Two months since Illinois lawmakers and Gov. Bruce Rauner signed
off on a bailout bill they said was needed to ensure the viability of two
Exelon nuclear electricity plants, two lawsuits filed in federal court have
challenged the constitutionality of the legislation, alleging the law
effectively rigs in Exelon’s favor wholesale electricity generation and supply
markets, resulting in a windfall estimated to be worth at least hundreds of millions of dollar for Exelon over the next 10
years, paid for by Illinois businesses and households.
On Feb. 14, two groups of plaintiffs – one which includes
Illinois household and business electricity customers and another which includes
an electricity generation trade association and some of Exelon’s rival power
generation companies – filed separate complaints in the U.S. District Court for
the Northern District of Illinois in Chicago, asking the court to invalidate
the portions of the Illinois law they say oversteps the state’s constitutional
bounds and stacks the market in Exelon’s favor.
Named plaintiffs in the power suppliers’ lawsuit include the
Electric Power Supply Association, Dynegy Inc., Eastern Generation LLC, NRG
Energy Inc. and Calpine Corporation. Plaintiffs in the consumer complaint
include the Village of Old Mill Creek, of Lake County; manufacturer Ferrite International
Company , of Wadsworth; business Got It Maid Inc., of Highland Park; and four
individual electricity consumers from Chicago and the Illinois communities of
Riverside, Highland Park and Havel.
Named defendants in the lawsuit include either the Illinois
Power Agency or its director, Anthony Star.
The lawsuits stem from the December 2016 passage of the
state legislation, now known as Illinois Public Act 099-0906. Among other
provisions, the law restructures certain aspects of the state’s energy
efficiency programs, as well as calling for greater use of energy from
renewable sources, such as wind and solar power.
The lawsuits, however, take aim at the provision mandating the
Illinois Power Agency obtain “zero emissions credits” (ZEC) for electrical
utilities ComEd, an Exelon-owned power distributor, which covers northern
Illinois, and Ameren Illinois, which serves central and southern Illinois, solely
from “certain nuclear-fueled generating plants” over the next 10 years.
The lawsuit said the law is crafted in such a way that those
credits can only be obtained from Exelon’s Quad Cities and Clinton power
plants. And the costs of those credits will be passed through ComEd and Ameren
directly to Illinois electricity customers, the lawsuit said.
The increased cost may cost typical Illinois households using
about 1 Megawatt hour of electricity per month an additional $2.64 per month.
But the new ZEC system would be considerably more costly for energy-intensive businesses.
A manufacturer who may use 10,000 MWh of electricity could be hit with an
increase of $26,400 per month, the lawsuit alleged.
The lawsuits argued the ZEC system oversteps the state’s
constitutional authority to regulate electricity markets, as the state’s ZEC
mandate would upset wholesale supply and generation markets which are regulated
as interstate commerce by the Federal Energy Regulatory Commission.
Specifically, the lawsuits alleged the ZEC system would guarantee price
premiums for two Exelon plants of more than 70 percent, paid for by Illinois
electricity customers, on each MWh of
The power suppliers’ lawsuit estimated each MWh of
electricity generated by the Quad Cities and Clinton plants would fetch
payments of $34.50-$41.50 in 2017, compared to $18-$25 other suppliers in the
same location could earn.
The credit amounts are expected to change over the next 10
years, based on wholesale power capacity and prices.
The lawsuits said such premiums will disrupt the functioning
of markets under which suppliers currently bid for electrical supply production
and capacity rights, usurping federal supremacy and harming consumers and market
The “ZEC program was enacted for political reasons in an
attempt to save jobs and property tax revenues at the subsidized generators,”
the power suppliers’ lawsuit said. “Illinois’ attempts to preserve local
industry from the rigors of interstate competition are prohibited by the (U.S.
Constitution’s) Commerce Clause.
“Although all nuclear facilities connected (to the state’s power
distribution networks) are purportedly eligible to apply for ZEC subsidies, the
procurement criteria have been rigged so that only Clinton and Quad Cities may
be selected as the ‘winning bidders,’” the power suppliers further alleged.
Both lawsuits have asked the court to block the ZEC
provision from taking effect on June 1, and to declare the law
The electricity customer plaintiffs are represented in their
action by attorneys Paul G. Neilan, of Highland Park, and Patrick N. Giordano,
The power suppliers are represented by attorneys with the
firms of Massey & Gail LLP, of Washington, D.C. and Chicago, and Boies
Schiller & Flexner LLP, of New York and Fort Lauderdale, Fla.