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CQ.com - Illinois Power Players Scramble as Carbon Rule Looms
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CQ NEWS
May 8, 2015 – 7:00 a.m.
Illinois Power Players Scramble as Carbon
Rule Looms
By Ed Felker, CQ Roll Call
As states look ahead to meeting
Story Photo
tough power plant carbon
regulations from the EPA, debates
are raging over which
energy sources will power the coaldependent Midwest -- with one of
the toughest to resolve underway in
Illinois.
It is among a group of states -including Ohio, Michigan, Indiana,
Wisconsin and Minnesota -- that are
weighing their options to use more
Exelon's Byron Generating Station.(Getty Images)
gas and renewables as they face carbon reduction targets ranging from 20
percent to 41 percent by 2030 under the EPA's Clean Power Plan.
Illinois, with a 33 percent proposed cut, stands out because of its particularly
thorny energy mix and footprint in two regional energy grids. With the most
nuclear generation of any state, it gets about half of its electricity from atomsplitting at six Exelon Corp. stations, and much of the rest from coal-fired
plants.
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The debate is expected to reverberate throughout the region, say
environmental activists, who are pushing the state to rely more on renewable
energy in the coming years.
Illinois "is really at a crossroads when it comes to the nation's energy," said
Andrew Barbeau, a consultant to the Environmental Defense Fund, part of a
coalition of groups pushing a green energy bill that would raise the state's
renewable energy mandate to 35 percent by 2030.
The Democratic-led state General Assembly has been wrapped up in a
budget tug-of-war with Republican Gov. Bruce Rauner over a projected $6
billion deficit next year, so much so that it has yet to move forward on energy
policy.
But expectations remain high that legislative leaders will at some point
address three competing energy overhaul bills. Exelon, renewable energy
advocates and Exelon's utility subsidiary Commonwealth Edison have each
proposed their own bill.
Commonwealth is proposing a bill that would raise rates to pay for grid
modernization.
The Exelon bill would also increase rates to the tune of about $300 million a
year, which it says is needed to keep three of its nuclear stations in operation.
The bill has advanced out of the state Senate Energy and Public Utilities
committee, the only action on any of the bills so far.
Still, the slow pace has not stopped a lobbying war from breaking out inside
and outside the state capitol.
On Wednesday, the Illinois Clean Energy Coalition, an Exelon-funded
advocacy group, bused in some 600 nuclear workers, community leaders
and residents to Springfield to personally lobby for the company's proposal,
titled the Low Carbon Portfolio Standard bill.
The lobbying push came just a day after environmental groups and
renewable energy firms that back the green alternative energy bill released a
survey showing there has already been rapid growth in renewable energy and
efficiency jobs. The group says more than 104,000 exist, up 7.8 percent from
2013.
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The groups say their bill would add another 32,000 jobs, if enacted, while
cutting rates for consumers.
Exelon has called for action before the spring legislative session comes to a
close at the end of this month, a target many don't expect to be met.
Exelon executives have contended that the company can't wait until later this
year to decide the fate of three plants it says are currently not profitable to
run because of low natural gas prices and incentives for renewables, despite
the overall profitability of the company.
Exelon's bill would effectively require state utilities to get about 70 percent of
their power from nuclear, which it says would maintain baseload generation
while helping the state meet its Clean Power Plan target.
The bill, however, is under fire by renewable advocates and state Attorney
General Lisa Madigan, a Democrat, who call it a bailout to the company.
Plant Closures Threatened
David I. Fein, Exelon's vice president for state government affairs, reiterated
at a hearing before the state Senate energy committee on Wednesday the
company's intention to decide over the summer whether to close the plants
in time to meet regulatory filing deadlines starting in September.
The closures would cost about 8,000 jobs and $1.8 billion in lost economic
activity, Exelon estimates, while driving up carbon emissions from
replacement coal or gas plants.
He called on lawmakers to reject arguments by opponents of the bill that the
legislature should wait until two upcoming milestones. The first is EPA's final
Clean Power Plan state targets and timetables, due this summer, and second
is the annual electricity capacity auction by the PJM Interconnection, which
coordinates supply among generators across 13 states and the District of
Columbia.
The company is in line for $13 million from the recent sale of reserve capacity
from one of its endangered plants, in Clinton, Ill. That price was the result of
the most recent auction by the Midcontinent Independent System Operator,
which manages the grid in central and southern Illinois.
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That auction saw a spike in prices that will cost consumers an estimated
$150 per household in higher rates over the next year in the regions served
by the Ameren Illinois utility, according to the state's electricity users'
advocate, the Chicago-based Citizens Utility Board.
Exelon has said, however, that the $13 million isn't enough to stem operating
losses at Clinton and does not take the plant off the chopping block.
"It's clear that there are many competing energy policy proposals before you,
but none of us have the luxury of delaying or ignoring the urgent need to act
now," Fein said.
"Act now or we are going to lose a reliable source of electricity, the major
source of zero-carbon electricity, and we need to now chart a path to a more
energy-efficient and sustainable future for Illinois families and businesses," he
added.
But the need for fast action was challenged by Cara Hendrickson, chief of the
public interest division for Madigan, who told the panel the push by Exelon is
premature, with no actual regulatory deadline for Exelon to decide whether to
close the plants.
She noted that the state exports about 20 percent of its power generation,
and that the lost power from the plants can be replaced over the long term
without harming reliable service. Hendrickson said the bill also does not
preclude Exelon from closing the plants, and the company has made no
guarantee that it won't.
"What does Illinois get for their $300 million a year? The answer is, not
much," she said. "This is simply a bailout bill for Exelon, and it's bad public
policy."
Lawmakers did not indicate when they will try to jumpstart the energy reform
process. Participants in the debate say privately that will come when the
state's Democratic legislative leaders launch negotiations, likely not until after
the budget fight is resolved.
Until then, the lobbying war is expected to continue as all sides fight for the
leverage of public opinion.
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Doug O'Brien, a former chief of staff to U.S. Sen. Mark S. Kirk, R-Ill., during
his first two terms in the House starting in 2001, and now the executive
director of the Illinois Clean Energy Coalition, said his group is looking to get
the attention of the entire General Assembly to hear arguments for the
preservation of the Exelon plants, and not only the risks to local jobs if the
plants close.
"We want to expand that discussion to all 177 legislators to help them
understand the impacts on our environmental policy, the impacts on our local
economy, but also the ancillary benefits that go beyond" those realities, he
said.
"It means Illinois is uniquely positioned to be able to comply with new clean
energy rules from the feds, it solidifies our position as the top producers of
clean energy in the country."
Gail Parson, Midwest advocate with the green companies group
Environmental Entrepreneurs, which backs the Clean Jobs bill, said this
week's report on state renewable and efficiency jobs shows an economic
alternative exists to Exelon's push. It's one the state should adopt in advance
of drawing up a plan to comply with EPA's carbon rule.
"I think it will reverberate. Illinois can send a strong signal," she said. "State
policy will form the backbone of a state implementation plan, and Illinois can
really lead the way by showing that by reducing carbon emissions, we're
really creating business."
TAGGED: Clean Energy, Electric Grid, Energy Efficiency,
Energy Efficiency Renewable Energy, Illinois, Michigan, Minnesota,
Ohio, States
Topics
Nuclear Energy
State of Play
Follow
Nuclear fission provides nearly 20 percent of the nation’s electricity, but
advocates of nuclear energy say public policy should be focused on
expanding that share.
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Although touted as a low-carbon energy solution, nuclear energy faces
challenges of high long-term cost, lack of waste repositories, competition
from increasing renewable resources and increased availability of natural
gas. Radiation released from the Fukushima nuclear plant in 2011 revived
longtime fears of a meltdown, making new reactors a tougher sell in the
realm of public opinion.
Nuclear waste storage has long been a sticking point for the industry.
The federal government spent more than $15 billion developing plans for
a geologic repository at Yucca Mountain in Nevada, over the objections of
the state. In 2010, President Barack Obama ordered a blue ribbon
commission to evaluate alternatives and the Energy Department sought to
halt plans for Yucca. A federal court has ordered the Nuclear Regulatory
Commission to continue evaluating the Yucca proposal as long as funds
are available. The House in the 113th Congredss passed spending plans
that fund and continue the project – but anything that moves a Yucca
Mountain plan along in the Senate did not move with Democratic Senate
Majority Leader Harry Reid of Nevada holding the reins.
In the meantime, nuclear power providers maintain waste at their sites at
a projected cost of $15 billion through 2020 for the federal government
and added costs to rate payers.
Dive Deeper
What are the biggest challenges to the nuclear power industry?
Is nuclear power waning as an energy source?
What about new reactor designs and fusion reactors?
What is the state of U.S. nuclear power plants?
EPA
State
of Play
Energy
Regulation
The EPA's proposal to limit carbon dioxide emissions was published in
State of Play
the Federal Register on June 18, kicking off a nearly six-month public
[email protected]
comment period that elicited scores of passionate opinions from the
Source: CQ News
environmental community, industry groups and others.
© 2015 CQ Roll Call All Rights Reserved.
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