Exelon Subsidy Negotiations At Impasse With Labor Urging Gov. To Consider Nuke Jobs, Climate Goals
With two more days until the scheduled adjournment of the General Assembly’s spring legislative session, negotiations on a high-stakes deal to steer Illinois away from carbon-causing energy sources — as well as a host of other goals from ending controversial formula ratemaking and forcing ethics reforms as a utility-involved corruption investigation looms large — have reached impasse, according to multiple sources engaged in bargaining.
As of Saturday night, parties remain far apart on the linchpin of the deal: how much the state should provide in subsidies for nuclear giant Exelon to prevent the company from the threatened closures of at least two, if not three, of Exelon’s six nuclear power generating stations that are not profitable. Those six locations serve the northern half of Illinois, which contains the majority of the state’s 12.8 million people.
Exelon’s ask from the state has varied, but those close to negotiations say the company has asked for a 10-year plan for subsidies with a credit in the first year that nearly amounts to what Pritzker’s office is offering in total. Exelon on Sunday declined to comment on the parameters of its subsidy ask.
Gov. JB Pritzker’s lead energy negotiator, Deputy Gov. Christian Mitchell, told Exelon the state’s final offer is $540M in subsidies for three plants over five years. Lawmakers have been briefed on that offer. There are currently no other negotiations scheduled, though that could change.
On Sunday morning, Exelon did not dispute the characterization parties were at impasse, but said it remained hopeful a deal could be made, as "failure to act will cost thousands of jobs, force consumers to pay higher energy prices to polluting power plants and will immediately increase carbon and air pollution by eliminating two-thirds of state’s clean energy," An Exelon spokesperson said in an emailed statement.
"However, as much as we want to continue running them, the administration’s proposal remains below what is needed to keep the plants operating," Exelon said. "With so much at stake for Illinois’ economy and environment, we remain hopeful that further discussions will lead to a compromise that will allow the plants to remain viable.”
But a coalition of labor unions, some of whom represent the more than 2,400 unionized workers at the plants is throwing down a final gauntlet in the waning days before lawmakers’ May 31st adjournment. On Saturday evening, that coalition organized under the Climate Jobs Illinois moniker sent Pritzker a letter after parties were informed negotiations over the nuclear subsidy were at impasse.
Debate over subsidies
Labor's letter lays out the case for more subsidies than the governor’s final offer by warning of dire consequences the coalition says are an inevitability. Climate Jobs Illinois this spring introduced its own plan with bipartisan support, dubbed the Climate Union Jobs Act, recommending the state agrees to the subsidies deemed necessary to keep the plants open, though not tying its request to a specific dollar amount.
“We remain concerned that the latest provisions under consideration don’t go far enough to protect workers and could lead to thousands of job losses, including the over 2,400 union workers at the nuclear facilities on the brink of closure and thousands of jobs indirectly supported by these facilities,” labor leaders of 16 different unions wrote in their letter to Pritzker.
The letter pointed to the economic ripple effects plant closures could have on the surrounding communities, estimating thousands more jobs hang in the balance than just the unionized workers in the plants or the non-unionized Exelon employees, which number approximately 4,100.
“If Illinois does not appropriately compensate its nuclear fleet for clean energy generation and allows these facilities to go offline prematurely, it will result in the loss of nearly 28,000 jobs by which many of our members have built a future for themselves and their families,” the letter continued. “In addition, millions of dollars in tax revenue for some of Illinois’ most rural communities would disappear, wiping out funding for local schools and emergency services.”
Energy negotiations update: Parties largely agree bargaining over the parameters of state subsides Exelon is seeking to keep open three of its nuclear plants is at impasse.— Hannah Meisel (@hannahmeisel) May 30, 2021
Last night @ClimateJobsIL organized labor coalition sent @GovPritzker this letter signed by union leaders: pic.twitter.com/fW3TTawvyM
Pritzker spokeswoman Jordan Abudayyeh, however, was adamant the governor will not move from its final offer, saying doing otherwise would deviate from the administration’s goal of protecting ratepayers.
“The governor has been very clear that he is not going to sign a bill written by the utility companies,” Abudayyeh said Saturday night. “We commissioned an independent audit and we based our negotiations off of that look into Exelon’s books…We have negotiated and we have moved. The only [entity] that ha[s]n’t moved is Exelon.”
Earlier this spring, Pritzker’s office commissioned a study by Massachusetts-based Synapse Energy Economics, which found Exelon would need $350 million in ratepayer subsidies over five years to keep open the two plants the company said in August would be shuttered later this year — Byron and Dresden. Since then, Exelon has upped the ante, hinting at early retirement of two more plants in Braidwood and LaSalle; it’s widely acknowledged the Braidwood plant is close to unprofitability.
The governor last month also introduced his own energy bill via Democratic sponsors in the House and Senate called the Consumers and Climate First Act.
Illinois already supports the other two Exelon nukes in Clinton and the Quad Cities to the tune of $235 million per year in zero-emissions credits created under the 2016 Future Energy Jobs Act, which expire in 2027.
State Rep. Marcus Evans (D-Chicago), a co-sponsor of the Climate Union Jobs Act, largely agreed with Abudayyeh’s assessment of Exelon’s posture during negotiations.
“The governor’s not the problem,” Evans said. “The problem is Exelon. Exelon is used to getting everything they want. And we want them to get what they need.”
Still, Evans said he was hopeful a deal could be reached “by 11:59 p.m. on Monday.”
“Let’s meet around the clock,” he said.
Sierra Club Illinois Director Jack Darin, a lead negotiator for legislation called the Clean Energy Jobs Act, which is focused on getting the state to 100% renewable energy by 2050, shared Evans’ optimism. He said CEJA stakeholders were ready to go back into negotiations at any time.
“It’s very exciting that Illinois is poised to realize clean energy jobs are the way to go,” Darin said, adding that talks on other elements of an omnibus energy package are “serious” and close to agreement.
The Illinois Clean Jobs Coalition, which backs CEJA threw down its own gauntlet Wednesday, sending a letter co-signed by nearly 50 Democratic lawmakers to House Speaker Chris Welch (D-Hillside) and Senate President Don Harmon (D-Oak Park). The letter cautioned the leaders that a “final energy bill must” set deadlines to eliminate carbon emissions and “prioritize closures in environmental justice communities,” as well as put equity at the center of the legislation “from workforce diversity to contractor equity to just transition” of workers currently in jobs in energy sources that will be phased out.
“For too long, utilities have dictated energy policy in Illinois,” the letter said. “We will not support a bill which is simply a handout for utilities and does not prioritize climate and equity – we must be forward thinking and lead with these issues. Our constituents and communities will support nothing less.”
Darin said provisions in energy negotiations that still need agreement include setting firm dates to phase out coal- and gas-reliant power and nailing down portions dealing with equity for communities of color, “not only for jobs but also for wealth-building opportunities.”
“I’m optimistic we’ve got the chance to pass the country’s leading, most equity-centric climate [legislation],” he said.
Ethics, Exelon and environmental reality
This spring’s jockeying over energy legislation is a continuation of groundwork laid more than two years ago, when progressive lawmakers introduced the “Clean Energy Jobs Act” early on in Gov. JB Pritzker’s term. With so much else on Pritzker’s and the supermajority Democrats’ plates that spring — including recreational cannabis legalization, a $45 billion infrastructure package and controversial legislation defining abortion as a “fundamental right” — energy negotiations were taken off the table.
But since then, Illinois’ political landscape has changed dramatically.
Exelon has been threatening to close plants since October 2019 — a move considered brazen by some, considering the company’s name had just shown up in subpoenas authorizing federal agents to search the offices and homes of several lawmakers and lobbyists in an ever-growing federal corruption probe from U.S. Attorney John Lausch.
The investigation is still ongoing, but when prosecutors this summer made public a $200 million deferred prosecution agreement signed by Exelon subsidiary Commonwealth Edison last summer, longtime House Speaker Mike Madigan was identified as “Public Official A” — the nucleus of the feds’ inquiry. Though ousted by members of his own caucus when the brewing scandal made it impossible for him to get reelected to a historic 19th term as speaker in January, Madigan has not been charged.
The COVID-19 pandemic threw yet another wrench in plans to negotiate an energy bill, and after Madigan was revealed as “Public Official A,” the former speaker was loathe to give lawmakers a forum to meet and consider his future, let alone legislation.
Despite public outrage over former ComEd lobbyists’ and executives’ indictments this past fall, alleging they orchestrated a years-long bribery scheme to curry favor with Madigan during a time period while two major energy laws were negotiated, Exelon still holds strong cards as lawmakers look to reach agreement on an ambitious and wide-ranging new energy law without undue influence from utilities.
Illinois is by far the most nuclear-reliant state in the nation; half of the state’s power is generated by nuclear energy while approximately 90% of the state’s carbon-neutral power comes from nuclear. While renewable energy is growing quickly — thanks in large part to state support for wind and solar power projects under the 2016 Future Energy Jobs Act — all parties acknowledge nuclear generation must bridge the gap to an energy grid powered largely by renewables someday.
But how long that bridge should be depends a lot on how the state decides to structure economic incentives for different types of power generation to shape Illinois’ energy portfolio.
Because Exelon corners Illinois’ nuclear energy market, the company has ramped up pressure on Springfield to help its unprofitable power stations remain on line, as shuttering the plants would undermine both Illinois’ goals for combatting climate change and could have adverse effects on power reliability and prices.
Still, all major players in the energy negotiations say ethics reforms must be part of an overall agreement.
State Rep. Ann Williams (D-Chicago), the lead House sponsor of CEJA maintains that only that proposal has stringent enough language to root out corruption stemming from the companies' relationships with Springfield. CEJA includes a mechanism for ratepayers to win restitution if a utility company engages in criminal activity and would also create an ethics compliance czar at the Illinois Commerce Commission, the state’s utillity regulator.
"[Exelon] needs to acknowledge the political realities in Illinois," Williams said Sunday morning. "The urgency of passing a comprehensive energy apackage is clear and I’m hopeful we can get it done. I’m still optimistic. I really am."
Pritzker’s plan as introduced stipulated that if Exelon were to accept state subsidies, the company would be on the hook for returning that money if it shuttered a nuclear plant “without making a good faith effort to sell the plant first.”
And the labor-backed bill includes its own ethics reform proposals, like establishing an independent “Electric Utility Monitor’ to oversee ComEd during its deferred prosecution period, paid for by the company to conduct annual ethics audits. It also calls for an audit to explore whether a 2011 law allowing ComEd and Ameren, which powers downstate Illinois, to make more than $3 billion in upgrades to a “smart grid” resulted in projects whose costs were “prudent and reasonable.”
State Sen. Mike Hastings (D-Tinley Park) on Friday obliquely referred to ethics scandals related to Madigan, ComEd and its emissaries while ginning up a crowd of hundreds of unionized Exelon employees rallying in front of the state Capitol in support of the Climate Union Jobs Act.
“It will hold people accountable,” Hastings said of the labor-backed bill. “It’ll hold those people that cast a dark cloud over our state that caused this whole problem because this bill would have been passed a long time ago if it wasn’t for them. And we’re going to hold them to the highest ethical standards that we can.”
Saving nuclear plants is not a cut and dry partisan issue, and House GOP Leader Jim Durkin (R-Western Springs) on Friday also spoke to rally-goers, telling them his caucus was “100% committed…to finding a solution to this problem.” Other House Republican leaders and Durkin’s spokeswoman later clarified the the caucus isn’t set on a particular plan, especially since no final product has emerged yet from energy negotiations.
Despite railing against Madigan and ComEd for months, Durkin told NPR Illinois last month that he advocated for caution in rethinking Illinois’ energy portfolio, and warned that “reactionary” energy legislation could make for unintended consequences.
“Nukes [were] the only thing that was keeping us warm,” Durkin said of recent winters where extreme cold limited other energy supplies. “So we’ve just got to be careful on how we approach this, and not just summarily say, ‘We’re done with this, we're done with that’ because of a scandal.
Agreement close on some energy elements
A group advocating for solar and wind energy has also been pushing for the last two years to get more state investment in those sectors as subsidies for solar projects ran out much faster than expected. After warning of the so-called "solar cliff" since 2019, the Illinois Power Agency in December said it could no longer give incentives to new solar projects because funding had officially dried up.
Those backing that "Path to 100” bill have tried to advocate for new subsidies outside of an omnibus energy package given how quickly the subsidies were depleting, but have so far been unsuccessful.
But negotiators for an overall energy package say compromise on more funding for those projects is close to agreement.
CEJA and Pritzker’s energy proposals stipulate phase-outs for natural gas and coal. The labor-backed bill includes provisions to help “displaced workers” from such plants.
Illinois currently has about a dozen coal-fired power plants still in operation, but the five owned by Texas-based Vistra Energy are set to be retired by 2027 or sooner as part of plans the company made after it merged with previous owner Dynegy in 2018. Vistra says it wants to pivot those properties to utility-scale battery projects. Additionally, the Southern Illinois Power Cooperative in Williamson County retired its largest plan last fall.
Springfield's City Water Light and Power says it plans to shutter a third coal-fired coal-fired power generator by early 2023 after already closing two last year, and CWLP says its already on the path to low carbon emissions and don't need a state mandate, new taxes or assistance to accomplish its goals.
Springfield and the lower half of Illinois are in a separate energy capacity market than the northern part of the state, where Exelon's nuclear generators power. CWLP says it's concerned the capacity market isn't prepared to move as quickly on the sweeping changes recommended by those pushing more renewable energy, and warns electric reliability in the state's central and southern regions hangs in the balance.
NRG Energy, which owns two coal-fired generators in Chicago's north and south suburbs and a third in central Illinois, has no plans to shut down. And Prairie State Energy Campus, a large coal-fired power plant that was built not even a decade ago in 2012, has a complicated web of contracts with municipalities both in other states and Illinois, including the suburbs of Chicago.
But a solution to handling early termination of those contracts is near, negotiators say.
The Illinois Municipal Electric Association, which represents CWLP along with other municipal electric utilities and co-ops are asking for carve-outs for not-for-profit power generation like theirs, including not being subject to a carbon tax or pollution fee, saying they've made investments to capture more carbon than some for-profit coal-fired power plants.
This story has been updated with comments from CWLP.