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A mighty wind problem  

Credit:  By Steve Daniels April 08, 2013 | Crain's Chicago Business | www.chicagobusiness.com ~~

Here’s a new indignity for cash-strapped Illinois: A state fund to promote clean energy is projected to balloon to about $150 million from $15 million in the next 18 months, but unanticipated glitches in the law that established it could make it next to impossible to spend much of that money.

The coming infusion is due to the explosive growth of retail electricity suppliers competing with utilities like Commonwealth Edison Co. and Ameren Corp. (which still have a monopoly on distribution). Under a 2007 law, which mandates that a growing percentage of the electricity powering homes and businesses come from renewable sources, those retail suppliers must pay into that fund annually based on their sales.

But the Illinois Power Agency, which oversees the renewable-energy fund, may not be able to spend the money on new clean power, at least for the next few years. Ironically, that’s also a result of the increasing market share of the retail suppliers that contracted with the city of Chicago and hundreds of other municipalities to supply cheap power to their households and small businesses.

Under state law, the IPA buys power on behalf of utilities. With the utilities’ customer base shrinking because of competition, the IPA already has contracted to buy more than enough electricity for customers who are staying with ComEd, for example, and may not need to procure more power next year or the year after.

Advocates for renewable energy worry that a $150 million fund just sitting around will prove tempting for state officials to grab for other purposes, given Illinois’ fiscal distress. “We think this is just a broken system,” says Sarah Wochos, senior policy advocate at the Chicago-based Environmental Law and Policy Center. “Let’s take the temptation away.”

Suppliers are projected to add $40 million to the fund’s $15 million next fall and about $91 million more in 2014, according to Chicago-based energy consultant Mark Pruitt, a former IPA director. Assuming suppliers continue to dominate market share, expect infusions of more than $90 million annually thereafter, he says.

The IPA is calling on Springfield to address the problem. “If we’re going to spend the money, the IPA has raised (with legislative staff and interested parties) that it needs the tools to spend the funds the way the General Assembly intended,” says Michael Strong, the IPA’s chief legal counsel.

Among other things that would help: explicitly allowing the agency to tap the fund even when it isn’t conducting a power procurement and keeping the money in escrow to prevent it from being used for other purposes.

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.

“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.

SB 103 cleared the state Senate Energy Committee last month. But even committee members who voted for it expressed reservations, and its prospects are uncertain. Chances are dimmer still in the House, where Speaker Michael Madigan is sour on long-term power-purchase contracts for new wind farms.

In the polarized realm of clean-energy politics in Illinois, even the IPA’s modest suggestions to free up the burgeoning clean-energy fund could run into the same stalemate that surrounds SB 103 if there’s a possibility that money could be funneled to new wind farms.

Source:  By Steve Daniels April 08, 2013 | Crain's Chicago Business | www.chicagobusiness.com

This article is the work of the source indicated. Any opinions expressed in it are not necessarily those of National Wind Watch.

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