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*** UPDATED x1 - Governor’s office responds *** Biz groups pan energy bill as largest rate hike in history

Monday, Jun 14, 2021

* Letter to Gov. Pritzker today signed by leaders of the Illinois Retail Merchants Association, Illinois Manufacturers’ Association, BOMA, Illinois Municipal League, Illinois Chamber of Commerce, Chemical Industry Council of Illinois and several others

In 1997, Illinois deregulated the energy market resulting in billions of dollars in savings for homeowners and businesses. Our low-cost energy prices and reliable grid have been cited by governors time and again as reasons why businesses should stay in or relocate to Illinois.

Twenty-four years later, instead of building on this strength, the proposed energy legislation being circulated will be the largest rate hike on consumers and businesses in history. At least as it has been described to us by several of those who have been fortunate enough to be included in the discussions.

This legislation not only includes a rate hike for low-income families in every part of this state, but also on every business and organization large and small. Lobbyists for the environmental community and many others appear to have had unfettered access in writing a bill that imposes massive costs on others. On several occasions we have requested economic, reliability, and rate impact studies and the raw data inputs that undergird them. Those requests have been ignored. These are landmark energy changes will upend Illinois’ competitive energy marketplace. Ironically, as the state and Chicago proudly announced the Phase 5 reopening many of those same businesses and organizations are going to be saddled with significantly higher electricity costs, as reflected by those industries that have signed this letter.

At a minimum, we project the first installment of the cost increase on businesses and municipalities to be $700 million annually; including an additional $215 million to pay for new programs paid for by ratepayers without their input. Due to the lack of transparency and accountability in this process – meaning there is no data provided to outline the costs of every fee, mandate, and regulation in this bill – we are calling this legislation an installment because this legislation will only keep sending higher bills every step of the way. In a nutshell, this legislation will be a credit card that keeps spending money without any accountability. Period.

Since 1997, there has never been energy legislation subject to less transparency or accountability. Given the lack of transparency under which it has been developed, rate payers and policy makers deserve the benefit of full disclosure and independent verification of the cost impacts.

On behalf of the people most impacted by this legislation, we urge you to delay this legislation and meaningfully engage the consumers, business owners, organizations and municipalities that will be saddled with the costs.

I’ve asked the governor’s office for a response.

*** UPDATE *** Jordan Abudayyeh…

The Governor’s Office involved the business community in over 30 working group meetings that informed the clean energy package. Transparency and accountability have been nonnegotiable for the Governor, which is why the legislation contains critical ethics reforms, such as restitution, tax repayment, and more robust reporting requirements.

The latest draft of the energy bill also contains policy proposals that IMA and IRMA voiced support for, such as an option for large commercial and industrial users to opt out of energy efficiency requirements and increased support for combined heat and power.

The Governor also heard loud and clear that the business community did not want a new ratemaking structure to compromise reliability. That’s why, under the new system, reliability will be a performance metric. That means that ComEd and Ameren will be rewarded for improved reliability and penalized for decreased reliability.

* Meanwhile, here’s a weekend press release from Illinois Clean Jobs Coalition…

After more than three years of community organizing and leadership, today the Illinois Clean Jobs Coalition (ICJC) announced its support for the nation’s most comprehensive and equitable climate and energy plan proposed by Governor Pritzker.

“After years of hard work and community collaboration, the Illinois Clean Jobs Coalition is proud to support Governor Pritzker’s energy proposal, the only plan which takes a monumental leap forward on climate change and equity. ICJC welcomed the opportunity to work with the Governor, legislators, and community stakeholders to help bring this plan to fruition.

“The Governor’s proposal is a bold, equity-centered plan that shares the goals, vision, and values of the Clean Energy Jobs Act (CEJA). This will put Illinois on a path to a 100% clean energy future with hard dates for phasing out coal and gas in the power sector while providing a just transition for workers and communities historically dependent on dirty fossil fuels, enacting some of the toughest utility accountability measures in the nation, and creating thousands of jobs and wealth in Illinois’ communities of color.

“This is an overdue victory for Black, Indigenous, and People of Color (BIPOC) communities who are often the first to suffer the negative consequences of pollution but the last to reap the health and economic benefits of a clean energy future.

“The plan also saves 1,000 union jobs at nuclear plants without giving Exelon the huge bailout they demanded, a giant subsidy which would have cost ratepayers nearly $5 billion more over 10 years. And, it holds utilities like ComEd and Ameren accountable by ending formula rate increases that burden consumers and small businesses, and places an independent ethics monitor inside all utility headquarters to prevent another ComEd-type scandal.

* Illinois PIRG…

Omnibus energy legislation under consideration by the Illinois General Assembly this week maintains key formula rate policies, the value of which could be higher than the legislation’s reported Exelon subsidy, according to new analysis published today by Illinois PIRG.

The legislation maintains a key formula rate policy that guarantees utility profits, while also increasing utility profit margins, providing what could be a significant windfall for ComEd and Ameren.

The report analyzed a scenario based on projections ComEd’s parent company Exelon presented to its shareholders, using a profit level in line with recent Illinois practice, to calculate an indicative view of potential ComEd profits under the legislation. Under such a scenario, ComEd would swiftly be authorized to collect over $1 billion in annual profits from customers, resulting in an additional $664 to $893 million in profits over four years.

“Completely ending formula rates is the bare minimum we should expect from our elected leaders in response to the ComEd scandal. This legislation fails to,” said Abe Scarr, Illinois PIRG Director. “Illinois needs to marshall all its resources to reach our climate and clean energy goals, not direct billions of dollars in excess profit to ComEd and Exelon.”

Drafts of the omnibus legislation circulated last Thursday allow the current formula rate law to continue through the end of 2022, meaning proposed ComEd and Ameren rate increases will go through this year, and both can file for an additional formula rate increase next year.

Additionally, the legislation would allow ComEd and Ameran multiple end-of-year formula rate true-ups, or “reconciliations” based on actual costs, the key policy that guarantees their profits, beyond formula rate’s 2022 sunset.

The legislation’s new rate-making structure also includes an annual reconciliation based on actual costs, called an ‘Annual Adjustment” in the proposed legislation. The Annual Adjustment includes two of three accounting practices codified by a 2013 law ComEd advocated for after not getting its desired outcomes from regulators.

Because the formula created in 2011 tied profit margins to interest rates, which have remained historically low, profit margins under formula rates have been relatively low. Under the proposed legislation, utility profit margins would be set by regulators who typically set higher profit margins than those set by formula rates.

Illinois PIRG is calling on Governor Pritzker and legislative leaders to amend the legislation to immediately end formula rate increases and to completely remove key formula rate policies from future ratemaking structures.

The full analysis is here.

* Steve Daniels had the PIRG report first

A Pritzker spokeswoman defended the measure, saying in an email that the “absolute worst parts of formula rates are gone.”

In an emailed statement, ComEd took aim at PIRG, saying it didn’t understand the regulatory process and hadn’t participated in most of the ICC’s regulatory reviews of ComEd rates over the past decade.

“Our review of the public draft of the governor’s energy bill shows that if it’s enacted, Illinois will return to a traditional process for setting rates, with the ICC determining utility compensation based upon performance,” ComEd said.

Utility rates go up as they invest in the power grid. ComEd originally won support for the formula in return for a promise to spend $2.6 billion to install smart meters in every home and business and make the grid more reliable. It’s done that. But its capital spending budget for the next four years is at levels equivalent to the highest-spending periods during the smart-grid period. Given the higher returns ComEd is expected to earn on that investment, the effect on rates will be more dramatic than they were under the formula rate that all the parties now supporting the Pritzker bill profess to abhor.

* Another weekend press release

A bipartisan group of 52 lawmakers from the House and Senate have signed a letter to Gov. JB Pritzker in opposition to plans to prematurely close not-for-profit coal-fired power plants, warning such a move would raise utility bills on consumers, eliminate jobs, place new financial burdens on communities forced to find replacement sources of power and threaten energy grid reliability.

Lawmakers are asking not-for-profit plants operated by City Water, Light & Power in Springfield and the Prairie State Energy Campus in Marissa to be excluded from the 2035 premature closure date proposed in energy legislation under consideration this week by the General Assembly. This will allow for a more responsible transition to a cleaner energy future that gives communities time to put in place new power sources, train and develop workers, keep utility costs stable and protect grid reliability.

The letter follows similar request to exempt the plants by organized labor and mayors from across the state led by the Illinois Municipal League.

The letter and signatories are here.

* More…

* Toxic waste left behind by coal-fired power plants could endanger drinking water for years to come: Dumps of water-soaked coal ash scattered around the state are chock-full of arsenic, boron, chromium, lead and other heavy metals. Nearly all of them are leaching pollution into lakes, rivers and groundwater near low-income communities, state records show.

* Illinois Senate President Don Harmon breaks down energy deal before lawmakers return to Springfield

* Energy working group negotiations to continue through weekend as new bill surfaces

* Jason Plummer: Gov. Pritzker and his party set to force massive utility rate increase to fund Exelon/ComEd bailout

* Jil Tracy: Bailout will bring massive utility rate hike

- Posted by Rich Miller        

17 Comments
  1. - Ok - Monday, Jun 14, 21 @ 2:27 pm:

    Oh please. Every thing in this bill has been discussed for like two years. They were in every Gov office working group meeting.

    They say the same thing every time just so they can get Exelon and ComEd to negotiate special lower contract rates for power for their members.

    Sorry, but that is the type of shady backroom deal that is not going to happen this time around.


  2. - Blake - Monday, Jun 14, 21 @ 2:28 pm:

    Generally I think the way to succeed in climate change mitigation globally is through addition that can also be adopted elsewhere, places that may not worry as much about climate change, rather than the subtraction of trying to shutdown coal plants.


  3. - Carbondale Chronicle - Monday, Jun 14, 21 @ 2:52 pm:

    One group that stood out that was not included in that letter is the Illinois Municipal Electric Association (IMEA). Anyone know why they were not? I also noticed that IML was included. I would think IMEA would hold much more weight on this issue (and be much more knowledgeable) than the IML.


  4. - illinoyed - Monday, Jun 14, 21 @ 2:56 pm:

    They say this every single time. expanding renewable energy saves consumers money - I also prefer not to destroy the planet for a few bucks but that’s actually not a concern here https://www.solarpowerworldonline.com/2021/04/study-finds-expanding-illinois-renewable-energy-program-saves-consumers-money/


  5. - Downstate Illinois - Monday, Jun 14, 21 @ 3:05 pm:

    If the ICJC is for it then it has to be crap. Their ads have been full of lies and distortions from the beginning. The use of the word equity should be enough to know this is nothing but left-wing green energy nonsense combined with raw rent-seeking subsidies for nuclear power.

    Cheap reliable energy is what Illinois needs. Carbon-free is not what informed Illinois consumers either want or need.


  6. - Suburbanon - Monday, Jun 14, 21 @ 3:18 pm:

    For a group of “reformers” who preach transparency and ethics in state and local government, the people pushing CEJA won’t talk to anyone who disagrees with them. It is discouraging because they could have easily gotten the vast majority of what they wanted, just by being open and collaborative with more people. Instead they ran a closed process that PO’d the largest business groups who now are pushing back with force, jeopardizing the entire bill. Short-sighted.


  7. - Blue Dog - Monday, Jun 14, 21 @ 3:19 pm:

    I do not disagree with the headline. The poor and working middle classes will once again be punished by the Democrats.


  8. - Al - Monday, Jun 14, 21 @ 3:38 pm:

    What is unfortunate is the message to business investors. Look, the Rules change whenever in Illinois.

    The CWLP and the Coal energy campus turbines are sited to reduced carbon transport of coal to plant, the latest in efficient turbines and coal scrubbers to reduce sulphur and other hot gas emissions. The construction was fully authorized and approved.

    The Nuclear plants are twice the age of the new coal plants which are not old enough to have even paid off their 30 construction bonds.

    Old paid off nuclear plants cannot compete with solar, wind, gas or coal facilities? So keep subsidizing the old dangerous routinely shut down and unavailable every 18 months due to a multiweek refueling process nuclear plants? How is that spent fuel storage plan coming along?


  9. - SOIL M - Monday, Jun 14, 21 @ 3:50 pm:

    Remember that line about Electricity Rates will necessarily skyrocket?


  10. - Blue Dog - Monday, Jun 14, 21 @ 3:59 pm:

    It won’t surprise me a bit if Prarie State power generation isn’t replace by out of state produced electric ….you guessed it. Produced from coal. We shall see.


  11. - Chicagonk - Monday, Jun 14, 21 @ 4:19 pm:

    More of the same from Springfield. Big surprise.


  12. - AndyIllini - Monday, Jun 14, 21 @ 4:27 pm:

    The idea of this being the biggest rate increase ever in Illinois or whatever the exact criticism was shouldn’t be dismissed. It certainly could be.

    But there are so many unknowns that trying to quantify it is a complete guess. Certain parts of the levitation can probably be reasonably quantified, but as far as the impact of closing the fossil fuel generation, no one on either side of the debate has any idea. You just cannot predict wholesale power prices 15 years out. How much renewable is built by then, how much has battery technology improved, does demand fall due to energy efficiency, or does it increase due to widespread adaptation of electric vehicles, does FERC have reliability concerns, what is going on in the rest of MISO (or PJM) etc? Anyone who thinks they know power prices will be like in 15 years is just absolutely kidding themselves. Higher is probably a darn good guess, but you could say that for the price of almost anything. How much is unknowable.


  13. - Shield - Monday, Jun 14, 21 @ 4:28 pm:

    There’s nothing low-priced about uncompetitive and planet-killing coal.


  14. - Cubs win - Monday, Jun 14, 21 @ 4:49 pm:

    So much bluffing! Put the governor’s bill on the floor and see if it has the votes to pass. If it doesn’t, water it down and run it again. This is not brain surgery.


  15. - Al - Monday, Jun 14, 21 @ 4:53 pm:

    Dear Shield, Am I supposed to believe that the new Space Tourism industry is Carbon neutral? Maybe we should raise the taxes on jet fuel to reduce unnecessary travel than close down a nine year old $4 billion dollar coal plant. Just make the municipalities eat the cost? Bad municipalities?

    No, we should let these things operate 30 years. Illinois has already shuttered several older smaller less efficient coal plants. Stop the endless nuclear power subsidy.


  16. - Phenomynous - Monday, Jun 14, 21 @ 5:30 pm:

    So the Governor’s Office update doesn’t refute that their proposal will local businesses and municipalities hundreds of millions of dollars every year?

    The pain just keeps coming.


  17. - Advocate - Monday, Jun 14, 21 @ 10:28 pm:

    I’m never on the side of IRMA and IMA but if we’re really bailing out utilities than I guess I’m almost never on the side of IRMA and IMA. If utilities cannot make a profit with all the govt help they get they are doing something wrong.


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