Good afternoon! I hope everyone is doing well. There have been two additional Energy Working Group meetings since our last newsletter, some huge news on the political front, and some other general developments detailed below. If you have any questions at all, please don't hesitate to reach out to me at [email protected] . On to the newsletter!

 

Governor's Energy Working Group

 

This week, the Administration held two virtual meetings of its Energy Working Group, the first on Tuesday, July 14, 2020, from 2:00 - 3:30, and the second yesterday, July 16, 2020, from 2:10 - 3:40. Each meeting had over 90 participants. This week saw the group move on from issues impacting renewable energy development, and turned to decarbonization and the Fixed Resource Requirement.

Unlike the last several meetings which were a bit more structured, the Tuesday meeting on decarbonization was a bit more freewheeling. That's not a criticism, but more of an acknowledgement that there were a lot of strong positions and not a lot common ground. Deputy Governor Mitchell kicked things off by asking the group what a policy on decarbonization should look like, mentioning cap & trade and carbon pricing as examples, and noted that the Governor is sensitive to identifying a program that works for the whole state. The second meeting on Thursday was a bit more structured, as presentations on the FRR were given by CEJA advocates and then PJM's independent market monitor. Once those presentations are disseminated by the Governor's Office, I will include them in the next newsletter. The presentations went long - the first seemed equal parts information and filibustering - so there was very little time for questions or follow-up.

 

Some of the key takeaways from the meetings included:

 

            CEJA proponents and environmental activists spoke to the need for any decarbonization policy to be paired with equity goals and minimization of health impacts to those communities disproportionately impacted by pollution. They were uniform in arguing that market-based approaches will increase the impact to low income families, and that the cost savings are disproportionate to the benefit resulting from health protections.

            A representative of the NRDC, after summarizing some of the key elements of CEJA pertaining to decarbonization, noted that "raising revenue is very important" for other key projects, and that while a pollution fee shouldn't force closures, it's clear that such fees are an incentive to close.

Representatives of two different generators indicated their support for a national policy imposing a carbon tax on all sources of emissions as a means to limit carbon emissions.

            Several participants indicated interested in the outcome of a FERC conference later this year on carbon pricing.

            Senator Hastings, as has been his focus throughout the process, asked several focused questions trying to get to the cost of the various proposals.

            A discussion on gas powered generation seemed to be missing, and Representative Walsh urged the Governor's Office to invite two large generators he expected to be impacted by this discussion.

CEJA advocates continued to push for the notion that PJM is severely over-procuring capacity, criticized MOPR, and argued that capacity payments are funding new polluting plants.

            There was a discussion on how an FRR could be structured to align with a State's policies regarding the purchase of energy.

            Deputy Governor Mitchell noted the subsidy given to Exelon through the passage of FEJA, and wondered what kind of commitment the state would be getting from the company should Illinois adopt CEJA.

            Dr. Bowring, the Independent Market Monitor, noted that he and his colleagues haven't been able to determine how the proposed FRR would work, given that the math just doesn't add up, and indicated that he was preparing a report estimating the cost of Exelon's proposal. He expects that report to be finalized next week.

As the meeting went long and the principles had other meetings to get to, Thursday's meeting ended a little abruptly with no discussion about next steps. With that said, it is extraordinarily likely that there will be another meeting or two scheduled to discuss some remaining issues, and that there will be an opportunity before the final meeting of the Energy Working Group in August to submit written statements to the Administration covering some or all of the issues discussed over the course of the summer.

The Department of Justice Makes Enormous Public Statement

 

Not to bury the lead here, but sure to reverberate throughout the State and have an impact on far more than just energy issues, the U.S. Attorney's Office for the Northern District of Illinois announced an agreement this morning with ComEd to resolve an ongoing criminal investigation into corrupt lobbying practices. Of particular interest, the deferred prosecution agreement notes that the company was making payments to Public Official A at the same time it was seeking his support for the Future Energy Jobs Act.

ComEd Charged with Bribery, Gets Deferred Prosecution, for Steering Jobs to Madigan's Office

The charge and agreement to defer prosecution was announced Friday morning as part of the U.S. Attorney's Office's investigation into whether Commonwealth Edison Company hired politically-connected contractors to secure favorable action from state government. In order to avoid criminal prosecution, the company agreed to a $200 million fine and certain compliance provisions. Although not charged with wrongdoing, federal investigators continue to probe into Illinois Speaker Michael Madigan's office and political network, to which the Speaker insists, "I'm not a target of anything."

Other Items of News and Note

 

White House Finalizing NEPA Overhaul to Speed Up Infrastructure Development

Speaking at a UPS facility in Atlanta on Wednesday, President Trump announced that his administration was close to finishing a rulemaking to limit the scope of projects subject to environmental review under the 50-year-old National Environmental Policy Act. The effort is aimed to remove barriers to infrastructure projects, ranging from wind energy and gas pipeline development to highway construction, among other projects. Initially announced in January, the President indicated a "top to bottom overhaul" of NEPA regulations, which has drawn support from a variety of permitted industries and concern from environmental organizations.

FERC Revises PURPA Regulations for Small Power Producers and Cogenerators

In a 3-1 ruling, with Commissioner Glick dissenting, the Commission on Thursday finalized updates to the Public Utility Regulatory Policies Act of 1978, culminating a rulemaking first proposed in September of 2019. The new rules will allow states to set rates paid to qualifying facilities at a variable wholesale rate, as opposed to a fixed rate, and lower the project size subject to these rates from 20 MW to 5 MW. The changes curtail a subsidy that benefits solar developers and has long been decried as unfair by utilities.

In Closing

 

The Governor's Energy Working Group is on hold for the time being, but it certainly seems I'll be sharing an additional date or two with you once they are scheduled. I'm also speaking on a panel at The Energy Professionals Association's Illinois Conference next Tuesday along with Jen Walling of the Illinois Environmental Council and Kathleen Barron of Exelon. In the meantime, today is my birthday and I plan to knock off a little early and spend time with some friends, and then I'm off to Bloomington on Saturday to take in my daughter's graduation ceremony, all socially distanced of course! Have a great weekend !