By STEVE DANIELS
After a year of build-up, Exelon today finally unveiled its state legislation to hike electricity rates in most of Illinois to boost revenue at its fleet of six nuclear plants.
The measure would slap an electric-bill surcharge of about $2 a month on the average household served by Commonwealth Edison and Ameren Illinois, creating more than $300 million of extra annual revenue to be distributed over the next five years to low-carbon energy sources. Those include obvious examples such as wind and solar—but also nuclear energy, which, unlike coal or natural gas, emits no carbon.
The legislation effectively would funnel most if not all of the $300 million to Exelon's Illinois nuclear plants, the largest state fleet in the nation. But Chicago-based Exelon, which also owns ComEd, went out of its way to argue that the bill allows low-carbon sources of all types to bid for the special credits to be made available via an auction conducted by the Illinois Power Agency.
A KEY POINT
The argument is central to Exelon's contention that the bill is a “market-based solution” to low wholesale power prices that have made some of its Illinois plants money-losers. Critics label the measure a bailout for a company that used to preach the virtues of the market but now is resorting to captive ratepayers to appease Wall Street.
“The Low Carbon Portfolio Standard doesn't pick energy winners and losers,” one of the bill's sponsors, Sen. Sue Rezin, R-Morris, said in Exelon's release. “It rewards all low-carbon energy sources—including wind, solar and nuclear—equally through a competitive market."
Also allowed to bid are hydropower operators and developers of “clean coal” plants.
But the bill places such great limits on bidders other than Exelon's Illinois nukes that Exelon is highly likely to win most if not all of the credits.
For example, generators with contracts of five years or longer to sell their output can't bid. That keeps out most existing wind farms and utility-scale solar, which have such contracts. For those few wind farms that sell into the wholesale markets, they're only eligible if they don't already have renewable energy credit from Illinois or some other state. That's a relatively small pool of projects, renewable industry representatives say.
The bill also limits eligible hydro producers to no more than 3 megawatts. The capacity of Exelon's Illinois plants collectively is more than 11,600 megawatts. There are no nearby clean coal plants to speak of, so those won't be bidding.
A LOW-CARBON REQUIREMENT
Interestingly, the bill requires that 70 percent of the power ComEd and Ameren distribute come from low-carbon sources like Exelon's nukes. Between them, ComEd and Ameren deliver about 120 million megawatt-hours of power annually. Seventy percent of that is 84 million megawatt-hours. Exelon's Illinois plants collectively produced more than 93 million megawatt-hours last year, according to the company. So the nukes by themselves could meet the state's new standard.
Exelon also argued that the new set-aside was no different than previous such carve-outs Illinois has provided to renewable energy developers. It pointed, for example, to the 2.015 percent limit on how much the bill can raise ComEd and Ameren rates—the same percentage the state has granted renewable producers since 2007.
But the money available to Exelon's nukes will be one-third greater than the cash allocated to renewables. That's because the bill establishes that the cap applies to rates in the year that ended May 31, 2009. The renewable rate cap uses a date of May 31, 2007.
Rates were considerably higher in mid-2009 than they were in mid-2007, so the low-carbon standard offers $300 million of additional revenue instead of the $225 million or so available via the renewable standard.
In a response, Exelon said the 2009 date was the same as the more recent state law that aimed to incentivize construction of new “clean coal” plants.
Once again, as it has before, Exelon refused to say whether its Illinois fleet as a whole is profitable. (In an analysis, Crain's showed previously that it is.)
“Consistent with our long-standing policy, we do not disclose the specific revenues, costs or profitability of each power plant or the Illinois fleet as a whole,” Exelon said. “We have to make decisions based on each plant's economics—that's just common business sense.”
NOT SO FAST
Reaction to the bill was swift.
The Citizens Utility Board, a consumer advocacy group, said, “Exelon has made more than $20 billion in profits over the past decade, its overall nuclear fleet is profitable—and consumers have already paid for these plants several times over, from when the facilities were owned by ComEd. … Anything resembling a full-fledged bailout of Exelon's nuclear plants would be radioactive for our pocketbooks and should be rejected by the state.”
The Illinois Clean Jobs Coalition—a group of labor, environmental advocates and renewable-energy and energy-efficiency firms, as well as Chicago Mayor Rahm Emanuel—advocates instead for its bill that it's pushing to boost Illinois' goal of 25 percent renewable sources to 35 percent, among other things.
“The Illinois Clean Jobs Bill sets a long-term clean energy policy that creates jobs—rather than sunsetting soon, missing opportunities to create jobs and raising the risk that consumers will again be asked to pay more in just a few short years,” the group said.
Even the Illinois Manufacturers' Association, usually a reliable Exelon ally, was non-committal. “The state has produced findings from a comprehensive report about the nuclear sector and the IMA is reviewing both this report and the Low Carbon Portfolio Standard that was announced today,” IMA CEO Greg Baise said in a statement.
Owners of coal-fired power plants in Illinois were critical.
"What Illinois needs ... is reasonable, market-based electric rates and a competitive energy market," wrote a spokesman for NRG Energy, owner of four coal- and gas-fired plants, three of which are in the Chicago area. "The proposed legislation, which appears to be written specifically to subsidize Exelon's nuclear fleet, would reverse those benefits. Subsidizing nuclear plants, which produce nuclear waste, as sustainable sources of energy makes a mockery of what sustainability is all about."
A spokesman for Houston-based Dynegy, Illinois' second largest power generator after Exelon, said, "The focus should be on all interested parties working together, on a level playing field, to ensure the reliability of the electric grid (and) providing needed jobs and revenue for families and communities across the state through policy or legislation that doesn't favor any region or company."
The bill, HB 3293, was introduced in the House by Reps. Larry Walsh, D-Joliet, and Mike Tryon, R-Crystal Lake.