Advertisers behaving badly
Thursday, May 7, 2015 - Posted by Rich Miller
* From a recent House hearing on the Exelon bailout bill…
Also testifying was Chris Armstrong, CEO of Keystone Steel and Wire, which operates a scrap mill on 1,500 acres along the Illinois River near Peoria, Ill.
Armstrong said the Exelon-backed bill would raise electricity costs for the mill and an associated plant in Chicago by $2.2 million a year and put the company at a disadvantage to competitors in neighboring states and overseas.
Yikes.
* More…
But the strongest criticism came from the attorney general’s office.
Exelon was happy to embrace risk when wholesale power prices were on the rise and profits from its generation business were flowing, [Cara Hendrickson of the attorney general’s office] said. Only now, in a market where nuclear power is under pressure from relatively inexpensive natural gas and wind, is the company asking for help in the form of a $300-million-a-year subsidy.
“What this bill does is disrupt that market. It puts a thumb on the scales,” she said. “Basically, it’s ‘Heads up, Exelon wins. Tails up, Exelon wins.’ That’s not a free market. It’s a bailout.”
* From an op-ed by Bob Gallo of AARP Illinois…
Twenty years ago, Exelon fought for a deregulated energy industry that could offer market-based solutions. It won that battle – but now it doesn’t like what the market has done so it is asking the legislature for a bailout, to be paid for by Illinois consumers. Meanwhile, it refuses to show any financial proof that its nuclear plants are struggling.
It’s hard to fathom that Exelon has a cash flow problem given its $693 million earnings statement for the first quarter of 2015 (as opposed to $90 million for the first quarter of 2014). Exelon’s legislation is nothing more than a government subsidy for a private company — paid for by Illinois consumers who can ill-afford to foot the bill.
As if the Exelon legislation wasn’t enough, ComEd is also back at the trough demanding more money from Illinois ratepayers. ComEd already enjoys the benefits of a unique formula rate law passed in 2011 that mitigates its business risk and guarantees an annual corporate profit of nearly 10 percent. ComEd claims that the cost of the new legislation would be offset by “voltage optimization” provisions. However, that is already a part of the utility’s ongoing legal obligation to provide “safe and adequate service” and cannot be used to justify the unnecessary costs that the ComEd legislation imposes.
And as long as we’re talking about unnecessary costs, let’s take a look at the special projects included in ComEd’s legislation. ComEd wants consumers to foot the bill for a $100 million vehicle charging station pilot program. Really? Is that a necessary project in order for ComEd to do its basic duty of providing safe, adequate and reliable electric service? This is just one example of a “special project” that ComEd wants to pull from the pocketbooks of Illinois consumers.
The bottom line is that these two pieces of legislation are bad for consumers. Illinois lawmakers would be wise to take a hard look at the facts before agreeing to subject their constituents to yet another corporate bailout.
* And the Sun-Times ran an editorial calling for a balanced approach, based on the clean energy bill already in the hopper...
Illinois already has committed itself to using solar, wind and other renewables — as opposed to, say, coal or nuclear energy — for at least 25 percent of its energy by 2025. The new legislation, which has companion versions in the Illinois House and Senate, would raise that to 35 percent by 2030. It’s a reasonable goal. As the New York Times reported Wednesday, Germany in 15 years has already converted 30 percent of its energy sources to solar and wind.
Although renewable energy costs more today than other power sources, the Citizens Utility Board estimates consumers would come out ahead by $1.6 billion by 2030. That would be a $98 annual savings for the average residential ratepayer. CUB says $1.6 billion is its mid-range estimate and that savings could go as high as $2.2 billion. A separate analysis by the Union of Concerned Scientists also predicts substantial savings.
We’re not so sure regular homeowners will rush out to buy smart appliances, like programmable dishwashers and dryers, that can save money by shifting energy use to non-peak periods, such as the middle of the night. But because of the complicated way energy pricing works — with peak use driving the rates — CUB says even people who don’t do anything on their own will save money. […]
Another arguable benefit to this legislation is that it would bring jobs to the state, according to a survey released this week by the Clean Energy Trust. The survey found Illinois already has more than 100,000 jobs in the clean energy sector, and has experienced growth of 7.8 percent in the last 15 months. That survey, though, fails to consider that other jobs would be lost as less fossil fuel and nuclear energy is used.
I’d be careful with those job numbers and with the projected savings, but even if they’re ballpark, that’s still pretty decent.
- Downstate Illinois - Thursday, May 7, 15 @ 12:36 pm:
The Sun-Times must be smoking something not yet legal in Illinois. There’s no way to hit a 25 percent mark, let alone 35 percent using renewables (unless you somehow redefine that and include nuclear).
Illinois would be better served to eliminate the 25 percent standard altogether. All it does is drive up electricity prices and make our system less dependable.
- Left Leaner - Thursday, May 7, 15 @ 1:20 pm:
Bob Gallo’s op-ed is right on point.
Legislators need to grow a backbone when dealing with ComEd and Excelon. Maybe Jim Oberweis can supply the milk.
- Arizona Bob - Thursday, May 7, 15 @ 1:23 pm:
It would be absolute idiocy to follow anything resembling the German “Green” energy debacle. Their costs per KWh are about triple those in the US, and twice the rates in most of Europe. This program has made “dirty energy” from sources like brown coal the most profitable in their network because they need to run constantly, other than their “peaking” function originally intended, due to unreliability of solar and wind.
Their CO2 production is actually increasing some years because of their foolish shutdown of their nukes, abandonment of the pump storage program, and reliance on dirty fossil fuels to “compensate” for Green energy inadequacies.
I guess if there’s a costly, inefficient, ineffective, damaging policy being promoted anywhere in the world, the “geniuses” in Springfield will find it and manage to use it to damage the state and its people.
BTW, my German manufacturing vendors are seriously thinking of moving operations to the US because of the low energy prices, rather than to Eastern Europe for the low labor costs. Japanese operators are doing the same thing.
What corrupt trade deals and government mismanagement couldn’t accomplish is apparently happening due to American ingenuity and entrepreneurship despite government fighting it all the way….
- Anon - Thursday, May 7, 15 @ 1:55 pm:
Arizona Bob- none of the bills in Springfield are proposing anything like what happened in Germany 15 years ago.
The Germans created a feed in tariff for renewables at a set price that was about 3x greater than the grid price. That resulted in a huge build out of renewable energy at a huge cost. The “green bill” in Springfield tweaks the renewable policy that’s existed since 2007 which, to be abuntantly clear, has a 2% rate cap. NOT a feed in tariff, NOT 3x greater than grid price.
The German government, after Fukashima, decided to close all their nukes by 2022. Exelon is threatening to close their nukes. The government of the state of Illinois is not closing nukes.
Please stop pushing Exelon’s scare tactic. It’s no more accurate to say that the continued operation of the nuclear plants will result in a meltdown. Simply not true.
- Anonymous - Thursday, May 7, 15 @ 2:10 pm:
Downstate, please let me introduce you to Iowa. In 2013, Iowa produced 27% of their power from wind alone. The idea that 25% is an unrealistic is not supported by the data.
http://www.eia.gov/state/?sid=IA
Also, if renewables are driving up prices, how come Exelon keeps complaining that they’re driving down prices? In IL, renewables have saved hundreds of millions on wholesale power prices as the Illinois Power Agency has found.
- Johnny Pyle Driver - Thursday, May 7, 15 @ 2:18 pm:
Welp, Anonymous just beat me to the punch on the RPS, so I’ll just chime in that Germany’s CO2 is in decline, not on the rise as AZ Bob claims
- Johnny Pyle Driver - Thursday, May 7, 15 @ 2:21 pm:
I guess I should also chime in that if we could finally “fix” the RPS so that the money actually went to the production of more local renewable energy, instead of being raided by the legislature for other reasons, we’d have already seen a lot more progress toward that 25%
- 102 Counties - Thursday, May 7, 15 @ 2:30 pm:
A lot of the conversation here about renewables– and as most have pointed out, the 35% standard called for under the IL Clean Jobs Bill is very much a reachable goal (esp based on what other states are doing). And, it’s the “fix” to the RPS that’s just as critical as boosting it. But, what makes the Clean Jobs bill achieve all the savings ($1.6B) and job creation (32K jobs/yr.) is the fact that it calls for more renewables PLUS more energy efficiency. Harmon, Nekritz have written a comprehensive bill that pairs both sides of the energy solution. http://www.ilcleanjobs.org has more info.
- Anon221 - Thursday, May 7, 15 @ 2:35 pm:
And don’t forget the role conservation can play. Even the State (and legislators) could say “lights out!”.
http://www.illinoishomepage.net/story/d/story/you-paid-for-it-state-lights-still-on/17030/hXBYP9teDU2ylgSeSUrNPA
- Arthur Andersen - Thursday, May 7, 15 @ 3:39 pm:
I’m not an energy expert at all, so maybe one of you guys can help me out.
When Bob moved his one-man “wind farm” from Illinois to Arizona, was that a net gain or loss for Illinois’ energy supply?
- Senator Clay Davis - Thursday, May 7, 15 @ 3:50 pm:
Good points, Anon/Anonymous. TX is also a good example, where renewables (mostly wind) make up about 10% of their (giant) power load.
Folks need to get educated before spouting the standard national cable news talking points (on all sides). Renewables costs have dropped dramatically in the past decade.
- Liberty - Thursday, May 7, 15 @ 3:51 pm:
OK, I would bet this is more of an important issue to Keystone than Right to Work. I have a relative, like many others in western Illinois, who hired in there years ago under a new union contract that dramatically reduced wages and benefits for workers and kept Keystone (they make fencing not just recycling scrap) open. The workers and management get along.
Excelon bet on the EPA closing coal plants but cheap natural gas is cutting into their profit. Too bad, its their decision and a free market.
- Arizona Bob - Thursday, May 7, 15 @ 4:26 pm:
Anon,I was referring to the Suntimes Oped which made the German shift to Green energy as a positive. It wasn’t.
The simple question here is this; Is Exelon willing to de-commission billions of dollars worth of revenue producing nukes because they’re currently not as profitable as they once were due to heavily subsidized “green” energy and an oversupply of cheap fossil fuel energy on their power grid? I think not. Take away $693 million per quarter and take a $5 billion charge over a year by this decision? Wouldn’t make much financial sense, would it?
The fact is that this “smart” meter system the people of Illinois were foolish enough to let get passed that will force them to pay to give Com Ed the ability to jack up their electricity costs big time when people need the juice the most during “peak” hours, is much like paying for the rope your executioner will use to hang you.
You can rest assured that Exelon will get its pound of flesh in this matter. they spread too much cash around for it to end otherwise.