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Coal Makes Play To Save Itself While Business Groups Throw Cold Water On Energy Deal

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Prairie State Generating Company
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36 municipalities and 20 electric co-ops in Illinois have power purchasing agreements with Prairie State and financed its construction with bonds they’ll have to pay off whether or not the plant is forced to close in 2035. While some bonds will be paid off that year, many run through 2047.

The General Assembly is back in Springfield on Tuesday and Wednesday this week to take up business left undone when lawmakers adjourned on June 1 — early in the morning for the House and in the evening for the Senate, which continued its business after the sun rose the next morning — chiefly a major energy deal that aims to put Illinois on a path to 100% renewable energy by 2050.

In the two weeks since lawmakers left Springfield without a vote on an energy deal, two coal-fired power plants have used the time off to gin up opposition to a deal that would force them to close by 2035 in the name of decarbonization — the same timeline President Joe Biden has outlined to close all coal-fired plants in the U.S. Natural gas plants would be forced to close by 2045. Over the weekend, the Illinois Clean Jobs Coalition, a major environmental alliance, endorsed the most recent version of the deal from Gov. JB Pritzker’s office.

Many older coal-fired power plants in Illinois have either shut down in recent years or are planning to shutter in the near future because they’re at the end of their natural lives. But that’s not the case for City Water, Light, and Power’s Dallman 4 plant in Springfield and Prairie State Energy Campus in Marissa in the Metro East, both of which have plans to run for years after 2035.

CWLP and Prairie State have been busy since June 1, and the fruits of those efforts have materialized in letters from more than four dozen lawmakers, 26 local trade union leaders and municipalities on behalf of the plants. But it’s unclear if the 52 lawmakers — overwhelmingly GOP members save for four Democrats in the Metro East and Central Illinois who co-signed — withholding support for the legislation will make a difference.

However, a coalition of influential business groups on Monday, as well as a well-known consumer protection non-profit, both voiced their opposition to the energy deal’s framework a day ahead of the planned vote in the Senate. The business groups characterized the energy deal as the “largest rate hike on consumers and businesses in history,” while Illinois PIRG (Public Research Interest Group) alleged the deal could result in major windfalls to energy giants Commonwealth Edison and Ameren.

The utilities, as well as Pritzker, pushed back on those claims Monday. But without final legislation published as of Monday night, it’s unclear whether opposition from the business groups especially will pick off enough votes to tank the deal, which needs three-fifths majorities in each legislative chamber now that the May 31st deadline for spring session’s adjournment has passed.

Business groups give thumbs down

In a Monday letter to Pritzker from a coalition of business groups like the Illinois Manufacturers’ Association, Illinois Retail Merchants Association, Illinois Chamber of Commerce and 18 other groups Monday, the coalition lambasted the process as not transparent and grumbled they weren’t consulted enough on negotiations.

“Lobbyists for the environmental community and many others appear to have had unfettered access in writing a bill that imposes massive costs on others,” the business groups wrote in their letter.

State Rep. Ann Williams (D-Chicago), however, dismissed that idea, saying the process of crafting the energy deal was different than any similar process in the past — but not because environmental lobbyists were holding all the negotiating power.

Rather, she said for the first time, utilities didn’t write the legislation. Pritzker has made the same claim, and told NPR Illinois earlier this month that it was a “misread entirely” to say Exelon had the upper hand in negotiations at the end of the day.

Exelon subsidiary ComEd has been the entry point for a sweeping federal investigation with former House Speaker Mike Madigan at its center. In a $200 million deferred prosecution agreement ComEd signed last summer, the once-powerful and longest-serving speaker in U.S. history was named “Public Official A” in what the feds outlined as a years-long bribery scheme to curry favor with the former speaker by lining up jobs and contracts for Madigan allies.

The former speaker has not been charged, but as the investigation has gotten closer to him in the last two years, ComEd and its parent company Exelon have been viewed with suspicion.

“I think the utilities are used to getting their way in Springfield,” Williams said.

She compared the current process — which began with a legislative working group, like other major bills in Springfield — to that of the Future Energy Jobs Act in 2016.

“With FEJA in 2016, the bill was literally negotiated in the utilities’ conference room,” Williams said. “That’s a vast change from what we’ve seen this year.”

The groups claimed that since they hadn’t been provided justification for “every fee, mandate and regulation” in the draft legislation, the coalition believes the legislation will “keep sending higher bills every step of the way.”

“In a nutshell, this legislation will be a credit card that keeps spending money without any accountability. Period,” the groups wrote.

But Pritzker’s office and others involved in negotiations pushed back on that notion. Pritzker spokeswoman Jordan Abudayyeh pointed to more than 30 energy working group meetings the business community was involved in and concessions made specifically on behalf of IMA and IRMA.

“The Governor also heard loud and clear that the business community did not want a new ratemaking structure to compromise reliability,” Abudayyeh said. “That’s why, under the new system, reliability will be a performance metric.”

11th hour objections from coal?

Conversation around energy and climate negotiations were for months dominated by nuclear giant Exelon, which had demanded a ratepayer subsidy worth billions more than the nearly $700 million the company is set to get in a deal described by negotiators as “nearly done.”

But coal-fired plants used the two-week pause between session to their advantage — or at least they’ve tried. While negotiators on the energy package claim coal did not mount much opposition beyond a potential carbon tax or fee that was quickly scuttled anyway, Prairie State spokeswoman Alyssa Harre insists the company has been advocating for itself “for well over two years.”

Asked about how coal-fired power plants and their allies were able to halt the energy deal the night of May 31st, Pritzker didn’t take aim at the plants themselves, but rather as members of the General Assembly.

“Well, first of all it was not the coal-fired plants that expressed themselves,” Pritzker said. “There were members that did, so that’s on them.”

Harre disagreed with the characterization that Prairie State’s and CWLP’s recent public campaign was an “eleventh hour” play, and pointed to support from Prairie State’s employees, the unions that represent its workers, and the Illinois municipalities that own its bonds, ever since the first version of the so-called Clean Energy Jobs Act was introduced in early 2019.

“We’ve been doing letter campaigns, hosting tours, we’ve done lobby days trying to get the message out about who we are and how we can serve as a bridge to Illinois’ transition to a larger dependence on renewable energy,” Harre said Monday.

CWLP is the only coal-fired power plant in Illinois that’s owned and run by a single municipality. Prairie State, which opened in 2012, is backed by 180 communities and energy co-ops across the Midwest, including 36 municipalities and 20 electric co-ops in Illinois.

Both say that as municipally owned, not-for-profit generating companies, they should be allowed to remain open longer than the 2035 closure date outlined for all coal-fired power plants in draft legislation.

But environmental groups say allowing a carve-out for CWLP and Prairie State would not be in line with climate goals shared by many, including Pritzker. The governor in recent weeks said he’s not going to exempt those two plants from closure and points out that Prairie State is Illinois’ biggest polluter.

“The Senate President, the Speaker of the House and I all have said and have stood up for decarbonization,” Pritzker told NPR Illinois earlier this month. “[The municipally owned coal-fired plants] can try whatever they like, I suppose, but…I think that's the best deal that we could get is the one that is being put on the table.”

In substantially similar letters sent to Pritzker late last week and over the weekend to combat what they characterized as “considerable misinformation” about CWLP and Prairie State, local trade unions and the mostly Republican group of lawmakers made arguments about the “devastating consequences” of shuttering the two plants early.

“Thousands of employees will lose their jobs, stifling economic activity in areas of the state where jobs can often be hard to come by,” both letters said.

During a Springfield news conference earlier this month, Rep. Charlie Meier of (R-Okawville), who says he can see Prairie State Energy Campus from his farm, says the people he represents have no reason to trust the plant’s early closure is in everyone’s best interest.

“I don't know why anybody in my district should be told that the state will help them adjust to closing our jobs down our families, our schools and our small mom-and-pop businesses,” Meier said.

Those vying to keep Prairie State and CWLP open beyond 2035 also point out the economic ripple effect closing the plants would have — especially Prairie State. The letter from local union leaders claimed the plant generates $785 million “in economic investment each year,” though it did not clarify the scope of those investments, which includes $47 million annually for local taxing districts — including schools.

Prairie State contracts with more than 1,000 union workers and directly employs approximately 650 workers, Harre said, including 200 in the power plant itself and 350 in an adjacent mine, also owned by Prairie State. The company touts its “mine-mouth” structure as more efficient than coal-fired power plants that get its coal shipped in on trucks or freight trains.

“That doesn’t just save on transportation costs — it also dramatically reduces the emissions transportation would produce,” Prairie State’s website boasts.

The letters to Pritzker also make claims about CWLP and Prairie State’s carbon-capture technology, saying the plants are “leading the way forward” in that area with partnerships with the University of Illinois and the U.S. Department of Energy “to study ways to reduce carbon emissions and create future job opportunities in Illinois.”

Already, CWLP is transitioning to cleaner energy sources, including the retirement of two plants and the planned retirement of a third by the fall of 2021. These retirements represent a 2 million ton per year CO2 reduction. Indeed, CWLP’s early action to reduce carbon is more aggressive than federal guidelines, and it is estimated that CWLP’s generating facilities will meet the Biden Administration’s goal of reducing greenhouse gas emissions by at least 50 percent of 2005 levels by 2030 – seven years ahead of schedule.

“If plants like Prairie State and CWLP are prematurely shuttered, Illinois will need to import power from other states – likely from less efficient coal plants,” the letters say. “This would transform Illinois into a net importer of dirtier power and a net exporter of jobs.”

But the idea that electricity from out-of-state coal plants would replace CWLP and Prairie State’s capacity is counter to the trend of the last decade, said Dr. Thomas Vitolo, a senior associate with Synapse Energy, an energy research firm in Cambridge, Massachusetts. Synapse was commissioned by the Sierra Club in 2017 to complete a study of CWLP, which found the plant runs uneconomically.

“Coal fired power plants across the region, the ones that are still operating, are being used less and less every year,” he said. Plus, there’s nothing stopping CWLP or Prairie State from signing purchasing agreements for cleaner, renewable sources.

Communities on the hook

The 180 communities and energy co-ops that helped finance Prairie State in the 2000s — including 36 municipalities and 20 electric co-ops in Illinois — are on the hook for paying those bonds regardless of whether Prairie State closes early or not.

Harre said the majority of those bond-holding communities will be paying off the bonds until 2047, though some have earlier end dates to their debt service, with the soonest in 2035.

Negotiators say there were preliminary deals made on helping the invested communities and co-ops with the cost of energy after Prairie State shutters, as those towns are also obligated to buy their power from Prairie State. But no one involved in energy discussions has said there was any talk of helping towns with their leftover bond payments.

Pritzker told NPR Illinois earlier this month that a 2035 shutdown date was already a concession he and environmental groups made to the plants; initially the date they wanted was 2030, he said.

Harre pushed back on that.

“Prairie State and its owners do not view 2035 as a workable concession, if we want to call it a concession,” Harre said. “The majority of our owners have debt service ranging all the way out until 2047. And so anything before debt service for them would be considered a premature closure.”

The Illinois Municipal League has also gotten involved in the fight over closing coal-fired plants on behalf of the 36 municipalities that funded Prairie State through bonding and are entangled in power purchase agreements with the plant.

In a letter sent to Pritzker last week, IML President and Vandalia Mayor Ricky Gottman, said those 36 municipalities would be “left stranded with debt payments of $1.16 billion” if Prairie State was forced to close in 2035.

“These costs will be passed on to utility customers and taxpayers who will also be forced to pay for new, alternative energy sources, likely imported from neighboring states with less stringent environmental standards,” Gottman wrote.

The city of Rochelle, 23 miles south of Rockford, is also predicting dire consequences if Prairie State is forced to shutter. Rochelle’s bond obligation for Prairie State’s financing runs through 2042, and in a letter to Pritzker, Mayor John Bearrows warned of a “downward economic spiral” for the city.

“First, businesses will leave and not be replaced, driving residential rates even higher (due to our purchased power agreement),” Bearrows wrote. “Then the residents will leave, if they can, as their property values plummet. The City will lose its tax base and must cut services.”

The letter also characterized Rochelle’s power purchasing agreement with Prairie State as “shield” from the “volatility of the wholesale energy market.”

Bearrows warned replacing energy capacity currently provided by Prairie State would cost an additional $6.7 million annually — though that doesn’t factor in potential subsidies in a final energy deal for municipalities to purchase power from alternative sources or energy prices in the future — and $79 million in bond payments between 2035 and 2042.

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