PI Original Ellyn Fortino Friday May 6th, 2016, 5:08pm

Illinois Energy Debate Intensifies After ComEd, Exelon Unveil New Proposal

ComEd and Exelon are proposing a major overhaul of Illinois energy policies under a new plan announced Thursday. Progress Illinois recaps the proposal, which is being met with mixed reaction among interested parties. 

ComEd and Exelon proposed wide-ranging Illinois energy legislation Thursday seeking to save two financially ailing nuclear plants, "jumpstart" solar power development and reform the state's Renewable Portfolio Standard. The proposal would also make controversial adjustments to the electricity rate structure, among other changes.

Without the so-called Next Generation Energy Plan, which has garnered mix reaction among interested parties, Exelon says it will have to phase out its Clinton and Quad Cities nuclear power plants. The facilities are collectively facing impending losses of "well over $100 million," according to the company.

ComEd and Exelon's proposal calls for shifting from a "Low Carbon Portfolio Standard" to a "Zero Emission Standard" and reportedly piggybacks off discussions had between the two companies, the Illinois Clean Jobs Coalition and other stakeholders. ComEd, Exelon and the Illinois Clean Jobs Coalition have been pushing competing proposals in the legislature, and this latest measure, according to the two companies, "contains significant parts of all three original bills."

"While not all issues have been resolved in the course of discussions, these new provisions reflect the clear response of Exelon Generation and ComEd leaders to the concerns and desires of environmental stakeholders and consumer advocates, resulting in a strong package of benefits for Illinois consumers to be considered by the general assembly this spring," Exelon and its subsidiary ComEd said in a joint statement.

For its part, the Illinois Clean Jobs Coalition has proposed restructuring the state's RPS to strengthen statewide standards around energy efficiency and renewable energy. Coalition members say their bill would result in the annual creation of 32,000 new jobs in the state and save customers $1.6 billion by 2030.

"The coalition has engaged in productive discussions with ComEd and Exelon Generation about legislation that achieves these goals," the group said in reaction to the new ComEd and Exelon bill. "At this time, those discussions have not concluded, and we have not yet reached an agreement. We look forward to reviewing the details of this new proposal, and continuing discussions toward comprehensive energy legislation that achieves the goals of the Illinois Clean Jobs bill."

Citizens Utility Board (CUB) Executive Director David Kolata called the ComEd and Exelon package "a step forward."

"We're not there yet," he said. "I think the ball is really in ComEd and Exelon's court to see (if they are) willing to negotiate. If they are, and if they're reasonable, then there could be a path forward where we end up with a bill that's good for consumers and the environment."

Exelon's proposed shift to a Zero Emission Standard is geared toward compensating struggling nuclear plants, pending a cost review by state regulators.

"The Zero Emission Standard addresses stakeholder concerns by requiring full review of plants' costs by state regulators and by ensuring that only those plants that can demonstrate that revenues are insufficient to cover their costs and operating risk will be entitled to receive compensation," Exelon's statement said, adding that the proposal would save 4,200 Illinois jobs, preserve more than $2 billion in annual economic activity and prevent "a dramatic increase in carbon emissions."

Exelon was previously seeking legislation that would have steered $300 million toward its nuclear fleet. Under the new proposal, support for the company's nuclear plants could work out to be about half of that amount, Crain's Chicago Business has estimated.

Average monthly power bills for residential customers would go up 25 cents if the proposal is enacted, according to the companies.

The legislative package contains many components, including a fix to the RPS to "provide stable, predictable funding for renewable energy." 

The RPS is a regulation passed in 2007 that requires the state to get at least 25 percent of its electricity from naturally renewable sources by 2025. Renewable energy and environmental advocates in Illinois have argued that the state's "broken energy policies," including the RPS, have stifled solar and wind growth in the state. 

Solar supporters with the Illinois Clean Jobs Coalition spoke at the State Capitol Wednesday about the need for "stable solar policies like net metering and stable rate design."

"Illinois needs predictable, stable renewable energy policies," said Illinois Solar Energy Association Executive Director Leslie McCain. "It's time for Illinois to give renewable energy companies the stability that they need to serve their customers and to create more jobs. It is time for Illinois to capture the investments of the booming industry, or to see them go elsewhere."

ComEd and Exelon's bill looks to "jumpstart solar energy in Illinois" via rebates as well as annual investments of $140 million in solar projects, until RPS solar targets are reached. Also under the measure, energy efficiency programs would nearly double, producing $4.1 billion in energy savings, and low-income customers would see $1 billion in assistance through energy efficiencies.

The bill includes proposed rate-design changes, including a 50 percent cut to the fixed consumer charge for energy delivery as well as the implementation of a "demand charge," which would be calculated based on a customer's use during peak demand periods. The companies view this change as a way to "create equitable rates," but opponents say mandatory demand charges are unprecedented and could cause confusion and higher electricity bills for consumers.

"No state legislature has ever approved a mandatory demand charge on residential customers," said Julie Vahling, associate state director for AARP Illinois. "Demand charges are confusing and difficult for consumers to understand. This makes it challenging to adapt their behavior to control their bills and avoid increases in their household expenses. The general assembly should reject this unprecedented proposal."

CUB's Kolata said ComEd and Exelon's bill appears to be "significantly better" than what they have previously proposed.

"We think that the ComEd energy efficiency components are particularly beneficial for consumers and would give Illinois one of the strongest efficiency laws in the country," he said. "Also, the 50 percent reduction in the fixed customer charge is a positive development. But there's still a lot of work to be done."

Kolata said further work is needed related to "consumer protections, the role of Ameren, ensuring that there's a full and functional Renewable Portfolio Standard and giving customers the tools to better manage their energy use."

When asked to expand on the proposed demand charge and 50 percent cut in the fixed customer charge, Kolata called the change "slightly better than the status quo."

"We've modeled this. What it shows is that 63 percent of consumers benefit, and 70 percent of low-income consumers benefit," he said. "The data really matters here ... The winners and losers, the range of the gains and losses, are reasonable. Plus, you can do something about it. What basically it means is that you reduce your peak demand, and there are ways to do that."

Kolata noted that the proposed rate-design changes are part of a larger package.

"It's not a standalone item," he said. "You have to take these things all together. In particular, it's linked to the energy efficiency measures of the bill, which are very strong."

Some solar and wind industry groups, meanwhile, are giving the overall plan a thumbs down. In a joint statement, Wind on the Wires and the Illinois Solar Energy Association said the ComEd and Exelon bill "falls far short of a comprehensive energy solution for Illinois."

"Although the proposal does soften the company's historic opposition to renewable energy, it would fail to expand the renewable energy industry and purposefully delays critical fixes to existing law," the groups said. "The proposal marginalizes wind power, Illinois' most cost-effective renewable resource. It also places new hurdles in the growth of solar energy in the state, including eliminating net metering and putting demand charges on all residential customers, which will limit positive effects from improving the Renewable Portfolio Standard. This proposal deprives Illinois of clean energy opportunities, stopping billions of dollars in investment and thousands of new jobs in the state. We urge lawmakers to consider addressing these shortcomings with comprehensive legislation that will bring jobs and economic growth to Illinois."

Image: AP/Robert Ray

Comments

Nuclear power is the only way to stop making CO2 that actually works. To stop Global Warming, we must replace all large fossil fueled power plants with nuclear.

Renewable Energy mandates cause more CO2 to be produced, not less, and renewable energy doubles or quadruples your electric bill. The reasons are as follows:

Since solar "works" 15% of the time and wind "works" 20% of the time, we need either energy storage technology we don't have or ambient temperature superconductors and we don't have them either. Wind and solar are so intermittent that electric companies are forced to build new generator capacity that can load-follow very fast, and that means natural gas fired gas turbines. The gas turbines have to be kept spinning at full speed all the time to ramp up quickly enough. The result is that wind and solar not only double your electric bill, wind and solar also cause MORE CO2 to be produced.

We do not have battery or energy storage technology that could smooth out wind and solar at a price that would be possible to do. The energy storage would "cost" in the neighborhood of a QUADRILLION dollars for the US. That is an imaginary price because we could not get the materials to do it if we had that much money.

The only real way to reduce CO2 production from electricity generation is to replace all fossil fueled power plants with the newest available generation of nuclear. Nuclear can load-follow fast enough as long as wind and solar power are not connected to the grid. Generation 4 nuclear can ramp fast enough to make up for the intermittency of wind and solar, but there is no reason to waste time and money on wind and solar.

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