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* There have been three late updates to the Exelon/ComEd story we’ve been following.
First, ComEd will reportedly drop its complicated and unprecedented “demand rates” scheme at a noon meeting today. The proposal was characterized by the governor’s office yesterday as “insane rates.”
Second, I’m told that the subsidy for coal-fired power plants will likely be dumped.
Third, enviros are saying the best way to satisfy the governor’s demand that ratepayers not be socked with huge increases to subsidize Exelon’s unprofitable nuke plants is to move forward with an ambitious energy conservation program. Ameren has not been happy with that, however. So, we’ll see.
* Plus, there’s this…
NRDC estimates that the savings from efficiency outnumber the costs by about 3 to 1.
But advocates for large commercial users counter that, with energy costs a major concern, industrials have been investing in efficiency for years—well before it became a cause celebre in the age of climate change. They are resentful that they’re being asked to pay so much more for programs controlled exclusively by the utility that likely will benefit peers and competitors that haven’t invested as much in saving electricity.
IMA’s Denzler says manufacturers want the ability to opt out of the utility program and pursue their own initiatives, which they can do in Illinois to comply with requirements to reduce natural gas consumption. The bill doesn’t currently allow for that.
Also raising the costs for power consumers, both commercial and residential, is that ComEd would be allowed for the first time to earn a profit from administering the efficiency programs. Under current law, ComEd recovers its costs via a surcharge on customer electric bills but isn’t permitted to earn a return.
Neme, representing NRDC, says more-efficient use of electricity benefits all customers, whether they participate directly in the programs or not, by holding down prices and lowering their bills. Efficiency gains are a particularly potent price suppressor if they take hold at peak-demand times like hot summer afternoons. “That’s the challenge of efficiency,” he says. “The benefits don’t show up on your bill in as visible a way as the costs do.”
* More specifically, here’s how the company gets its money…
Under existing law, ComEd collects money from ratepayers to help support energy efficiency efforts. If a consumer decides to upgrade to a new thermostat, for example, those dollars allow ComEd to provide a rebate to help defray the cost. Currently, it’s a pay-as-you-go system with ratepayer dollars being doled out as needed.
The proposed change would allow ComEd to instead finance those costs on behalf of ratepayers, and collect a management fee and interest in the process.
Illinois Attorney General Lisa Madigan’s office has likened it to forcing customers to take out a mortgage they don’t necessarily want. Cara Hendrickson, an attorney in Madigan’s office, told a panel of lawmakers last week that the provision would, for the first time, allow utility companies to build profits into the energy efficiency program.
“Of the $3.6 billion in additional spending (on energy efficiency), roughly $1 billion of that would go exclusively to profit,” Hendrickson said. “We don’t think that is a good use of ratepayer dollars.”
The governor’s office, you may recall, said yesterday that it supports conservation efforts.
*** UPDATE 1 *** Press release…
Experts on Illinois energy issues will hold a teleconference Tuesday morning to emphasize the role that energy efficiency would play in lowering the bills for residential, institutional and commercial customers under legislation being considered by the Illinois General Assembly.
The Natural Resources Defense Council (NRDC) commissioned an analysis with energy efficiency experts which points to $7 billion in savings under the bill.
During hearings held last week and in other public statements, many lawmakers suggested that the scope of the legislation might need to be scaled back, singling out the bill’s support for coal plants and potential changes to rate design as two areas that might need to be changed.
Scheduled to join in the teleconference will be representatives of the NRDC, Citizens Utility Board (CUB) and the Illinois Chapter of the Sierra Club. They will point out that the savings, while significant, would only be available to customers in ComEd’s service territory, and will urge Ameren Illinois to make similar commitments to deliver savings to its customers in Central and Southern Illinois.
*** UPDATE 2 *** From a senior Rauner administration official…
The following is a quick readout from this morning’s productive discussions between Exelon and ComEd senior leadership and senior Rauner Administration leadership.
Exelon and ComEd agreed to remove demand rates and keep the plants open for at least 10 years, potentially 12 years. Following intense discussion regarding potential energy price spikes for both consumers and large employers, Exelon and ComEd committed to working with Ameren on inserting a guarantee into the legislation that would by law protect both consumers and large employers from any significant rate increase.
There are some remaining skeptics, however, so don’t get the champagne out yet.
…Adding… Some headlines were changed as clarity emerged. There’s a “commitment to work on putting a guarantee in a bill” that would cap rates. However, there’s no language yet. And as mentioned directly above, there are still opponents.
*** UPDATE 3 *** Hearing word of a very loud shouting match and real trouble on the deal.
posted by Rich Miller
Tuesday, Nov 22, 16 @ 10:17 am
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Comment by Ggeo Tuesday, Nov 22, 16 @ 10:19 am
While I’m glad the most onerous parts of the bill seem to be diminishing, the problem still remains that Illinois ratepayers are subsidizing a situation where the most obvious benefits also accrue outside Illinois, such as base load support and carbon free energy. The most fair solution includes ratepayers in the entire region or nation, such as through MISO.
Comment by Simple Simon Tuesday, Nov 22, 16 @ 10:38 am
NRDC is claiming even larger benefits of energy efficiency than ComEd? ComEd claims it will only save $4 billion. You’re telling us ComEd, the people who claim the bill will only cost residential customers 25 cents a month ($125 million today), is TOO CONSERVATIVE???
Oh, and let’s say you’re right. So it saves $7 billion. What about the other $17 BILLION in cost???? Not my analysis. It’s the one done by the state’s leading energy consultant for BOMA.
Comment by BEST Dave Tuesday, Nov 22, 16 @ 10:52 am
The idea of doing this before getting a budget is just insane.
Comment by Anon Tuesday, Nov 22, 16 @ 11:00 am
For all of these cost estimates, are they per year or over a longer period of time?
Comment by My button is broke... Tuesday, Nov 22, 16 @ 11:04 am
Gas turbines can be sited and install in a cost efficient manner. Between cheap Natural Gas and the Wind Machines, it is going to be tough, even with a 22% depletion accounting hat trick on Uranium ore courtesy of the Do-Gooder Congress Critters. Iowa is producing 30% of their electricity from wind.
I am less concerned about whether or not Excelon closes its Nuclear plants. I just wonder whether they have the money reserved to decommission these toxic brownfields. Of course, I have already read their 10Ks and they don’t. They have paid most it all out in CEO bonuses and stock dividends. It is difficult to justify a bailout when they spend tens of millions a year on a small handful of Executives pay and bonuses.
Comment by yeah Tuesday, Nov 22, 16 @ 11:17 am
To piggy back on yeah, reading a good book about how the power generation business is going to change drastically and quickly to solar and wind. It is inevitable because of costs, but big power will fight like hell. This bill seems like evidence of their attempt to stick around. https://www.amazon.com/Clean-Disruption-Energy-Transportation-Conventional/dp/0692210539
Comment by fed up Tuesday, Nov 22, 16 @ 11:42 am
@fed up
I had an environmental professor who swore that by 2020 90% of our energy would be solar & wind. Then fracking happened.
I think the bigger threat to Il nuclear power plants is cheap, abundant natural gas.
But whether it’s natural gas, wind turbines, or solar power, @yeah hits the nail on the head with this one. I don’t see how–even with the bailout–Excelon keeps these plants up for a decade AND has the money to safely decommission them afterward.
Comment by Chicago_Downstater Tuesday, Nov 22, 16 @ 12:59 pm
Great film flames…kudos to BigBrain andSuperstars..they keep
Nukes glowing but keep rates down…can’t wait to see how they do it
Comment by Annonin' Tuesday, Nov 22, 16 @ 2:02 pm
Two years with no budget, universities on life support, social service providers tanking, municipalities and school districts on the verge of bankruptcy, and finally, we get “a very loud shouting match” over…corporate welfare. Welcome to Illinois.
Comment by CEA Tuesday, Nov 22, 16 @ 3:11 pm
Let the shouting begin. The problem isn’t with this bill, it’s with the law that mandates an unsustainable amount of Illinois energy to be generated by non fossil fuels. The idea of nukes as a green energy is funny because it is if all you care about is carbon emissions, which if that’s what you care about you’re supposed to hate nukes even worse than fossil fuels.
Separately, the federal rules proposed by the Obama Administration that’s killing coal will be repealed by the new administration, if the courts don’t throw them out first. The state has no business telling power companies where they should get their power as long as it’s reliable and cheap.
Our so-called market reforms of the last few decades have been anything but. If coal loses to cheaper natural gas, that’s fine. If it’s driven out by environmental zealots then there’s going to be a fight. Nuclear plants have a future if the enviros would relent (and now that Harry Reid is leaving the Senate we could get a Nevada nuclear waste repository).
Comment by Downstate Illinois Tuesday, Nov 22, 16 @ 3:22 pm
===If coal loses to cheaper natural gas, that’s fine. If it’s driven out by environmental zealots then there’s going to be a fight.===
The market includes all sorts of pressures. You don’t get to choose.
Comment by Rich Miller Tuesday, Nov 22, 16 @ 3:26 pm
Wind and Solar are producing 7 to 8 percent of all the electricity in the US and are increasing their installations at a 20 plus percent clip year over year for many years. They are not going away. Just wait until the Tesla Wall and Solar shingles are available in Illinois. Oh boy.
Comment by yeah Tuesday, Nov 22, 16 @ 3:32 pm
Warren Buffet’s company is going to install two big nuclear power equivalents in Iowa Windmills in the next few years.
MidAmerican Energy announced its plans to provide 1,000 wind turbines that could supply 2,000 megawatts of renewable energy in Iowa. This plan makes it the biggest economic development project in the state. The project is to be mostly completed by the end of 2018. Buffet is investing $3.6 million in Windmills. I’d rather invest with him than Excelon. If a windmill breaks, well you fix it. If a nuclear power plant fails, the Federal Government steps in and sticks the taxpayers with the mess. Nuclear power is dirty and heavily subsidized. Only when the next one breaks, will taxpayers realized they have been on the hook for a very risky proposition. Of course, the profits have been privatized, because that is the American way.
Comment by yeah Tuesday, Nov 22, 16 @ 3:43 pm
Great flim flames…kudos to BigBrain and Superstars..they keep the
Nukes glowing but keep rates down…can’t wait to see how they do it
Comment by Annonin' Tuesday, Nov 22, 16 @ 3:51 pm
U.S. solar power capacity grew by more than two gigawatts during the second quarter of 2016, representing an astonishing 43 percent increase from the same period last year, according to the latest U.S. Solar Market Insight Report released on Monday by GTM Research and the Solar Energy Industries Association.
“We’re seeing the beginning of an unprecedented wave of growth that will occur throughout the remainder of 2016, specifically within the utility PV segment,” said Cory Honeyman, associate director of U.S. solar research at GTM Research. “With more than 10 gigawatts of utility PV currently under construction, the second half of this year and the first half of 2017 are on track to continue breaking records for solar capacity additions.”
Solar is becoming an increasingly important part of the world’s renewable energy mix. In 2014, the International Energy Agency said the sun could be the planet’s biggest source of electricity by 2050.
GTM Research forecasts that more than 30 states will add more than 100 megawatts of annual capacity by 2021, with 20 of those states becoming home to more than one gigawatt of total operating solar PV.
Source: OKEnergyToday.com
Comment by yeah Tuesday, Nov 22, 16 @ 3:51 pm
===The state has no business telling power companies where they should get their power as long as it’s reliable and cheap.===
Yes they do. Where do you get that idea?
Coal is dirty. It pollutes the environment. It’s bad for everyone except rich people who own the means of production and they don’t live anywhere near it.
Coal is 19th century technology. It’s time to replace it. The energy “market” has failed. Government is the only thing that corrects a market failure.
Comment by Try-4-Truth Tuesday, Nov 22, 16 @ 4:02 pm
If we don’t ensure adequate baseload the entire system fails. You don’t build a baseload system on intermittent supply such as Solar or Wind. SO what taxpayers are having pushed on them is a duplicate system when nuclear can do what we want and need. Just open up the Nevada repositories for nuclear waste.
Comment by NeverPoliticallyCorrect Tuesday, Nov 22, 16 @ 4:22 pm
Wait… Who said Exelon had unprofitable nuke plants??? They had over $800 million in net adjusted earnings in the third quarter of 2016.
http://www.exeloncorp.com/newsroom/Pages/Q3-2016-Earnings-Press-Release-and-Tables.aspx
Comment by benniefly2 Tuesday, Nov 22, 16 @ 4:56 pm
Repeal the RPS. Boom! the market works again. Problem solved.
Comment by Apple Picker Tuesday, Nov 22, 16 @ 6:31 pm
“Not my analysis. It’s the one done by the state’s leading energy consultant for BOMA.”
I wouldn’t say anything that is put to the public by you is credible - you proved that when you were grilled by the Energy Committee.
Comment by Barstool Jake Tuesday, Nov 22, 16 @ 9:10 pm
Exelon never had any intention of closing the plant - the whole thing was just an attempted bluff get a state sanctioned rate increase.
Comment by Faustian Wednesday, Nov 23, 16 @ 6:36 am
To Faust–
I don’t think exelon is bluffing, they made that clear months ago when they announced to Wall Street their intentions, which have real consequences beyond Illinois borders…If they close the plant(s) large swaths of west and central parts of state will suffer severe negative economic impacts. Housing prices schools counties munis etc…Believe what you want but when supply goes down prices will go up.
Comment by NorthsideNoMore Wednesday, Nov 23, 16 @ 11:13 am