church in Peoria.

She noted that the financial news outlet 24/7 Wall St. recently named Peoria the worst place in the country for black Americans to live, based in part on vast disparities in income compared to white residents.

“They want energy sovereignty – they want to own rooftop solar on the church, they want people to be able to buy into that as a way for increasing wealth,” said Dannenbring, noting that locals have been meeting at Mt. Zion twice a month for a year to work on the legislation.

“They have lived in the shadow of a coal-fired power plant in Peoria, with families having four generations suffering from asthma. They want to see these coal-fired plants replaced with clean renewable energy. They refer to themselves as environmental justice warriors.”

Numerous stakeholders said the environmental justice representation was key to the bill, and more generally the collaboration between diverse stakeholders was an end in itself.

“The backstory here is how the coalition came together and created real political power around low-income solar and community solar and rate design and other things we were able to achieve,” said Klein. “Hopefully this is the start of a really strong coalition that will implement these programs and get future wins on the clean energy front.”

One thought on “Illinois energy bill: After race to the finish, what does it all mean?

  1. Wonderful environmental reporting. As an Illinois resident who’s lived through three governors getting sent up the river, I’m going to assume the bill is bad. The problem with distributed solar getting a 50% set aside is that rooftop solar isn’t really economically sound compared to traditional generation. It only seems so if all extra beneficial incentives are included. Those incentives may evaporate over the next four to eight years, if Trump’s cabinet gets its way. The big green group promoting distributed solar, NRDC also has a side business of promoting clean technology (Environmental Entrepreneurs or E2), like distributed solar. If Illinois folks see their rates rise too much they’ll be justifiably upset. Exelon and coal can say that it’s those pesky environmentalists fault. And under a Trump administration, anytime anyone can call out pesky environmentalists as the cause of all society’s ills- they will. As justification to turle all environmental protection. However, green tech will sell under Trump and so will oil, gas and maybe coal. More importantly, if Trump plans are boundless growth for the economy – all that solar power will become overshadowed by electricity usage increase. GHG emissions will go up, in spite of a spectacular solar deployment.

    Illinois is basically a nuke, coal and gas state with wind doing pretty well in a small sliver across the central portion of the state. Wind maps pretty much show why windmills are located where they are and where they aren’t in both Illinois and Indiana. I’d rather see utility scale solar coordinated with agriculture than rooftop and brownfields. btw, brownfields solar is a way to keep from cleaning up the soil and groundwater beneath the side sometimes. So that uncleaned brownfield can remain brown or nasty black for another generation. Anywho…

    On environmental justice. It pretty much failed in the 1990s under Clinton the first. Clinton the second was going to make environmental justice a cornerstone of her green platform. It’s a way to get people engage in environmentalism and the democratic party without having to do too much actual environmental protection like pollution control, site remediation and actual climate change mitigation. Given Trump’s recent EPA head pick, Pruitt, environmental justice may end up in the dustbin of history the second time. And so the broke state of Illinois and the more broke city of Chicago will get broker. The folks living in Little Village will eventually move to the western suburbs and forget all about the near southeast side – upon gentrification.

    On the other hand, if all my worries are wrong than we all win. Being a cockeyed optimist in Illinois is the same as being dumb. Even the consumer, environmental and justice nonprofits seem to be on the make.