Price hike due to lack of energy supply comes alongside rocky transition to renewable power. “We cannot allow these power-hungry facilities to drive up costs for consumers who are already struggling to pay their bills,” says Gina Ramirez.
Photo: Hans Isaacson/Unsplash
by Andrew Adams
Capitol News Illinois
Extreme weather events are “likely” to cause shortfalls in energy reserves.
“We’re trying to keep prices low while combating climate change,” Jen Walling, head of the Illinois Environmental Council, told Capitol News Illinois. The IEC has been heavily involved in advocating for parts of the bill. In December, federal officials at the North American Electric Reliability Corporation — the nonprofit oversight agency for grid operators — designated the grid for central and southern Illinois as “high risk” for not having enough electricity to meet demand on hot days in the summer and cold days in the winter over the next five years. The grid that stretches from central Canada to the Mississippi river delta is the only power grid in the nation to have that designation, with much of its risk stemming from power plants closing. Illinois’ northern grid, which includes parts of 13 states and Washington, D.C. from Illinois to the east coast, faces “elevated” risk. That means extreme weather events are “likely” to cause shortfalls in energy reserves. The increased demand stems from data centers, increasing adoption of electric heat pumps and the rise of electric vehicles, according to NERC. David Braun, an executive at the energy technology company Intelligent Generation, said demand on the electric grid is the highest it’s been in the 30 years he’s worked in the energy sector. “We haven’t seen this in a long time,” Braun told Capitol News Illinois. “So, it’s catching planners by surprise, and it takes a long time to build power plants.”
Shrinking supply
That demand, according to NERC’s December report, is coming at the same time supply is going down — increasing pressure on the grid.Downstate Illinois’ grid might run out of energy reserves as soon as 2034...
Around the country, fossil fuel plants are closing as states move to limit their greenhouse gas emissions. While Illinois exports energy overall, plant closures elsewhere in the country can affect the price of energy, raising prices for Illinoisans. Grid operators nationwide, meanwhile, face yearslong red tape-induced backlogs on new renewables. Downstate Illinois’ grid might run out of energy reserves as soon as 2034, per NERC. Northern Illinois’ grid has more reserves but will face decreased levels throughout the next decade. If nothing is done to either reduce demand or increase supply, this means prices could continue to increase or blackouts could become necessary to stabilize the grid. To address these issues, lawmakers in Springfield are weighing sweeping energy legislation. The bill’s proponents say its provisions to incentivize new developments are the only way to prevent serious problems without walking back the state’s climate goals. Republican critics contend that the main reason for the legislation is to fix problems with the 2021 Climate and Equitable Jobs Act. Gov. JB Pritzker’s marquee climate policy, they say, is a major cause of the supply shortfalls because it requires fossil fuel-burning power plants to shut down by 2045. Others say provisions aimed at reducing data centers’ energy demands on the grid will hurt businesses in the state. Lawmakers and advocacy groups are currently reviewing draft language for the bill, which has not been made public. Even with complex procedural maneuvering to avoid long-passed deadlines, lawmakers face a tight turnaround to reach an agreement before the legislative session ends. The process could have become more complicated, some suggest, after the U.S. House passed a wide-ranging bill early Thursday that could drastically alter federal energy incentives if it becomes law.
Higher prices
Bills for customers of private electric utilities — most notably ComEd and Ameren — will go up in June. The increase was determined at two recent capacity auctions, which are how grid operators set energy prices for years into the future. High prices at these auctions can indicate low supply relative to demand.Consumer watchdogs at CUB estimate that the policy cut the increase for ComEd customers by about 17%.
PJM Interconnection, the grid operator for northern Illinois, saw a roughly eight-fold jump in its most recent capacity auction compared to the year prior. Downstate’s energy grid, Midcontinent Independent System Operator, or MISO, saw more than a 20-fold year-over-year price jump at its capacity auction in April. Representatives of the state’s two largest electric utilities stressed that these increases occurred beyond their purview. “ComEd does not profit from this increase, was not part of the auction, does not supply capacity, and does not retain any proceeds of the capacity charge payments,” ComEd spokesperson John Schoen said in a statement. An Ameren spokesperson echoed the sentiment, noting that the state requires utilities to pass this type of cost to customers “dollar-for-dollar, without markup.” The price is lower for ComEd customers than it could have been due to a provision in CEJA, which credits customers when energy generated by nuclear power plants is above a certain level. Consumer watchdogs at CUB estimate that the policy cut the increase for ComEd customers by about 17%. Customers in the Ameren area, which has much less nuclear power, are not eligible for the credit.
Other energy providers
While millions of Illinoisans get their power from ComEd and Ameren, some get their electricity through other means, including alternate retail suppliers, municipal utilities and electric cooperatives. Many of these energy suppliers are not affected directly by the capacity auctions. Municipal customers in towns like Naperville, St. Charles and Rantoul are largely insulated from the spike, according to Staci Wilson, the head of government affairs for the Illinois Municipal Electric Agency. The IMEA is a private entity that provides electricity to 32 of the 42 municipal electric systems in the state. IMEA sometimes participates in capacity auctions. But Wilson said the agency tends to secure energy through other means, such as having ownership stakes directly in power plants. “IMEA member municipalities have rates that are currently lower than private utilities and our ownership model continues to gain value as we transition to a carbon-free future in an affordable and reliable manner,” Wilson said. But other municipal utility officials, including those at Springfield’s City Water, Light and Power, are less optimistic about future prices. “Regulations are forcing plant retirement a little too soon,” CWLP spokesperson Amber Sabin said. “And the grid operators that are here, they have resources that they can't connect to the grid. They're waiting, or they don't get financing or ever developed. They have supply chain issues, workforce issues, right? There's a cost to all of that.” CWLP didn’t participate in the recent MISO auction, although it could have. The utility shut down several coal-fired generators over the past five years but continues to operate one coal-fired power plant on the southeast side of Springfield. That plant will need to shut down permanently at some point in the next two decades under state law. “In the future, all the costs are going to go up,” Sabin said. “We do expect that capacity auction prices will affect our customers.” That echoes what some state officials expect as well. Sen. Bill Cunningham, D-Chicago, has worked on energy legislation for years and said that there is “nothing we can do” to reduce prices for this summer as capacity auctions have concluded, but he said lawmakers should do what they can to address the root causes of the spike. “We think this is going to be the new normal,” Cunningham said.Legislative moves
Negotiations over energy reforms in Springfield have included lawmakers, the governor’s office, and interest groups including environmentalists, organized labor and business associations. The process is sparking heated debate. Over the past week, a draft of legislation began circulating among lawmakers and advocates, many of whom discussed portions of the bill with Capitol News Illinois. “I don’t think, by any stretch, you’ll see a bill the size and scope that CEJA was, that we passed four years ago — certainly won’t see that,” Cunningham, who was involved in the negotiations, said. Potential provisions deal with incentives for renewable power, energy efficiency regulations, nuclear power, data centers and more.We cannot allow these power-hungry facilities to drive up costs for consumers who are already struggling to pay their bills.
Environmental groups clashed with business and labor this week over a provision meant to lower the energy burden brought by data centers. That proposal would require large energy consumers to build their own energy generation through renewable sources like wind or solar power or pay the state to do so. The pitch sparked fierce pushback from business and labor groups, which sent a collective letter to Pritzker, urging him to oppose the specific provision. The letter was co-signed by groups including the AFL-CIO, Climate Jobs Illinois, Illinois Manufacturers’ Association and Constellation Energy — the last of which operates all the state’s commercial nuclear power plants. The proposal is being pushed by environmentalists, who say they want more accountability from data centers and other large consumers. “We cannot allow these power-hungry facilities to drive up costs for consumers who are already struggling to pay their bills,” Gina Ramirez, director of Midwest environmental health at the National Resources Defense Council, said at a Wednesday rally. Other issues are less controversial, largely because they’ve been negotiated for months. Cunningham, a prominent player in the passage of CEJA, has his own proposal in the current draft: incentives for the energy storage industry. The current draft of that provision closely parallels recommendations made by the Illinois Commerce Commission. That agency was directed by a bill passed earlier this year to study how to handle energy storage projects. While legislative Republicans have largely been shut out of negotiations over the bill, some of their ideas are being considered. Sen. Sue Rezin, R-Morris, put out a pitch to ease the pressure on electric demand earlier this year by expanding nuclear energy. She was the architect of a bill two years ago that eased the state’s moratorium on new nuclear power plants, lifting it for next-generation, small generators. This year, Rezin introduced a bill that would eliminate the remaining state restrictions on new nuclear power plants. Language similar to Rezin’s was included in draft legislation circulated this week. Rezin, who leads several energy-related groups of lawmakers as part of her involvement at the National Conference of State Legislatures, said all states are facing similar issues around electricity. “All energy buildout will take years because of the regulatory process,” Rezin said. “That's why it's important now. The state of Illinois needs to send positive messages to companies that are looking to invest in technology — whether it's nuclear or any other kind of energy producing plant — that we are open for business.”
The feds’ ‘big, beautiful bill’
Republicans in the U.S. House of Representatives on Thursday morning passed a bill containing many domestic policy priorities of President Donald Trump that many fear could upend state energy policy. The bill contains provisions rolling back several clean energy tax incentives. Several key solar company stock prices fell sharply Thursday morning in response, including NextEra Energy, FirstSolar and Enphase Energy among others.
Photo: American Public Power Association/Upsplash
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