By David Roberts
Last week, the Illinois legislature passed a sweeping, comprehensive new energy bill. With the possible exception of California’s recent bill, it might be the most significant state energy legislation passed in the US in decades.
The Future Energy Jobs Bill (SB 2814) is notable not only for its scale, but for the process that produced it. A wide variety of stakeholders were involved in negotiations, from utilities to environmental-justice advocates. The Illinois legislature is controlled by Democrats, but the bill passed on bipartisan votes in both houses and Republican Gov. Bruce Rauner signed it into law on Wednesday…
(As a bonus, the climate may be a triple winner in the process.)…
…Since 2007, Illinois has had a renewable energy portfolio standard (RPS), which says that the state’s utilities have to get 25 percent of their energy from renewable sources by 2025.
It’s a bold target, but various problems with the way the RPS is designed have led to disappointing results…
A variety of grassroots, environmental, social justice, faith, and business groups have spent years pushing a bill that would make various fixes to the RPS, channeling more money to in-state and community-level clean energy projects. (See the Clean Jobs Coalition for more.)….
Perhaps most importantly to clean energy fans, net metering will remain in place and there will be no demand charge. (Last-minute intervention by the governor helped kill this.) Rather than scrap net metering, the bill protects it, offers new up-front financing mechanisms, ensures “grandfathering” of any changes, and most significantly, instructs the Illinois Commerce Commission to convene a multi-stakeholder process to study what comes after net metering — how better to capture the time- and location-dependent value of distributed energy.
So there won’t be any changes in rates that penalize rooftop solar customers.
A last-minute addition to the bill would have implemented a Fixed Resource Adequacy Plan (FRAP), which would have bailed out uncompetitive coal plants own by Dynegy (another state genco). That also got yanked from the final bill.
Both those changes were big wins for environmentalists…
The bill is somewhat misleadingly being headlined by most journalists as a bailout for nuclear plants. But while the bailout is in there, of the money generated by various mechanisms in the bill, some 70 percent will be going to clean energy and energy efficiency. Just 30 percent will be going to the two nuclear plants.
Whatever your feelings on the nuclear part of the deal — and many enviros and consumer advocates remain deeply opposed to the bailout — it is an extremely significant win for clean energy.
1) Fixing the RPS and boosting community-scale energy
The overall target of the RPS has not changed. It’s still 25 percent by 2025. The rate cap — the amount utilities are allowed to raise rates to pay for RPS compliance — is still set at 2 percent.
However, under the hood, the RPS has gotten some tune-ups.
Now, all the money generated by compliance credits will be put into a central, stable budget of more than $200 million a year, to be spent by the Illinois Power Agency on renewable energy credits, or RECs. RECs are viewed with great suspicion by many clean energy advocates, but the bill puts restrictions on them…
A huge part of the story of this bill is the key role played by low-income and environmental-justice advocates, from places like the Little Village Environmental Justice Organization. Thanks to their efforts, the bill will invest more than $750 million in programs for low-income communities (down slightly from a previous version of the bill).
One, called “Illinois Solar for All,” will help low-income customers, nonprofits, and community centers access rooftop solar and community solar. Others will provide solar job training programs.
And of course, the demand charge was dropped and net metering was preserved, a significant win all on its own.
2) Energy efficiency
ComEd will be required to reduce demand from its customers by 21.5 percent by 2030 (somewhat lower than a previous version of the bill). The cap on the amount it can be reimbursed for energy efficiency investments has been raised from 2 to 4 percent, about $400 million a year.
Ameren will reduce its demand by 16 percent, which it is complaining about mightily.
There will be performance-based incentives available to the utilities for exceeding their EERS targets, creating a virtuous incentive.
According to CUB, these changes would save every household in ComEd’s territory $15 a year, even after all the costs of the legislation are taken into account.
Another environmental justice win was a provision instructing ComEd to spend at least $25 million a year specifically on efficiency retrofits for low-income customers.
The bill also increases the options for “on-bill financing,” which is a way for customers to pay off up-front investments in efficiency equipment over time, via a small monthly charge on their utility bill.
(There are also a few unfortunate caps and exemptions in this category. See this NRDC post for more.)
3) Those nuclear plants
Exelon’s two nuclear plants will be subsidized to keep them open for 10 more years (up from six years in a previous version of the bill). Technically, the bill creates a “Zero-Emission Standard,” which directs payments to low-emission power sources not covered by the RPS, i.e., to nukes….
4) Rate caps
Thanks in large part to the governor’s forceful last-minute intervention, the impact of the bill on ratepayers is capped. Once all its costs and benefits are netted out, the bill can raise rates for residential customers no more than 25 cents a month, and for businesses no more than 1.3 percent above 2015 rates…
The climate won thrice in Illinois
The framing of this story has typically been about tough compromises between the politicians and utilities that wanted to keep the nuclear plants open and the environmentalists who wanted more renewable energy in the state.
But from a purely climate-focused perspective, the bill is a win-win. By keeping the nuclear plants open, it preserves several gigawatts of low-carbon generation that would otherwise have been replaced (mostly) with carbon-polluting natural gas plants. And by fixing the RPS, it sets the stage for tens of millions of dollars of new investment every year, flowing to in-state renewable energy and energy efficiency.
What’s more, the climate won in a third way: It won because politics won. Stakeholders with varying interests came together to hash out a mutually beneficial compromise that accelerates the clean energy transition. Politicians from across the aisle supported it. Everyone sacrificed something, but everyone got more than they sacrificed.
Non-zero-sum, democratic politics can still work. Let’s celebrate it when it happens.