September 1, 2016
Illinois

Planned wind-power line in doubt after court ruling

By Steve Daniels | Crain's Chicago Business | September 01, 2016 | www.chicagobusiness.com

A proposed high-voltage line meant to move power from Great Plains wind farms west of here into Chicago and points east has hit a major roadblock in the form of a court decision overturning state approval of it.

But the developers, along with the Illinois Commerce Commission, aren’t giving up. They promise to appeal the Illinois Appeals Court ruling to the Illinois Supreme Court.

The Appeals Court sided with landowners along the Rock Island Clean Line’s proposed path, as well as Commonwealth Edison. They joined in filing a suit, claiming the ICC was wrong under state law to grant the Texas-based firm proposing to construct the $1.8 billion, 500-mile line crossing most of Iowa and part of Illinois a “certificate of public convenience and necessity”—a designation conferred on necessary utility projects that usually involve acquisition of private land.

A three-judge panel in Ottawa, Ill., agreed unanimously, saying the developer didn’t qualify as a “utility” under state law and that it hadn’t met the test that the public would have beneficial use of the project.

The developer, Clean Line Energy Partners, says it thinks the court was wrong and will appeal.

The Rock Island project has been in the works for four years, grinding through the arduous regulatory process both at the federal level and in Illinois and Iowa. It’s different than most high-voltage lines in that its developers aren’t asking regulators to force captive ratepayers to pay higher electricity rates to finance the project. Instead, Rock Island is a “merchant” line and will be a success only if it signs up enough wind farm developers to pay it to move their output from low-population parts of the Dakotas, Minnesota, Kansas and Iowa to population centers like Chicago and the mid-Atlantic.

“It’s a terrible precedent, not just for us but any non-incumbent,” Hans Detweiler, Rock Island vice president of development, said in an interview.

He argued that the logic of the ruling is that only established utilities like ComEd and Ameren Illinois can win approval for transmission lines. That undermines competition, he said.

For its part, ComEd said its opposition to Rock Island doesn’t mean it’s anti-competition or against clean energy.

“While we support both competition and clean energy choices for our customers, in this case the court correctly found that the RICL failed to make the commitments necessary to ensure this project would serve Illinois consumers,” ComEd said in a statement.

ComEd has an economic interest in whether the line gets built, though. Its parent, Exelon, is the state’s largest power generator and has complained often about power pricing being suppressed due to competition from wind farms in Illinois and Iowa.

In his opinion stating the court’s Aug. 10 decision, Judge Tom Lytton wrote that the line failed to establish the statutory requirement that it serve the public. And he seemed to state that threshold could be met only by ensuring Illinois wind farms got some benefit from the project.

“The (federal) order approving the sale of excess capacity (from the line) does not mandate that an Illinois wind generator or other renewable energy generator participate in the bidding process,” he wrote. “But if it did, there is no way to know whether an Illinois energy generator will submit a successful bid. … Thus, it fails to satisfy the statute’s public use requirement.”

Detweiler said the ruling ignores that the project would lower electricity prices for Illinois consumers as more power was made available in the market. The line would be designed to move up to 4,000 megawatts, enough to power 1.4 million homes.

“Under the court’s ruling, until such time as Rock Island has an Illinois generator as a customer, any other contracts from any other customers would be worthless, and the clear economic benefits to Illinois electricity customers completely irrelevant,” he said. “The analogy for this decision would be a court saying that an oil pipeline traversing Illinois from Missouri to Indiana must have local Illinois oil producers as customers of the line or else there is no public benefit. It is absurd, and a clear restraint on interstate commerce.”

In a filing in a separate but related case involving a different proposed transmission line, the Illinois Commerce Commission wrote that it thought the ruling was “flawed” and that “any reliance (on it as a precedent) would be premature.”

Clean Line doesn’t rule out a federal appeal if the Illinois Supreme Court declines to take the case, Detweiler said.