Advocates jockey for position amid changing energy landscape
Coal, nuclear interests spar at Senate committee hearing
By JERRY NOWICKI
Capitol News Illinois
SPRINGFIELD — Advocates from various energy sectors agree that the Illinois Legislature will likely define a radical new energy future with the legislation it does or does not pass this month, but what that future looks like is up for debate.
On Thursday, that debate focused on two bills before the Senate’s energy committee: one would benefit the state’s coal industry, the other its nuclear industry. Both industries believe their plan of choice will drive the state toward carbon-free energy production at lower costs to ratepayers.
Amendment 1 to Senate Bill 660 is backed by nuclear energy provider Exelon. That bill would reform the state’s capacity market — one of two markets affecting energy availability and costs. When capacity is purchased, the product is not the energy itself, but the guarantee that the grid can output necessary energy wattage to satisfy consumer needs three years into the future.
Northern Illinois is currently part of the federally-regulated PJM grid which purchases capacity from generators in 13 states and Washington, D.C. at an auction every year. The Exelon-backed bill would remove Illinois from this compact while giving the Illinois Power Agency the authority to purchase capacity.
Kathleen Barron, senior vice president of Government and Regulatory Affairs for Exelon, said capacity reform is necessary to continue to incentivize carbon-free emissions because pending Federal Energy Regulatory Commission changes could remove those incentives from the PJM market.
“By empowering the Illinois Commerce Commission and Illinois Power Agency to take over responsibility for procuring clean generation capacity, we will see increased development of new renewable resources like wind and solar and continued operation of Illinois’ existing clean generation, including its nuclear plants — which produce more than 90 percent of the state’s carbon-free energy,” Barron said.
The bill would create two pools from which the state would procure capacity: zero-carbon sources and carbon-emitting sources, Barron said.
Dave Kolata, executive director of the Citizens Utility Board, testified in favor of the capacity market portion of the Exelon-backed bill, noting a rate cap included in the bill would help keep costs to the consumer low.
But opponents, including the Illinois Chamber of Commerce, said Exelon’s large market share of Illinois energy production would give the company an unfair advantage and potentially drive up energy costs. That’s because the number of energy generators participating in capacity auctions would likely shrink if the state leaves the PJM market.
Opponents also said Exelon’s generators are all currently profitable, diminishing their claims that the legislation is needed to keep their energy production online.
David Kraft, of the non-profit nuclear energy watchdog Nuclear Energy Information Service, said nuclear energy, in general, is a danger to Illinois and it should be removed from the market.
Judith Lagano, senior vice president of asset management at NRG Energy which operates coal plants in Illinois, said the bill minimizes competition under the guise of clean energy production.
“(The bill) allows Exelon to name its own price for capacity,” Lagano said.
She said Exelon would continue to receive more than $300 million in credits from Illinois’ existing Future Energy Jobs Act, plus the added capacity payments from the state.
“Illinois ratepayers will be compelled to buy what amounts to be the most expensive megawatt hours under the guise of a clean energy market that isn’t a market at all,” she said, adding that FERC has not yet officially made the capacity market changes Exelon has written the bill to address.
Lagano advocated for a different bill, Amendment 3 to Senate Bill 135, which she said would drive costs and carbon emissions down through greater competition — the opposite, she said, of what the Exelon bill would do.
“Monopolies are bad for clean energy,” she said. “What about tomorrow’s clean energy technologies? They would be frozen out.”
The NRG-backed bill would allow companies to receive clean energy credits for closed fossil fuel plants. Coal-to-gas conversions would be eligible for these credits.
“The act allows an orderly and cost-effective transition from fossil to clean resources,” she said, adding that fossil fuels contribute 40 percent of Illinois’ energy usage and “are needed to keep the lights on.”
Opponents to the NRG bill, however, said it would provide state funding to coal plants that would be closing for financial reasons anyway, diverting this money from renewable energy projects.
“It authorizes billions of dollars in customer-backed payments to coal plant owners for not producing energy,” Barron, of Exelon, said.
No action was taken on the two bills, which remain part of a larger energy discussion at the Statehouse.
Vistra Energy, another Illinois coal provider, is backing House Bill 2713, which is aimed at transitioning closing coal plants into solar and energy storage sites.
Another pair of carbon-cutting, clean energy job-creating bills carried by Chicago Reps. Ann Williams (HB 3624) and Will Davis (HB 2966) passed committee earlier this year as well, and could become part of an “omnibus” package addressing the state’s energy future.