Ameren Illinois customers could pay more to keep three nuclear power plants outside of Southern Illinois profitable for Chicago-based Exelon Corp.
Illinois legislation backed by the nuclear power giant that also runs Chicago utility ComEd could add about $2 per month to the bills of utility customers — even Ameren Illinois customers who buy much of their power from coal power plants downstate.
The measure is one of several energy-related bills bouncing around Springfield as the legislative session winds to a close this month. Another bill, the so-called “Clean Jobs Bill,” is backed by a large coalition of clean-energy and efficiency advocates, and there’s also smart-meter legislation for the Chicago area and the possibility of new rules requiring power plants to use more Illinois coal.
Observers say a large energy package could come out of the Legislature before the end of the year, if not this session. A recent Illinois Supreme Court ruling invalidating a pension reform measure has lawmakers scrambling to plug a giant hole in the budget by the end of the month, but many expect an energy package to be negotiated during the fall veto session.
“It’s very typical when we have competing bills that they all will come together for a common resolution,” said Senate President Pro Tem Don Harmon, D-Oak Park, the chief sponsor of the Clean Jobs Bill.
The Exelon bill pending in Springfield would require the state’s utilities — ComEd in northern Illinois and Ameren Illinois downstate — to deliver 70 percent of their power from “low-carbon” sources. They could offset that cost with a surcharge on customer bills, capped at around 2 percent.
Exelon says its nuclear plants, which emit no carbon dioxide, would have to compete with other sources, such as wind and solar. The company argues that renewable energy prices are distorted by federal tax policies and other initiatives that have led to a boom in wind generation. Exelon warns it may close three nuclear power plants it says are no longer profitable.
“All we are seeking through this legislation is a level playing field where nuclear energy can compete on an equal footing with other forms of low carbon energy,” Exelon spokesman Paul Elsberg said.
But critics contend the bill is crafted to ensure Exelon has an edge over renewables and is essentially a subsidy now that its nuclear plants are struggling to compete with natural gas, wind and solar.
Exelon advocated for a deregulated electricity market in Illinois and reaped profits for years when power prices were higher, said David Kolata, head of Illinois utility customer advocacy group the Citizens Utility Board.
But now that prices are down, the company’s no longer interested in the open market and is pushing a bill that by CUB’s estimate would divert $300 million a year to the nuclear plant owner, he said.
“Exelon wants to have its cake and eat it too, and have proposed a situation where they win either way,” Kolata said. “They profited when natural gas prices were high. That’s how markets work. What Exelon seems to be saying is markets are great when prices are high but markets are bad when prices are low.”
Only one of the three plants Exelon says it may close is in Ameren Illinois territory — Exelon’s Clinton nuclear plant, 30 miles north of Decatur. While Ameren Illinois customers can buy power from plants outside the utility’s territory, a large portion of the downstate Illinois electricity comes from Houston-based Dynegy, which acquired Ameren’s Illinois coal plants.
But Exelon and some legislators warn that electricity prices across the state would rise and thousands of jobs would be lost if the plants shut down.
“These are benefits for everyone in the state,” Exelon’s Elsberg said. “These aren’t jobs only located at the plants. These plants are massive spenders on in-state businesses.”
An analysis from the Illinois Department of Commerce and Economic Opportunity estimated that 7,000 jobs and labor income of $620 million would be lost if the three plants shut down.
But Dynegy, whose coal power plants would be disadvantaged by the law because of their carbon emissions, said Southern Illinois customers would see little benefit from paying more to make sure Exelon’s plants keep operating.
“We believe it is a bailout if they give it to them,” said Dynegy spokesman Micah Hirschfield. “You have downstate and Southern Illinois customers paying for a problem that is northern Illinois in nature.”
An analysis from northern Illinois grid operator PJM Interconnection estimated that if the Clinton plant closed, energy costs would rise between 1.2 percent and 2.7 percent in Southern Illinois. If the northern Illinois plants closed but Clinton didn’t, some scenarios actually predict a decrease in prices for downstate customers.
In ComEd’s territory, PJM found that any plant closure would lead to a price increase.
Rep. Jay Hoffman, D-Belleville and a sponsor of the Clean Jobs Bill, said the Exelon legislation appears to put too much of a burden on downstate customers, who won’t see as much of a benefit from keeping the plants open.
“I do understand that we need to make sure that these plants remain viable,” he said. “They’re important to our power grid. But I think whatever comes out of that needs to be more equitable to us.”
‘CLEAN JOBS’ PUSH
Kolata said the state should pursue the Clean Jobs Bill to offset any impact from a nuclear plant closure. The increase of energy efficiency alone could save consumers about $100 per year, he said.
“There’s likely to be a comprehensive energy bill at some point and we would hope the concepts in the Clean Jobs Bill would become law because that’s the best way to keep rates low,” he said.
The Clean Jobs Bill includes provisions that make it easier for residents to fund community solar projects and a fix for the state’s renewable energy credit market that environmental groups have long pushed for.
Advocates hope that will spur more renewable projects from companies hesitant to invest because of the flaw in the market, said Sarah Wochos, co-legislative director of the Chicago-based Environmental Law and Policy Center.
“If we lose another year, I think a lot of companies will look at Illinois and say it’s not worth our time,” she said.
Harmon, the Clean Jobs Bill sponsor, said the prospect of Exelon closing plants was “very worrisome” to those communities, but he said he thinks there “are better ways to address the situation than to simply subsidize a very profitable corporation.”
Before moving forward with a legislative response, Harmon said he wants to wait for an electricity price auction Exelon will participate in this summer to learn “about the true nature of Exelon’s situation.”
In the meantime, the Clean Jobs Bill is the only one that has the potential to lower electricity prices, he said.
“A clean energy infrastructure is going to be built in America, the only question is who gets to build it and who gets the jobs.”