Illinois' bailout bill for two Exelon power plants unique, unprecedented, needed more review, attorney says

By Robert Lawson | Jan 18, 2017

SPRINGFIELD — In early December, Springfield Democrats and Republicans, including Gov. Bruce Rauner, agreed on an energy bailout bill in the Legislature to keep two Exelon nuclear generator plants operating at a cost of as much as $4.54 per month per Illinois ratepayer.

But a Chicago lawyer who has advised industrial businesses and governments on energy-related issues for more than two decades said the 503-page bailout bill, which rewrote major provisions of both the Illinois Public Utilities Act and the Illinois Power Agency Act, should have received a more thorough review before becoming law.

Christopher Townsend, an attorney with the firm of Clark Hill PLC in Chicago, and a member of the firm's Environment, Energy, & Natural Resources Practice Group, said the bill was driven by an attempt to save jobs in Illinois through a “zero emission credit” program designed specifically to provide funding to those plants.

In addition, the law also restructures important aspects of the state’s energy efficiency programs and the renewable portfolio standard, among other things.

"It's driven more by a jobs perspective than by a markets perspective," Townsend said. "The driver is the jobs component and Exelon is claiming they would have to shut down one facility in Clinton and another one in the Quad Cities."

It could cost ComEd customers an additional 25 cents or $4.54 per month, depending on how the calculations are done.

A number of lawmakers questioned the rationale behind even discussing such a bill at a time the Democratic-controlled General Assembly and Rauner remain at odds over the state budget.

But those of both parties couched their support in the language of preventing job losses in the state, should Exelon shut down the two operating generation units.

"It's a unique piece of legislation," Townsend said. "We've never before had a piece of legislation to preserve particular generation units. We've had them for legislation to advance renewable energy and efficiency, but here the legislation was crafted to make these two specific generators viable."

Townsend said, even without legislation, Exelon would still be profitable and the state is still strong in terms of energy production.

"Illinois is a net exporter of power," Townsend said. "We have lost some generators but there not been an uptick in the cost of electricity. It is not fair to say this was needed from a market perspective."

Townsend also spoke to the jobs argument and its political ramifications.

"It wasn't necessarily a question of eliminating jobs, per se, because if the jobs moved, Exelon said they would relocate those employees elsewhere," Townsend said. "It was just the actual political risk of having them go elsewhere."

Utility customers would pay about $235 million a year to keep the plants open. ComEd could spend about $400 million a year on energy efficiency programs with the new program in place.

Townsend said many observers were not satisfied with the analysis of the bill either, as it was being modified up until the last minute.

Rauner, for instance, accused House Democrats, led by Speaker Michael Madigan, of putting "poison pills" into the bailout bill, including specific requirements for new renewable energy projects to follow prevailing wage laws that Rauner has sought to weaken. Those provisions were revised on the last day of Veto Session, as were other sections, including one that removed the immediate effective date, making it no longer necessary to get for a super-majority vote in both chambers.   

The last-minute political maneuvering and deal-making did not allow for thorough analysis and limited the ability of the public to see details and scrutinize it a bit more, Townsend said.

He said the economic impact could be studied to address fundamental questions, such as how the state's economy might be impacted by increased electricity costs.

"That question was not fully addressed," Townsend said. "There was some analysis that suggested that the law would have a negative impact on the number of jobs in the state. The increased cost was not analyzed thoroughly either."

Townsend said there were other complex parts of the bill, which had other implications in Illinois such as provisions to revamp the way energy efficiency operates in the state and to reduce some market elements of the renewable portfolio standard. That may increase costs further, but utilities will now be able to get a return on investment for efficiency.

Townsend said Exelon has strong ties in Illinois regardless.

"I fully expect discussions designed to advantage those companies," Townsend said. "Hopefully, next time there will be an opportunity for a more robust discussion."

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Clark Hill PLC Exelon Corporation Illinois General Assembly Illinois Governor Bruce Rauner

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