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At Least One Old Blagojevich Idea is Worth Saving

Charlie Wheeler headshot
WUIS/Illinois Issues

Ever the showman, Rod Blagojevich sought the spotlight with a basketful of grandiose proposals, half-baked notions and — unfortunately for the former governor — ill-conceived criminal schemes. 

A partial accounting might include:

  • All Kids, the ambitious 2005 plan to provide state-subsidized health insurance coverage for every child in Illinois. Now, rising health care costs have reduced the program to some kids, with tens of thousands more likely to be tossed off as part of Medicaid cuts needed to balance the FY 2013 budget.
  • Pre-school for All, a 2006 initiative that Blagojevich said would make Illinois the first state in the nation to offer early childhood education to all 3- and 4-year-olds. Currently, the program serves only about 77,000 preschoolers, and lawmakers are balking at Gov. Pat Quinn’s call to boost its funding by $20 million to $345 million.
  • Sell the Thompson Center in Chicago. Sell the state lottery. A pair of big-ticket, quick fixes for the state’s perennial fiscal woes, both of which were thwarted by technicalities such as the Illinois Constitution and federal law.
  • And perhaps most infamously, put up for sale the U.S. Senate seat that President Obama vacated for the White House, among the 17 corruption counts on which Blagojevich was convicted last year by a federal jury.

Yet buried within the sorry legacy left Illinois by Federal Prisoner 40892-424 is one initiative that has worked out very well, at least so far: a long-range plan for renewable energy standards to help wean the Prairie State away from fossil fuels and nuclear power in favor of wind, solar, bio-mass and other alternative energy sources.
Blagojevich unveiled the idea in his 2005 State of the State address, and the Illinois Commerce Commission later adopted the plan. Under the proposal’s Renewable Portfolio Standard, electric utilities and other power suppliers would provide 2 percent renewable energy to their Illinois customers in 2006 and increase that amount by 1 percentage point annually to hit 8 percent by 2012.

“The Renewable Portfolio Standard proposal will increase our use of Illinois’ untapped renewable natural resources like wind power,” Blagojevich said in a statement. “Boosting our use of clean, renewable, homegrown energy will put Illinois on a path toward greater energy security.”

The governor’s initiative won plaudits from the Environmental Law and Policy Center, a longtime champion of renewable energy, and the Citizens Utility Board, a consumer advocate. The state’s two largest public utilities, Commonwealth Edison and Ameren Corp., also signed on.

Two years later, Blagojevich approved bipartisan legislation that created the Illinois Power Agency to act as an intermediary for wholesale power sales to Illinois utilities. The new law called for gradual, annual increases in renewable energy resources from 2 percent of the retail power load in 2008 until 2025, when renewables must provide at least a quarter of the megawatt-hours supplied by electric utilities to retail customers. Under its terms, at least 75 percent of the renewable energy should be supplied by wind power.

So how has the law worked?

“So far, so good,” says Howard Learner, executive director of the Environmental Law and Policy Center. “We have been on track. ... The law has driven billions [of dollars] of rural economic development, created thousands of jobs and provided environmental quality benefits.”

Perhaps most significantly for consumers, the standards are saving money. 

“Renewable resources, in particular wind, have played a dramatic role in reducing electric energy prices in Illinois,” the power agency reported in a March analysis of the costs and benefits of the standards. Integrating renewable resources into the power grid has saved almost $177 million in electricity costs, according to the report.

The law’s emphasis on wind power has spurred impressive growth in the industry, from its start in 2003 with a modest 63-turbine Lee County wind farm with a 50-megawatt capacity — enough for the daily electric needs of some 12,000 homes — to almost a score of large wind farms by last year, most in north central Illinois, with more than 1,400 turbines producing more than 2,800 megawatts to power more than 1 million homes.

Indeed, Illinois led the nation in installing turbines last year and now ranks fourth in wind power capacity, according to the American Wind Energy Association, a trade group.

“Renewable energy has been one of the success stories of the recession,” says Kevin Borgia, director of the Illinois Wind Energy Coalition. “There has been a lot of growth, while the majority of the economy has been sluggish.”

In fact, the state’s 17 largest wind power projects created more than 13,000 construction jobs with a total payroll of more than $750 million, and they are supporting some 600 permanent jobs with an annual payroll of more than $35 million, according to a 2011 economic analysis by the Center for Renewable Energy at Illinois State University.

Moreover, local governments and school districts are sharing in $22 million in annual property tax revenue, while landowners are getting $10 million annually in income from leasing their property to the wind farms. In all, the 17 projects will produce a total economic benefit of some $1.4 billion over their projected 25-year life span, the study estimated.

The economic boost also has benefited companies that make, install and service the turbines. More than 50 wind energy companies are located in Illinois, including scores of structural steel suppliers, turbine and blade fabricators and gearbox makers. In addition to production facilities, more than a dozen wind farm developers and turbine manufacturers are headquartered in Chicago, according to the industry.

But clouds are on the horizon. The major challenge is the scheduled expiration at year’s end of a production tax credit that reduces a wind farm operator’s federal income tax liability by 2.2 cents for each kilowatt hour generated.

Both Borgia and Learner expect the credit to be renewed, either at year’s end or early in 2013. But the uncertainty already has caused some operators to hold off on construction plans, Borgia said, which will lead to a drop off in new construction next year, followed by declines in component manufacturing. A recent study commissioned by the American Wind Association predicted a 37,000 job loss if the credit is not renewed.

Over the longer term, the state’s evolving power markets also could undercut the gradual shift to renewable energy resources, Learner said, as more customers switch to alternate electric suppliers from ComEd and Ameren. But he’s hopeful the law can be revamped to adjust the renewable portfolio standard to the new market realities.

Expecting the U.S. Congress to set aside its hyperpoliticized gridlock long enough to extend the wind credit any time soon might be bordering on Blagojevich-delusional. But the economic and environmental benefits for Illinois would be very real.

Charles N. Wheeler III is director of the Public Affairs Reporting program at the University of Illinois Springfield.

Illinois Issues, June 2012

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