Governors' Wind Energy Coalition

The nation’s largest nuclear operator and clean energy groups are calling on Illinois lawmakers to overhaul how the northern part of the state ensures there’s enough power plant capacity and slashing carbon emissions.

Chicago-based Exelon Corp. backed legislation filed yesterday that would require the state to pull out of grid operator PJM Interconnection’s annual capacity auction. Under the bill, the Illinois Power Agency (IPA) would take over that responsibility.

The language would provide a boost to Exelon’s fleet of 11 reactors in the region, at least three of which the company has said are at risk of being shut down because of pressure from inexpensive shale gas (Energywire, Feb. 14). The bill would open the door for continued expansion of wind and solar power.

Illinois is one of a handful of states where legislation is pending to shift toward 100 percent clean energy. Some of those proposals include nuclear energy.

Unlike three years ago when Exelon and clean energy groups clashed over competing bills before ultimately compromising on the Future Energy Jobs Act, the focus on decarbonizing Illinois’ power sector has united the two sides on the need to withdraw from PJM’s capacity market.

The bill would require the IPA to procure 55 percent of northern Illinois’ capacity needs from clean energy resources for delivery starting in the 2023 planning year (June 1, 2023-May 31, 2024). The requirement would increase to 100 percent for 2032.

David Fein, senior vice president of state government and regulatory affairs at Exelon, said the company envisioned a two-step process. First, the IPA would procure capacity from “eligible resources” within northern Illinois as defined by law, including renewables, efficiency and nuclear power.

Any shortfall would be procured through PJM’s Base Residual Auction, typically held in the spring.

The process would be conducted under a provision in PJM’s existing tariff unless and until federal regulators act on pending capacity market reforms.

PJM hasn’t studied the bill in detail, but the grid operator “stands ready to be a resource” to Commonwealth Edison and other parties to help ensure reliability for consumers while helping the state meet its policy priorities, spokesman Jeff Shields said.

The Exelon-backed bill would pave the way for the company to get hundreds of millions in annual capacity payments for its Illinois nuclear fleet — something not guaranteed today as the plants must compete in PJM’s 13-state capacity auction.

In fact, the Dresden nuclear plant and portions of Byron and Braidwood plants failed to clear the most recent PJM auction, putting the facilities at risk of early closure.

States in the driver’s seat

In a Securities and Exchange Commission filing last month, Exelon said the three plants are “showing increased signs of economic distress, which could lead to an early retirement, in a market that does not currently compensate them for their unique contribution to grid resiliency and their ability to produce large amounts of energy without carbon and air pollution.”

The filing prompted two Illinois legislators, both of whom have nuclear plants in their districts, to ask for a meeting with Exelon CEO Chris Crane.

One of the legislators, state Rep. David Welter (R), was among a group of House members who signed on as chief co-sponsors of the bill yesterday. Another lawmaker on the list is Rep. Ann Williams (D), who chairs the state House Environment and Energy Committee and is lead sponsor of the legislation supported by environmental groups.

Fein said the Federal Energy Regulatory Commission and the courts have made it clear that states are responsible for “taking control of their clean energy futures.” Right now, the design of the PJM capacity market doesn’t enable that.

“FERC sort of opened up the door on this,” he said. “We view this as an opportunity to address that market failure and provide greater certainty going forward. This is the best path forward on clean energy.”

Similar warnings about potential reactor closures a few years ago led the General Assembly to adopt a zero-emission carbon (ZEC) provision in the Future Energy Jobs Act.

The act passed after more than a year of clashes between Exelon and environmental groups, which initially fought efforts to subsidize a pair of nuclear plants. While nuclear subsidies have withstood court challenges, FERC has signaled that an extension of ZEC isn’t a viable option without capacity market reforms.

Members of the state Clean Jobs Coalition, a group of environmental advocates, businesses, and labor and faith groups, are likewise in favor of changing how capacity is procured in Illinois for the purpose of expanding wind and solar energy (Energywire, March 1).

“There’s a path in northern Illinois, at least, to a 100 percent decarbonized electric system by 2032 with guaranteed savings for consumers,” said David Kolata, executive director of the Citizens Utility Board, a coalition member. “That’s a pretty powerful message. Exelon is making a big statement.”

It remains to be seen how, and if, the Exelon-backed bill, dubbed the “Clean Energy Progress Act,” meshes with much broader legislation proposed by clean energy groups.

There’s another bill that is backed by renewable energy developers and seeks to move the state toward 100 percent renewable energy.

An informational hearing on the two clean energy bills filed last month is set for Tuesday before the House Energy and Environment Committee.

What emerges from the energy debate is far from certain, but supporters of capacity market changes stress there’s urgency to get something done.