2020 Lane Reports

The Debate Over Illinois’ Renewable Energy Future

The Lane Report, February 2020
Monday, February 3, 2020 10:00 am
by Alexander Konetzki

The Debate Over Illinois’ Renewable Energy Future

By Alexander Konetzki

A new legislative session is upon us in Illinois, and the development of renewable energy is on the minds of Illinois legislators and Governor J.B. Pritzker. In 2019, State Representative Ann Williams of Chicago and State Senator Cristina Castro of Elgin introduced the Clean Energy Jobs Act (CEJA), which would move Illinois to 100% renewable energy by 2050 and make the state’s power sector carbon-free by 2030. CEJA did not make it out of committee in 2019. But in late-January 2020, CEJA’s co-sponsors revived their push for its adoption, and the Governor declared his intent to pass legislation in the new session to accelerate Illinois’ adoption of renewable energy.

At present, only 7% of all electricity produced in Illinois comes from renewable sources, but that amount has tripled since 2010, and Illinois now has the 6th highest renewable energy production capacity among U.S. states. Almost all the renewable energy now produced in Illinois comes from windmills. But most of that wind energy goes to out-of-state customers. Therefore, almost all electricity now consumed by Illinois residents comes from nuclear, coal, and natural gas--all non-renewable sources. Illinois remains a significant consumer and exporter of coal, which when burned produces more CO2 than any other fossil fuel. In addition, Illinois consumes the 6th highest amount of petroleum in the U.S., predominantly for motor vehicles and other forms of transportation. And only 15,000 of the approximately 4.5 million private commercial motor vehicles registered in Illinois are electric. There is plenty of room for improvement. 

With advancements in renewable energy technology and the increasing availability of electric vehicles at a reasonable price point, Illinois now has the opportunity to significantly increase the amount of renewable energy it produces and consumes and the amount of electric vehicles on its roads. These are major goals of CEJA, which is also intended to encourage energy conservation, subsidize solar energy installations, and help Illinois coal workers displaced by the state’s transition to renewable energy.

CEJA’s proponents cite two main reasons other than global warming for supporting the legislation. The first is CEJA’s anticipated major economic impact. An analysis of CEJA published in October 2019 found that the legislation will lead to $39 billion of direct private investment into Illinois by 2030, with a resulting net gain of local and state income tax, sales tax, and property tax revenue of $6 billion over the next 20 years. The second reason cited by CEJA’s proponents is that CEJA will shield Illinois from federal regulations they consider harmful to both the development of renewable energy and to Illinois residents’ pocketbooks. 

New rules issued in December 2019 by the Federal Energy Regulatory Commission (FERC) change the way that northern Illinois residents pay for future energy capacity. ComEd, which provides electricity to most northern Illinois residents, is a member of PJM Interconnection, an electric power transmission system operator subject to FERC regulations and set up to ensure that all or part of 13 states east of the Mississippi River, including Illinois, have enough energy capacity to meet peak demand for electrical power at any given time. FERC maintains that the new rules, which establish minimum prices at which renewable and non-renewable energy sources can be sold, are intended merely to level the playing field among different energy sources by offsetting state subsidies that lower the cost of renewable energy. CEJA’s proponents counter that the new rules’ true purpose is to quietly bail out the coal industry while making it cost-prohibitive to decarbonize the energy sector by switching to renewables. The new rules will also, according to CEJA’s proponents, increase the electricity bills of northern Illinois residents by a total of $864 million annually, with the average household electricity bill increasing by $60 annually. To negate the effect of the new FERC rules, CEJA would delegate the authority to manage Illinois’ future energy capacity to the Illinois Power Agency, such that Illinois would no longer be subject to FERC’s jurisdiction with respect to pricing. 

CEJA faces opposition from the business community, including the Illinois Chamber of Commerce, which says that it’s too early to tell whether the new FERC rules will raise electricity costs for northern Illinois residents. In addition, there is a legitimate question as to whether Illinois can ever be powered reliably and at a price affordable to consumers by wind and solar energy exclusively--even at the state’s current level of electricity consumption. This question would become only more important if CEJA succeeded in substantially increasing the number of electric vehicles on Illinois roads.

As the debate over CEJA unfolds, we will be watching with great interest. The legislation certainly has transformational potential both within and beyond Illinois. The parties to the debate seem to agree that increasing renewable energy production and consumption in Illinois is desirable. The question is how much to do so and how quickly, which the parties will answer differently and for different reasons. But the parties can find common ground in the great economic potential of increased renewable energy production and consumption in Illinois. This is true regardless of whether the energy produced in Illinois ultimately becomes 100% renewable or a smaller percentage. That is a reason for everyone to like CEJA and a good starting point for negotiations.

Should renewable energy legislation be signed into law this session, we stand ready to offer guidance to anyone seeking to enter, expand within, invest in, or procure from Illinois’ renewable energy market, which could be primed for decades of growth. We are able to assist at all stages of market participation, including but not limited to strategic business plan development, entity formation and structuring, equity and debt financing, acquisition of public lands, environmental compliance and due diligence, tax credit financing, mergers and acquisitions, intellectual property, patents, licensing agreements, and international transactions.

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Alexander Konetzki is an Associate Attorney with The Law Offices of Marc J. Lane. He earned his B.A., Phi Beta Kappa, from the University of Illinois at Chicago; his M.Phil from the University of Cambridge; and his J.D. from De Paul University College of Law.

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