Monday, April 8, 2013

Fixing the Illinois Power Agency, Renewable Portfolio Standard, & SB103



It’s officially spring.  It’s the time of year where lobbyist hearts turn t their love with politicians and “help” purposing bills.  There are a couple interesting bills being that have been written and are in the works in Springfield this spring worthy of watching opposing and supporting, one is SB103.


As written he before, the Illinois Power Agency is clearly a mess.  The Governor blames the former director, Mark Pruitt, but everyone else blames Governor Quinn for creating the mess.  The Illinois Power Agency was never given an adequate budget to create a staff.  Funds have been raided because Illinois is broke.  The Governor and wind lobbyists pushed for 20 year power purchasing agreements at high prices. 


Through deregulation, consumers have moved away from ComEd and Ameren’s high priced Quinn;’s wind energy.  With “aggregation” cities have moved away from ComEd to cheaper energy.  Now the Illinois Power Agency is stuck with these 20 year contracts and there isn’t enough consumers to buy this high priced wind energy.  The wind industry claimed they needed 20 year power purchase agreements and the politicians gave it to them.  Then the wind industry claimed the 20 year power purchasing agreements were hurting them.  They didn’t realize the public still had a choice and were moving away from high priced wind energy through aggregation.


The Illinois Power Agency is clearly broken.  The Renewable Portfolio Standards is also broken.  Both need fixing, but the last thing Illinois ratepayers need is having those politicians (friends of Governor Quinn) who made a mess of the IPA and RPS attempt the fix. 


Any “fix” proposed supported by the wind industry will most likely mean those ratepayers who are purchasing their energy through the Alternate Retail Energy Suppliers will be forced to buy the overpriced wind energy through the Illinois Power Agency.  Senate Bill 103 (SB103) has been introduced and appears to do just that and force consumers to purchase high priced wind energy through the Illinois Power Agency. 


This makes one ask “Is SB103 about actually fixing the RPS and IPA or is this about fixing the screw up created by greed in the wind industry and their politicians and correct the screw up by limiting consumers choice and economically priced energy. 


Steven Daniels at Crain’s Chicago Business just wrote a good article about this situation.  He points out there is about to be a huge fund under the watch of the IPA and the state is going to be tempted to raid this fund.  In Illinois, we know Springfield is going to be tempted to raid this fund.  It was done once before by Governor Quinn under IPA director Mark Pruitt.


 It’s too bad the article didn’t explain who is paying money into the fund…most likely Illinois ratepayers, why is the fund growing….most likely because the ComEd customer base is shrinking.  Funds are quite possibly going into the fund while cities are still buying energy from ComEd and Ameren, but as cities move away from ComEd and Ameren, money going out of the fund will decrease. 


So there is a perceived fear the Governor will want to raid this fund and fund the state’s deficit spending.  This also make a person ask the obvious question, why isn’t the Illinois Citizen’s Utility Board speaking out about this and demanding the money go back to the ratepayers. 


It’s a fair question and deserves an answer.  Why isn’t the CUB supporting the Illinois ratepayers and opposing Governor Quinn.  If there is truly a surplus at the IPA, it belongs to the Illinois ratepayers and not Springfield.


Daniels’ article in Crain’s Chicago Business does answer some questions that have gone unanswered so far, such as where is Exelon (ComEd’s) position;
“ComEd doesn't believe there's a problem that requires a fix,” the utility says in a statement. “Since the (renewable-energy law) was enacted, Illinois has seen a major buildout of wind energy.”
Exelon executives, who oppose SB 103, have complained that unneeded power generated by wind farms in Illinois and elsewhere is lowering wholesale electricity prices and pinching profit margins at the company's U.S.-leading fleet of nuclear power plants.

Exelon executives are likely getting a good laugh out of the wind industry’s attempts to corner the “clean” energy market with Governor Quinn and the 20 year Power Purchase Agreements only to have consumers abandon the IPA and wind industry through aggregation.  While I would agree with ComEd that SB103 is not a proper fix to the problem, there is clearly a problem here.  ComEd is possibly playing politics with the wind lobby by refusing to acknowledge there is a problem here.  After Exelon being kicked out of the American Wind Energy Assocciation last fall for discussing the problem of negative pricing, it appears games between Exelon and the wind lobby continue.

 This article by Daniels is also the first I’ve found where anyone (Exelon) refers to the problem wind energy is creating by affecting the wholesale price (Localized Marginal Price) with excess supply that isn’t directly affecting the wind industry because they are not selling their energy at the wholesale (LMP) price they are depressing.  In any other market under another administration in Washington this would be viewed as predatory pricing and being investigated by the Department of Justice. 


Daniels also acknowledges the wind industry and their lobby have influence in correcting the problems created by their greed in the creation of the IPA and RPS.    
No bill like that has been introduced in Springfield, though. Instead, broader legislation to overhaul the state's renewable-energy law is pitting Illinois' wind power industry against Exelon Corp., the state's largest power generator, and its politically potent utility subsidiary ComEd.

The wind power lobby, allied with environmentalists, wants the law changed to eliminate the fund entirely. Under the bill they're pushing, SB 103, all customers, whether buying from a utility or from alternative suppliers, would pay an extra charge on their electric bills to cover renewable-power purchases. The IPA then would decide what mix of clean energy to buy, including—at least potentially—more wind power.

I appreciate Crain’s Chicago Business and Daniels candor to show SB103 is the “fix” being lobbied by the wind industry.  SB103 is not the best for the consumer and the energy industry. 

Would it hurt the Illinois Citizen’s Utility Board to oppose Governor Quinn and cooperate with ComEd on this issue?

Again, with the Illinois Power Agency such a broken agency and the Renewable Portfolio Standard such a failure in Illinois, now is not the time to introduce more wind energy into Illinois with projects like Clean Line Energy’s Rock Island Clean Line and Grain Belt Express, or the Three River’s project.  The Illinois Power Agency has a new director with Antony Star who came from the Illinois Commerce Commission.  Let’s give him a chance settle in to the new position and propose his own plan to clean up the agency, find his own solution, and fix the RPS before the wind energy lobby pushes through their “fix” with SB103.


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