Next Generation Energy Plan Doesn’t Fix Illinois’ Energy Policy

, policy analyst, Clean Energy | May 27, 2016, 4:47 pm EDT
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Illinois’ regular Legislative Session ends next Tuesday, May 31, and discussions on energy policy continue to heat up. In its current form, ComEd and Exelon’s Next Generation Energy Plan (NGEP) doesn’t do enough to protect consumers or the environment. We need comprehensive energy legislation that will serve as a powerful driver for expanding clean energy investments, curb carbon emissions, and keep electricity bills affordable for consumers. Here are several ways the NGEP needs to be strengthened.

Fix the existing renewable portfolio standard

The NGEP proposal discourages new large scale wind and solar projects, and does not fix the problems with the current RPS. A transition to a full non-bypassable charge is needed to create a single and stable pool of funds for renewable energy procurement. The ComEd/Exelon proposal purposefully delays full funding of the RPS by dragging out the period of time by which the non-bypassable charge would be implemented on all customer classes. This creates instability in the renewable industry and will delay investment in clean energy. Fixing the broken RPS is the only sure way to attract investment in solar and wind that we are losing to other states.

The proposal also doesn’t expand the RPS to 35%; it keeps it at the current 25% by 2025 target. The Clean Jobs Bill would expand the Renewable Portfolio Standard (RPS) to 35% by 2030, which UCS analysis shows is a cost-effective approach for achieving the goals of the Clean Power Plan and would bring new jobs and economic growth to Illinois.

Protect residential solar customers

For solar customers, the NGEP would end net metering for all new customers once a demand charge is implemented. Net metering is a vital policy that fairly credits customers with the electricity that they generate with their own distributed generation system. Recent studies show that net metering provides significant benefits for all ratepayers when all costs and benefits of solar are accounted for. The proposed mandatory demand charges for residential customers would institute a single monthly charge based on the customer’s highest electricity use in a short period of time. This would eliminate most of the benefits of net metering, and the shift would be complicated to consumers. Residential electricity bills could vary dramatically from month to month, and make it difficult for customers to manage their bills.

A new analysis estimates that eliminating net energy metering nationwide would cut cumulative distributed PV deployment by 20% in 2050, which is stimulating the development of alternative reform strategies that address concerns about distributed PV compensation.

Implementing a range of alternative utility-rate reforms could minimize solar value losses at increasing levels of distributed PV penetration.

Strengthen efficiency standards state-wide

In its NGEP legislation introduced on May 5th, ComEd and Exelon proposed nearly doubling energy efficiency programs, and committing $1 billion to low-income assistance programs. This is a strong and laudable new commitment because energy efficiency is one of the most cost effective ways to combat climate change, curb harmful emissions, create economic development and reduce energy costs for consumers.

However, Ameren Illinois, the state’s second largest investor owned utility, is not included in the increased energy efficiency target.  As a result, under the current bill, central and southern Illinois customers would not see the benefits of increased energy efficiency programs, bill savings, and job creation. Any final legislation must extend stronger energy efficiency targets to both ComEd and Ameren Illinois.

Capitalizing on federal renewable energy incentives

The end of the legislative session is not the only deadline that matters in Illinois’ clean energy debate. The recent 5-year extension of the federal production and investment tax credits (PTC and ITC) for wind and solar energy resources provides a golden opportunity for Illinois to accelerate renewable energy deployment.

Our recent analysis shows that strong growth in renewable energy and energy-efficient technologies, together with a national carbon emissions trading program, provide an affordable and achievable pathway to cut global warming emissions. This is consistent with studies from the National Renewable Energy Laboratory (NREL) and the Rhodium Group that show that the five-year extension of the federal PTC and ITC could result in record setting growth in the U.S. renewable energy industry while significantly reducing power plant carbon dioxide emissions.

But states and utilities must act quickly to take advantage of the credits, which begin to decline in value in 2017 (for wind) and 2020 (for solar), before phasing out by 2022. Further delays in negotiating a sensible comprehensive energy package could lead to Illinois missing out on the full benefits of these federal incentives.

Utilities in the Midwest are already moving forward with reaping the benefits of the tax extensions. For example, Xcel Energy filed their preferred plan for 2016-2030, which is currently pending before the Minnesota Public Utilities Commission. In the plan, Xcel proposes adding an additional 1,800 megawatts of wind by 2030, 800 of which is slated to be added by 2020. This is in addition to adding 1,400 megawatts of large solar to their system, including 400 megawatts by 2020. Procuring these resources in the near term will allow Xcel to capture the full tax benefits of the PTC, which will translate to even greater savings for their customer. Xcel expects that with the extension of the PTC and ITC the cost of their plan will be reduced by $202 million.

Now is the time to act

We have an important opportunity in the remaining days of session to work on a comprehensive energy policy that will invest in a sustainable energy future, create clean energy jobs, and reduce harmful air pollution. This energy policy must include a fixed RPS and increased energy efficiency for all customers.

Posted in: Energy

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