How Pay-to-Play Politics and an Uneasy Coalition of Nuclear and Renewable Energy Led to a Flawed Illinois Law

Source: By Dan Gearino, Inside Climate News and Brett Chase, Chicago Sun-Times • Posted: Monday, May 24, 2021

State lawmakers are running out of time to fix 2016 clean energy legislation.

Pete Southerton (left) and Tom Bradshaw, of solar energy contractor Certasun, install solar panels on a Chicago home on May 17, 2021. Credit: Ashlee Rezin Garcia/Sun-TimesPete Southerton (left) and Tom Bradshaw, of solar energy contractor Certasun, install solar panels on a Chicago home on May 17, 2021. Credit: Ashlee Rezin Garcia/Sun-Times

This article is the result of a partnership between Inside Climate News and the Chicago Sun-Times.

CHICAGO—Just over five years ago, the Illinois Legislature passed a plan that aimed to build a solar power industry from scratch while saving thousands of jobs at two struggling nuclear plants.

The Future Energy Jobs Act brought together environmental groups, the owner of the nuclear plants—Exelon Corp., unions and consumer advocates. The result was a plan marrying nuclear subsidies with support for renewable energy that purported to create tens of thousands of solar power jobs as well as put the state on track to move away from fossil fuels and meet its pre-existing target of having 25 percent renewable energy by 2025.

But the law sputtered from the start and now state leaders are racing to meet a May 31 legislative deadline to fix some of its biggest problems, like the impending loss of more than $300 million in funding for renewable energy programs. The 2025 target is far out of reach, the jobs expectations went unmet and the solar industry is laying off workers as promised funding dries up.

Exelon emerged as a clear winner, receiving $2.3 billion in ratepayer-funded subsidies over a decade for its two plants. It is now demanding even more money and threatening to close two other nuclear plants if it doesn’t get it.

“Exelon continues to get $235 million a year, while the solar support has been stripped away,” said Howard Learner, executive director of the Chicago-based Environmental Law and Policy Center and a critic of the state’s nuclear bailout. “Illinois could’ve been a Midwest solar energy leader.”

Making the current scramble even more complicated is a federal bribery probe of Exelon and its Chicago utility subsidiary, Commonwealth Edison. Prosecutors say ComEd gave cash, jobs and contracts to associates of former House Speaker Michael Madigan with the hope he would shape the legislation to the company’s liking.

Gov. J.B. Pritzker has said that Exelon will not dictate the terms of the current debate over how to fix the state’s energy law. But the company and its close allies in organized labor nonetheless have immense power in the Legislature.

Michael Madigan, speaker of the Illinois House of Representatives and chairman of the Democratic Party of Illinois, speaks during a press conference at the State Capitol in Springfield, Illinois, U.S., on Wednesday, Feb. 18, 2015. Credit: Daniel Acker/Bloomberg via Getty Images
Michael Madigan, speaker of the Illinois House of Representatives and chairman of the Democratic Party of Illinois, speaks during a press conference at the State Capitol in Springfield, Illinois, U.S., on Wednesday, Feb. 18, 2015. Credit: Daniel Acker/Bloomberg via Getty Images

Exelon is seeking subsidies for its four Illinois nuclear plants that didn’t get help in the 2016 law, and is saying that the Byron and Dresden nuclear plants will close without this aid.

Meanwhile, solar companies are laying off workers following the abrupt end of incentive funding tied to the 2016 law.

Supporters of the law talked about a boom in solar jobs, but the actual gains have been modest. Illinois went from 3,480 solar jobs in 2015, the 14th highest number in the country, to 5,259 jobs in 2020, which ranked 13th, according to the Solar Foundation.

While there were few new solar jobs, there has been a surge in the small-scale solar projects the law was designed to encourage, with more than 20,000 projects completed. But solar remains a blip in Illinois’ energy landscape, providing less than 1 percent of the state’s electricity generation in 2020.

Solar and wind energy have grown in Illinois, but renewable sources are only about 7.5 percent of the state’s electricity consumption, which is far short of the pace needed to reach the target of 25 percent by 2025.

Some of the problems here are specific to Illinois’ political culture, but they touch on national concerns about how to increase renewable energy while also preserving the jobs and carbon-free electricity from old nuclear power plants.

Exelon is arguing, as it did in 2016, that it would close the nuclear plants if the decision was based solely on financial factors, but that the preservation of carbon-free electricity and jobs is so important that the state should explore all options for keeping the plants open.

Exelon said in a statement that the 2016 law had broad support because “it was, and remains, a good framework for comprehensive energy policy.”

Illinois got 58 percent of its electricity generation from the Exelon nuclear plants last year, and the company says that closing them would create a void that would largely be filled by electricity from fossil fuels.

Illinois Electricity Generation
National environmental groups, including the Union of Concerned Scientists and the Natural Resources Defense Council, have said they support giving subsidies to nuclear plants to prevent them from closing prematurely.As their support suggests, much of the criticism of the Illinois law is not about the existence of the nuclear subsidies, but the taint associated with the bribery scandal, and the renewable-energy provisions that were severely underfunded.ComEd spokeswoman Shannon Breymaier said in an email that the law “has delivered on its goals of spurring new investment to develop renewable energy, expanding energy efficiency programs and dedicating funding to new programs that train workers for clean energy jobs and help utility customers reduce their bills.”About the funding issues with solar and other renewable energy, she said, “Our approach to procuring renewable resources can be improved.”

A Nuclear Bailout Takes Shape

In 2016, Exelon was threatening to close the Clinton and Quad Cities power plants and wanted the Illinois General Assembly to pass a law that would require local utilities, including ComEd, to charge consumers for a 10-year subsidy for the plants.

The idea had the strong backing of Exelon’s allies in organized labor, but it was difficult to get lawmakers to agree to raise utility bills.

At the same time, environmental groups, clean energy business groups and environmental justice advocates had their own proposals.

Madigan, a Democrat who was the longtime speaker of the House, made clear that any clean energy proposals needed to go through Exelon and get added to their nuclear bailout, according to those closely involved with the process. Madigan, through a spokeswoman, declined to comment.

“Being able to pass clean energy legislation was conditioned by the speaker to reach agreement with ComEd and Exelon and labor,” said Jen Walling, executive director of the Illinois Environmental Council, which led the push for renewable energy provisions.

The Exelon Byron Nuclear Generating Stations running at full capacity in 2007 in Byron, Illinois, Credit: Jeff Haynes/AFP via Getty Images
The Exelon Byron Nuclear Generating Stations running at full capacity in 2007 in Byron, Illinois, Credit: Jeff Haynes/AFP via Getty Images

Walling, whose group represents more than 90 environmental and community groups across Illinois, said the political reality forced the environmental advocates to work with Exelon.

Pat Quinn, a Democrat who was governor from 2009 until he lost his bid for re-election in 2014, said the process was unseemly but typical for Exelon.

Exelon wanted “the renewable people to literally crawl to them,” Quinn said. “As long as they could hold up the renewables and the progressive stuff, they’d get more for themselves.”

Federal prosecutors later said that Exelon subsidiary ComEd’s actions at that time were more than just hardball politics. The company was part of a pay-to-play environment for energy legislation in the state, with ComEd giving cash, contracts and jobs to people connected to Madigan, according to a federal complaint. The investigation has led to indictments and a deferred prosecution agreement with ComEd.

ComEd’s Breymaier said the company has “substantially strengthened oversight and controls of its lobbying and hiring,” among other steps to prevent actions like those described by prosecutors.

“That said, the past conduct at ComEd that led to these actions shouldn’t be equated with the impact of energy legislation on our customers,” she said.

Madigan is referenced in federal documents as Public Official A. He resigned in February after 50 years in the Illinois House, amid continuing revelations in the bribery probe.

Environmental and community groups didn’t like the process with the 2016 legislation, but many of them are adamant that the clean energy provisions were a clear step forward for the state.

“Everything is a negotiation,” Walling said.

The legislative debate included talk of social benefits on a grand scale.

“We are going to create tens of thousands of jobs around the state of Illinois, in communities of color but also for our brothers and sisters downstate and the rural economy,” then-state Rep. Christian Mitchell, a Chicago Democrat, said of the promise of the solar program.

Mitchell, now Gov. Pritzker’s point person on energy and the environment, didn’t respond to a request for comment.

Other than the nuclear bailout, the legislation had provisions requiring utilities to increase the amount of in-state renewable energy they purchase, with funding of about $225 million per year.

Illinois Nuclear Plants
The bill had requirements to encourage energy conservation, with each utility needing to expand energy efficiency programs and meet goals through 2030.The measure also had provisions dealing with job training, designed to prepare people to work in renewable energy industries.In addition, utilities got some big benefits that were not widely publicized, including the ability to expand a loosely defined “grid modernization” program that started in 2011 and had allowed utility companies to increase rates and profits.The grid modernization program has led to $4.7 billion in additional costs for ComEd ratepayers since 2012, with little evidence that the money led to substantial benefits for consumers, according to a report issued in December from the consumer group Illinois PIRG.“Any interests of ComEd or Exelon are not left up to chance,” said Abe Scarr, the organization’s director and co-author of the report. “They are guaranteed. Whereas the benefits to the public or to development of the clean energy industry, for example, those are much less guaranteed and locked in by the law.”Breymaier of ComEd said the spending tied to the grid modernization program has been thoroughly vetted by regulators and has improved the reliability of ComEd’s system while maintaining unusually low electricity rates compared to other large U.S. metropolitan areas.‘This Legislation Isn’t Perfect’

The landmark energy bill became law with a Dec. 7, 2016, signing ceremony. Then-Gov. Bruce Rauner, a Republican, held the event at the high school in Port Byron, a small town near the Quad Cities nuclear plant that would get subsidies.

“While this legislation isn’t perfect, it allows us to protect jobs, ratepayers and taxpayers,” Rauner said.

Environmental and consumer groups applauded the new law, including how it would help the state meet the goal of 25 percent renewable energy by 2025.

Exelon began receiving the Illinois bailout money starting early in 2018.

While the company had only a short wait to get paid, state officials spent nearly two years drafting and implementing the procedures for the clean energy provisions of the bill. This took time because the state was setting up a process for how to select which companies would get limited funding, and the office in charge, the Illinois Power Agency, had fewer than 10 employees.

“These are complicated programs,” said Anthony Star, the agency’s director. “You can’t just turn them on overnight.” He said staffing levels were not an issue.

One of the centerpieces of the clean energy provisions was the “adjustable block program,” which was designed to dramatically increase customer-owned solar power.

Solar entrepreneurs could see this was an attractive deal, especially for subscription-based community solar projects, providing close to a guaranteed profit for developers and discounted electricity for consumers.

The first round of applications in 2018 turned into a feeding frenzy, with projects that outnumbered the available funding by about eight to one.

One of the underlying problems was that Illinois had pent-up demand for rooftop solar and community solar following years in which there were not substantial incentive programs.

As developers vied for limited dollars, there was a much bigger flaw with the way lawmakers had set up the funding.

Money for the renewable energy programs came from a charge on customer bills that is about $1.15 per month for households and more for businesses. The charges provided for annual funding that turned out to be far short of what was needed to get on track to reach 25 percent renewable electricity by 2025.

Customers began to pay the charges in mid-2017, and the money accumulated for about two years while the Illinois Power Agency was working to design the programs and select the first rounds of projects. After the projects began to get money, many developers were slowed by delays related to the coronavirus.

The agency was making decisions based on the idea that it could spend all of the available funding, but the projects were coming online so slowly that there was going to be a large unspent balance as of May 31, 2021—the date set in the law when any balance would be returned to customers as a refund.

As of late 2020, the agency had committed all of the projected available money and had none to give to projects on the long waitlist for funding. And the agency was facing the loss of the ability to use some of the money utilities had already collected, but not paid, to other projects, because the unspent balance was set to go back to ratepayers. As of March, the projected balance of unpaid money was $352 million.

Solar companies warned that the abrupt loss of funding would lead to layoffs and asked lawmakers to allow the unspent balance to be spent after May 31. But no amount of prodding was enough to get the Legislature to pass a bill that would permit that, in part because Exelon and its close allies in organized labor opposed the legislation.

Exelon said in a statement that it has “advocated for a comprehensive energy policy” and that proposals to allow the existing renewable energy funding to roll over past May 31 are falling short of addressing many other issues that could be dealt with in a larger proposal.

An Industry Waits and Suffers

Illinois is now facing the consequences of what went wrong with the 2016 law and lawmakers are working to do something about it by May 31, the final day of the legislative session and the deadline to fix the solar funding.

Also, Exelon is threatening to move forward with plans to

close the Byron and Dresden nuclear plants if the Legislature doesn’t approve additional aid this session.

Among the people who suffered the most from all the missteps were clean energy entrepreneurs and their employees, many of whom had decided to go into the renewable energy industry because of publicity surrounding the 2016 law.

“This year is probably going to be our toughest year,” said Dawn Heid, CEO of Rethink Electric, a solar installer in the Chicago area. “There is a severe cliff in front of us.”

Her company grew from four employees to 70 employees to respond to demand from the solar programs, and then laid off dozens when the new projects came to a near stop because of uncertainty about incentive funding.

Even if lawmakers come up with a stable, long-term plan for supporting renewable energy, the damage has been done to the state’s credibility, said Josh Lutton, CEO of the solar installer Certasun in the Chicago area.

“If you want businesses to invest in Illinois, you can’t encourage them to invest and then say, ‘Ooh, we really didn’t mean it,’” he said.

There are no figures available about recent layoffs in the industry, just many anecdotes about companies laying off workers because of a drop in new projects.

Clean energy advocates defend many aspects of the law, saying the underlying ideas were good, even though some programs were hurt by funding issues.

Will Kenworthy, Midwest regulatory director for Vote Solar, said it’s important to note that there are now more than 20,000 rooftop solar and community solar projects that have been built or are in the works, most of which would not have happened without the law.

“FEJA was imperfect,” Kenworthy said, referring to the acronym for the 2016 law. “But it was fixing an even bigger mess. In some ways, it was a resounding success.”

The bigger mess was the way that Illinois previously had renewable energy goals but almost no effective programs for encouraging projects.

Pritzker has said things will be different in the current legislative process. Lawmakers have said they are optimistic that they can come to an agreement on a bill and pass it by May 31, providing additional funding for renewable energy. The bill is likely to include nuclear aid for Exelon, although the amount and the terms are the subject of negotiations that will probably continue into the final days of the session.

Pritzker has proposed “measured, short-term state support” for the Byron and Dresden nuclear plants, but made it clear in a recent statement that Exelon is no longer calling the shots.

In response to a proposal for a larger assistance package for the nuclear plants, the governor’s office said: “While he is deeply committed to the survival of the nuclear fleet, Gov. Pritzer has made it clear that the days of Exelon treating Illinoisans as their piggybank are over. A profitable corporation with a cloud of corruption hanging over their subsidiary should not be making exorbitant demands.”

This statement is indeed clear, but close observers of Illinois energy policy know to temper their expectations.