Governors' Wind Energy Coalition

Democratic Illinois Gov. J.B. Pritzker laid out an ambitious energy proposal Friday aimed at tackling climate change while also improving utility affordability and accountability.

One pillar of Pritzker’s sweeping plan would put Illinois on a trajectory to power the state with 100% renewable energy by midcentury and phase out polluting power plants by adding a price on carbon emissions.

The 13-page statement of principles builds on the governor’s call earlier this year for legislators to pass clean energy legislation this spring — an agenda derailed by the novel coronavirus pandemic. The plan recommends strengthening ethics laws and warns against crafting energy policy “behind closed doors,” responding directly to the unfolding bribery scandal involving the state’s largest utility, Commonwealth Edison (Energywire, July 20).

“These principles represent guideposts for crafting a legislative proposal that puts consumers and climate first,” Pritzker said in a statement.

The plan leaves many details to be ironed out. But it calls for scrapping a push by utility giant Exelon Corp. and a coalition of environmental groups to leave the capacity market run by PJM Interconnection LLC, the largest U.S. grid operator. Rather, the governor advocates for a “market-based program” that favors carbon-free electricity.

PJM typically runs an annual auction to procure capacity — insurance that power plants will be available to run during peak hours of the year.

Chicago-based Exelon and the Illinois Clean Jobs Coalition have pushed for the state to take over the responsibility from PJM in response to moves by the Federal Energy Regulatory Commission that are seen as favoring coal and natural gas generation (Energywire, March 15, 2019). Withdrawing from the PJM auction would save consumers money and help Illinois more quickly transition to clean energy, they said.

Pritzker, however, rejects the idea, saying it would be a windfall for Exelon, which already receives more than $230 million a year in subsidies for two of its Illinois nuclear plants.

Legislation to withdraw from PJM’s capacity market would effectively triple the current taxpayer subsidy that each of Exelon’s two nuclear plants receives “without any strings attached,” according to the governor’s energy plan.

In a statement, Exelon said it agrees with Pritzker that policy is “urgently needed to address the climate crisis and advance Illinois’ clean energy economy.”

“We welcome any timely policy solution that preserves Illinois’ economically challenged zero-carbon nuclear plants, which are essential to keeping rates low for our customers and communities and are integral to meeting the state’s clean energy goals while we scale up new sources of clean energy,” the statement said. “However, we cannot continue to operate unprofitable nuclear plants indefinitely that aren’t compensated for the reliability and environmental benefits they provide.”

The governor’s proposal states that although Exelon’s Illinois nuclear fleet — the largest of any state — is “integral to achieving our clean energy goals and integral economic drivers in the communities where the plants are located, taxpayer and ratepayer financial support for these plants cannot be a blank check.”

The document notes that Exelon “has refused to show their math” to explain why the plants need a large amount of taxpayer money to stay open. “They are asking us to take their word for it without providing the relevant financial statements for each plant,” the proposal said.

Howard Learner, executive director of the Chicago-based Environmental Law & Policy Center, said Pritzker’s energy and climate plan is “moving in the right direction” by emphasizing clean energy jobs, ethics reforms, transparency and a reduction in carbon emissions.

“Obviously, the devil is in the details,” he added.

Learner also said he agrees there are better ways to achieve progress on clean energy than withdrawing from the PJM capacity market.

“The governor is clear that that is an unnecessary and very expensive solution to the problem,” he said.

Illinois in RGGI?

The Clean Jobs Coalition said Pritzker’s plan would achieve the same climate, economic and social objectives as legislation the group has pushed for over the last year and a half.

A central part of the group’s “Clean Energy Jobs Act,” however, is Illinois’ withdrawal from PJM’s capacity market — a move that the coalition, like Exelon, insists would free up funding for renewable energy development.

Jack Darin, director of the Illinois chapter of the Sierra Club, a coalition member, said he doesn’t think the capacity market proposal is off the table despite the critique by the governor’s office.

Darin said coalition members are pleased with Pritzker’s message and his continuing to prioritize climate action and social equity for disadvantaged communities most affected by pollution.

“We’re really focused on those endpoints that we share in common,” Darin said. “We’re open to ideas about ways to get us to those goals.”

Illinois is one of a handful of states with clean energy goals that have weighed an exit of the PJM capacity market in response to FERC’s December order on PJM’s minimum offer price rule, a price floor aimed at helping the competitiveness of fossil fuel plants.

Pritzker’s plan calls for establishing a carbon price to make fossil energy less competitive, reduce emissions and raise revenue.

The policy outline doesn’t directly advocate for Illinois to seek membership in the Regional Greenhouse Gas Initiative but lists that as one possible strategy.

“There are many options for implementing a market-based greenhouse gas reduction program, and we will explore all of the options to ensure that we are getting the most reductions possible while maintaining the advantage Illinois has with lower energy costs than our neighbors,” the plan states.

Jeff Dennis, managing director and general counsel for Advanced Energy Economy, said a carbon price can be an effective solution to clean up the grid and help improve the investment climate for advanced energy resources like renewables and battery storage. But that’s only true if it’s reinforced by other policies.

“A carbon price is among many tools states can use,” he said. “It works really well in a regional competitive market structure.”

Along the same lines, Dennis said AEE members oppose FERC’s minimum offer price rule but “are urging states to look at all of the options” before abandoning the PJM capacity market in favor of procuring their own capacity.

While environmental and consumer groups, as well as the Illinois Chamber of Commerce, praised Pritzker for seeking to lessen Exelon’s influence over energy policy, the governor’s push to expand renewable energy got some resistance from the state’s other big utility, Ameren Illinois, which serves much of the rural southern half of the state.

“There’s a common misconception that clean energy is free energy,” Ameren said in a statement. “To the contrary, our analysis indicates that one of the clean energy plans alone will cost downstate residential customers an additional $1.8 billion over ten years.”

“We believe that consensus on clean energy policy is possible, but we need to take the time to do it right,” Ameren said. “When it comes to clean energy policy, Illinois is not a ‘one size fits all’ state.”