Monday, February 11, 2013

History of Illinois Power Agency and RPS



With the problems Illinois now faces with renewable energy, it is difficult to explain everything in one essay.  The last blog was my opinion on current affairs with the Illinois Power Agency and the Renewable Portfolio Standard.  It was one person’s opinion, nothing more.  This blog attempts to explain the basic history and soap opera of the Illinois Power Agency.  If it’s attempted to explain the problems of the IPA and RPS first without explaining what the IPA is, it would get confusing.  This agency is a weird soap opera of state politics, and like many Illinois government soap operas of the last 20 years, this one goes back to the Governor’s office.

The Illinois Power Agency was created back in 2007 and established in 2008 with the main goal to administer the state’s Renewable Portfolio Standard.  Apparently the state conducted some kind of “reverse auction” in 2006 that ended horribly with no bidders but the state’s current energy suppliers Ameren and ComEd.   The response was to set up the IPA.  Mark Pruitt was brought in to run the show as director.  He was handling energy purchasing for the University of Illinois Chicago. 

From most accounts Mark Pruitt was doing a decent job.  With the Renewable Portfolio Standard mandating a certain percentage of our energy come from renewable energy, Pruitt’s job was to secure that renewable energy for Ameren and ComEd.  In theory, with the state administering the Renewable Portfolio Standard for the state’s two largest energy retail sellers, there would be little room for fudgery or trickery.  Dirty coal energy couldn’t magically become “clean” renewable energy.

Mark Pruitt was hired under Governor Blago.  From most accounts Pruitt perceived the top priority of his job was to secure renewables at the most economical price for the consumers.  After Blago was booted from office, Lt Governor Pat Quinn took over Springfield.  There are several reports Quinn and Pruitt did not get along.  In the politically charged state government, Pruitt did his best to make sure it was well known he was doing his job properly.  He presented reports showing how much money he had saved Illinois consumers, but his comparisons were from the 2006 “reverse auction” fiasco.

To assure the Renewable Portfolio Standard was being met by ComEd and Ameren, Pruitt was purchasing Renewable Energy Credits of the power companies.  These (REC’s) are basically certificates sold by wind energy companies to guarantee the energy came from a “clean” source.  PJM, our Regional Transmission Operator,  is the cartel we as consumers more commonly refer to as “THE GRID”.  PJM has a clearinghouse (http://www.pjm-eis.com/) where REC’s can be bought and sold according to supply and demand. 
In this situation, the energy from wind companies is sold into the market at the market price.  ComEd and Ameren through Pruitt and the Illinois Power Association would then pay a small premium by purchasing these Renewable Energy Credits are certificates of proof “clean” renewable energy was being purchased.

There are reports Governor Quinn and the wind energy industry did not like this.  Governor Quinn and the wind energy industry wanted long term Power Purchasing Agreements where the ComEd and Ameren would be forced to pay a premium to specify wind farms for the wind energy produced.  Pruitt fought Quinn hard on this issue and had the protection of the powerful House Speak Michael Madigan in Springfield.

Finally in October 2010 Pruitt acquiesced to political pressure and Power Purchases Agreements were signed.  Strangely, these agreements didn’t go into effect until the last half of 2012.  Governor Quinn continued to play games with Pruitt and refused to fund the Illinois Power Agency sufficiently for the agency to have a staff.  The IPA was a one man show for the longest time. 

Finally the Illinois Power Agency was audited by the state and showed several problems.  As a one man agency, it was doomed for failure.  Pruitt was finally allowed to hire a Chief Financial Officer.  Pruitt was recommended a person of questionable accounting ability and that person was hired as the CFO.  A leter investigation tried to determine who hired a CFO for a job paying over $80,0000 who did not have a college degree, or was familiar with advanced accounting principles.  While the CFO was not hand picked by Pruit, the investigation found him at fault for hiring a state employee who was not qualified.  The lack of a working relationship with Pruitt and Governor Quinn office continued in spite of the Governor getting his long term Power Purchasing Agreements.  Pruitt was fired by Pat Quinn in October 2011.

Michael Madigan was not happy with Quinn’s dismissal.  Springfield legislature made sure the Governor would not be able to fire anymore directors of the Illinois Power Agency and passed legislation changing who can fire the IPA director.  In a weird maneuver by Quinn, he hired Arlene Juracek as Acting Director of the Illinois Power Agency.   Speak Madigan makes it know he does not approve the termination or Pruitt or the hiring of Juracek.

Juracek had some terrible history that made her a questionable candidate for the IPA Director position.  She was retired from ComEd and was closely associated with the “reverse auction” of 2006 where no other energy companies were involved besides ComEd.  Quinn claimed no one other than Juracek was qualified for the job.  With Quinn, as former head of the Citizens Utility Board, it was a shock that he would hire anyone from ComEd for this position.  Quinn and Cub were inconstant battles with ComEd.  This company seemed like the last place Quinn would hire for the director position at the Illinois Power Agency.   Juracek assured the public she would sell all her stock in Exelon, ComEd’s parent company, as director of the Illinois Power Agency to avoid a conflict of interest.

Juracek is never approved as Director of the Illinois Power Agency by the state legislature.  Finally in the October  2012 Juracek resigns.  No other director has been named to the Illinois Power Agency.  Mark Pruitt went on to advise Rahm Emmanuel and the City of Chicago how to purchase power more economically than ComEd with the high priced power purchase agreements made by the Illinois Power Agency.

The Colin Powell Doctrine applies to Governor Quinn and the Illinois Power Agency.  You broke it.  You fix it.  After learning more about the Illinois Power Agency, it is not surprising the agency supports the Rock Island Clean Line.  Arlene Juracek looks to be a politically handpicked acting director by Governor Quinn, who supports the Rock Island Clean Line.  Governor Quinn’s political influence in the IPA is well documented with the termination of Mark Pruitt.  Also, Pruitts management of the office of is questionable at best.  It is also questionable if the Governor’s Office has given the IPA the proper support to maintain the office.  Just this basic overview of the IPA shows a broken agency in massive need of reform. Sadly, this agency is not even 6 years in existence. 
Before a massive amount of “clean” renewable energy is introduced to the state from the Rock Island Clean Line, this mess with the IPA needs to be straightened out and cleaned up.  Perhaps the Illinois Power Agency needs to be abolished as political influence in the pay-to-play state of Illinois has brought us an agency without a director and only a financial officer.

Wow this agency is a mess.  I still hardly know where to begin to go into detail about how broken the Illinois Power Agency is or where it needs to be fixed.  There are two internal reports or audits made by the state that are critical of the office.  There is a report made by the IPA that reads like Wind Association propaganda, contradictory articles in reputable publications, 20 year power purchasing agreements that have just now gone into effect and the public is moving to cheaper alternative energy suppliers.  

 


The big question is who will be stuck paying for the 20 year power purchase agreements now that consumers are moving away from ComEd.  The public is speaking clearly.  They are moving away from high priced energy renewable energy to cheaper Alternative Energy Retail Suppliers.   All this time, the Citizen’s Utility Board (Quinn’s creation) supports the IPA!  

…and then there is RICL.  The IPA’s support for RICL is very ambiguously written and well hedged.  Juracek looks to have chosen here words very carefully and stayed very superficial with her support.  Should Illinois residents respect the support of the IPA for RICL or is this more politic as as usual in Illinois?

...where to begin? 

Perhaps the question should be when is Governor Quinn going to fix or abolish the Illinois Power Agency?

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