Illinois Passes Sweeping Energy Legislation
On December 7, 2016, Illinois Governor Bruce Rauner signed into law broad-reaching legislation popularly known as the Future Energy Jobs Bill (Public Act 99-0906), the largest state energy action since Illinois deregulated its power market in 1997. It is a sweeping, 503-page complicated law that amends key provisions of both the Illinois Public Utilities Act and the Illinois Power Agency Act, with far-reaching impacts across energy markets in Illinois and beyond.
Exelon will be the primary beneficiary of the legislation, which includes a "zero emission credit" program specifically designed to give Exelon billions of dollars to prop up two unprofitable nuclear power plants. The legislation gives Exelon a $235 million annual subsidy for its nuclear power plants in Clinton and the Quad Cities, which provide approximately 12 percent of the power produced in state of Illinois. Although Exelon threatened to cease operation of those plants in 2017, critics noted that Exelon previously made similar claims, but has continued to run the plants. The impact of closing the plants also was called into question, because Illinois produces 41 percent more electricity than it needs, and exports the excess power to other states. Indeed, other plants have closed throughout the state, but wholesale prices have remained low. Exelon and other advocates for the legislation highlighted the loss of jobs if the plants were closed, but opponents pointed to economic modeling showing that the number of Illinois jobs that will be lost due to the increased costs to Illinois businesses dwarfs the number of jobs that would have been lost due to the plant closures.
Rate payers will be responsible for these subsidies through rate increases that will take effect on June 1, 2017. Local utility Commonwealth Edison Company, an Exelon subsidiary, claims that residential customers' rate increases will be limited to 25 cents a month, while commercial and industrial customers' rate increases are limited to a 1.3 percent increase over last year's rates. Opponents believe that these estimated rate increases are much lower than the rate impact consumers can actually expect, and point to the complex formulas in the legislation for calculating the supposed caps that appear to allow for much higher rate increases.
The legislation also provides funding mechanisms for new wind and solar installations, and significantly modifies energy-efficiency programs run by ComEd and Ameren's Illinois utility companies, allowing those utilities to obtain a substantial return on investment associated with energy efficiency and displace the Illinois Department of Commerce and Economic Opportunity as the administrator of energy efficiency programs for public sector entities. Additionally, the legislation exempts very large energy users from the requirement to participate in the utility-administered energy efficiency programs. While this change will eliminate utility energy efficiency charges for those customers, the overall rate increase associated with the other aspects of the legislation is expected to cancel out any savings from avoiding those energy efficiency charges.
While proponents have called the legislation "the most important green energy bill that has ever come before the General Assembly" and opponents have referred to it as a case of corporate welfare, one thing is clear: this law will redefine the way energy markets in Illinois operate for the foreseeable future.
For more information on Illinois' Future Energy Jobs Bill, please contact Chris Townsend 312.517.7555 | firstname.lastname@example.org,Chris Skey 312.517.7515 | email@example.com or Sean Killeen 202.552.2365 | firstname.lastname@example.org.