SB2814 – An Overhaul of Illinois Energy Policy and a Bailout for Largest Nuclear Power Company in the US
By Jeanne Ives 12/5/2016
Merry Christmas from the Illinois General Assembly who could not focus on the task at hand – putting a balanced budget together – but had time to bailout a multi-billion dollar company. Sitting in the Governor’s office, is a rate hike bill wrapped up in ComEd red and white paper, an Exelon blue bow on top, and placed appropriately under the artificial green energy Christmas tree. It will be a good Christmas for millionaire CEOs, certain highly skilled workers and renewable energy advocates.
HB 2814 contemplates significantly rewriting energy policy and returning our market-based energy policy instituted in 1998 back to a more regulated, government directed production and consumption model in a protectionist appeal from large energy companies. Various energy proposals have surfaced over the last 18 months with the primary driver of the legislation coming from Exelon. Exelon is a major supplier of power to both Illinois and the PJM base load capacity market through their operation of six nuclear power plants.
Ignores the Free Market: The policy proposals in HB2814 are not market driven solutions to energy production and are instead costly to all classes of rate payers and should be rejected.
This bill requires ratepayers to fund huge profitable companies and favored green energy companies. Exelon’s net income was $2.25 billion in 2015. Hypocritically, prior to beginning the discussion of this subsidy bill, Crain’s reported in late December 2014 that Exelon argued in Ohio against subsidies for its competitors. Crain’s stated,
“Exelon isn’t the only power generator trying to cope with low wholesale electricity prices by asking for financial help from its home state. But the company doesn’t like it when peers ask for similar aid…Chicago-based Exelon, which has said it will lobby Illinois lawmakers next year for legislation to boost revenues at its six nuclear plants in the state has petitioned utility regulators in Ohio to block attempts by generators based in that state to prop up their plants courtesy of ratepayers there. Exelon on Dec 22. issued a strongly worded filing with the Ohio Public Utilities Commission in opposition to the FirstEnergy proposal to require electricity consumers at its Ohio utilities to pay extra for power generated by a 900-megawatt nuclear plant and a 2,200- megawatt coal-fired plant owned by a separate FirstEnergy unit.”
I recognize that nuclear power is essential. In 2014 during the polar vortex, Exelon’s nuclear power plants maintained 96% production reliability — when other sources of energy could not ramp up production due to severe weather, nuclear kept producing. This capability should be preserved through the base load capacity power market and spread to all users of Illinois produced energy including those in other states – not only Illinoisans. Compared to natural gas, nuclear power already receives 4 times more subsidies at the federal level and wind is subsidized 18 times more than nuclear power. Subsidizing anything leads to inefficiencies in the market. Wind and solar have been around since the beginning of man – and wind has been subsidized in modern times since 1992 – more than long enough to stand on its own. Exelon should be arguing, as they did in Ohio for no state energy subsidies.
Costly Efficiency for some, but not for all: This bill is BIG Government saying all ratepayers must pay millions more so ComEd can buy insulation and light bulbs for folks in the name of energy efficiency – and earn a 9.5% return rate while doing so.
Disregards Coal: This bill rejects Illinois’ competitive advantage in coal. Coal accounts for over 40% of Illinois energy production. You need 600 square miles of wind power to equal the same amount of energy from one coal plant.
Crony Capitalism: This bill protects certain classes of workers in Illinois when all industries should receive the same treatment. The most important thing to address is the idea that ratepayers should subsidize a specific industry just to save specific jobs for a specific timeframe. Illinois cannot get into the habit of saving specific industries with tax credits or legislation that skews the free market and picks winners and losers. Going down this road is similar to the very controversial Edge Credits and Special Edge Credits which carved out tax credits for not just specific industries but actually specific companies. It’s wrong and taxpayers continually shepherd these costs with little direct benefit. It should be noted that we did not bail out US Steel Co. when they laid off 2080 employees in Granite City in 2015. Last year we lost 6200 manufacturing jobs who were not saved with a subsidy. So far in 2016, 7900 manufacturing jobs have left Illinois – no subsidy for those workers either. And this legislature took no action when coal lost significant jobs, about 6500 in 2003 and we did nothing for the 1200 coal mining employees who lost their jobs in the last 18 months.
Rejects trend away from RPS: This bill disregards the movement away from wind and solar that is happening in Europe because you cannot run a modern economy on dilute and intermittent energy like wind and solar. Steve Goreham, author of numerous books and articles on this topic (visit stevegoreham.com), stated, “Denmark erected over 5,000 wind turbine towers, one for every thousand Danish citizens. Turbines blanket the nation, providing a beautiful view of a 300- to 500-foot tall tower from almost every house, farm, field, forest, and beach. But in total, the turbines produce only 1.3 gigawatts of electricity on average. All could be replaced by a single large conventional power plant. Today, Denmark has the highest electricity prices of the developed nations.” Here in Springfield where a 500-megawatt power plant operates, you would need about 1000 wind turbines to replace that power and disperse those in such a way as to guarantee that 30% of them were turning at any given time.
This bill buys into climate change alarmism despite the debunking of the IPCC findings, 18 years of no global warming from 1997-2015, and carbon dioxide being a trace element that promotes plant growth not a pollutant as the EPA thinks. The bill even uses President Obama’s EPA language of the social cost of carbon without accounting for the beneficial effects of increased carbon dioxide has by increasing biomass in a farm state like Illinois.
Solar and wind power mandates are strengthened in this bill. This bill, in direct contravention of its intentions, will require more fossil fuel not less as back up energy sources if wind and solar are forced to become a larger portion of our energy mix. Stephen Moore, author of Fueling Freedom, states,” Germany and England are already learning that the more renewable fuels they dispatch to their electric grids, the more coal they must burn to back up the intermittent generation from wind and solar sources.” The goal of 25% renewable use in Illinois by 2025 is unachievable without large and aggressive rate increases. Goreham, in response to this bill when I shared it with him, said this about solar power in Illinois, “Solar in Illinois is like growing pineapples. We’re not the sunbelt. Recent analysis shows that over a 25-year life, the amount of energy produced by a solar system at Illinois latitudes does not rise to the amount of energy used to fabricate the solar cells and install the system. By forcing solar in Illinois, we are causing more energy to be expended in China than we get back over the life of the system in Illinois.”
Will not Improve Environment: And the Wall Street Journal reported that, “In truth, the cost of backup power not only caps solar and wind growth, renewables may already have overshot. The International Renewable Energy Agency, in a discordantly sober report, predicts that wind and solar will start shrinking their share in the fast-growing developing economies in coming years.”
If you still believe carbon dioxide is a problem consider this as reported in the Wall Street Journal, “Germany managed to increase its use of renewables and its output of carbon dioxide at the same time—because it resorted to cheap coal to keep the lights on at a price its people could afford.”
In closing, Illinois should trust the free market to determine what energy is produced and at what price. The free market built this nation and can be better trusted than politicians and special interests. Illinoisans deserve energy that is cheap, reliable and pollutant free. Politicians in state government continue to obscure the path toward those objectives in order to keep political insiders happy.