State’s renewable energy fund lacks power to fulfill purpose

May 13, 2013 by  
Filed under Green Energy News

Five years ago, Illinois passed legislation requiring electric suppliers to buy more renewable energy such as wind and solar power and then pass those costs on to customers.

The intent of the mandate was to have so-called green electricity accounting for a quarter of the power flowing into residences and businesses by 2025 while fostering homegrown jobs and cleaner air.

But that was before customers of the state’s two major electric utilities defected en masse to other suppliers that purchase power on the open market. With that move, the state is falling short of its green mandate, because money being collected from customers by these other energy suppliers isn’t being used for green energy purchases.

  • Related
  • It may be green, but it’s probably not local

  • Maps

  • Chicago, IL

  • Springfield, IL

Instead, the money is going into a fund that’s sitting untapped because of obscure language in state law.

That $15 million account is on track to balloon to nearly $135 million by the end of 2014, according to the Illinois Power Agency, the state agency tasked with spending the funds.

Because of the language in the law, the agency can only use the money to buy renewable energy if the state’s two utilities are out buying renewable energy at the same time. With only a fraction of their customer bases left, the utilities already have more renewable energy than they need and aren’t buying more.

As a result, the money sits, although at one point the cash-strapped state borrowed the entire amount from the fund then repaid the money. Overall, about two-thirds of the state’s electric customers are paying into a renewable-energy fund that isn’t being used.

“It really doesn’t make sense to have all this money being spent by consumers and then have them not getting anything for it,” said David Kolata, executive director of the Citizens Utility Board, a consumer advocacy group. “We’d like to think that this can all be resolved.”

In June, about 5 percent of the state’s electricity will come from renewable sources, according to an Environmental Law and Policy Center analysis of publicly available state data. That’s short of the 8 percent target mandated under the law, and amounts to about 4.7 million megawatt hours, enough to power half a million homes for one year.

Environmental groups are clamoring to tweak the law to free up those funds but face resistance from nuclear plant owner Chicago-based Exelon and its utility, Commonwealth Edison. They contend the law is working as intended.

Some take issue with that notion.

“The point of the law is to create an environment in which renewable energy can flourish in Illinois, so that we can get cleaner air, economic development and be competitive with states around us,” said Barry Matchett, co-legislative director and policy advocate for the Chicago-based Environmental Law and Policy Center. “While we were able to achieve those goals for the last few years — the renewable energy industry created 19,000 jobs in Illinois in the last five years alone — unless the law is fixed, we won’t see much, if any, more solar or wind energy built in Illinois.”

Consumer advocates contend that not spending the fund’s money is costly for consumers. The Illinois Power Agency said new wind farms have driven down power prices overall by about $177 million each of the last two years. Consumer advocates said greater savings might be achieved with even more renewable power nurtured in Illinois.

“This is a problem that needs to be fixed to protect consumers. Consumers are paying money into this fund for the purpose of procuring renewable energy. And if the fund is used as intended, that will clearly save money for consumers,” said Natalie Bauer, a spokeswoman for the state’s attorney general’s office.

The fact that the renewable fund isn’t being spent and that the money is dependent on consumers who can freely switch back and forth between electricity suppliers at any time has already caused some wind and solar power developers to back off on projects.

“We don’t like unstable markets,” said Jeff Bishop, senior manager for government and regulatory affairs at EDP Renewables North America, a Houston-based wind power developer. His firm has paused on $1 billion of near shovel-ready projects in Illinois that his company spent more than a decade developing.

“We need the finance community to feel confident with the project’s long-term prospects,” said Bishop, whose company has already spent $1.5 billion building wind farms in Illinois. He said the renewable portfolio standard, the law that mandates how much electricity will come from renewable sources, worked well until customers started defecting from ComEd and Ameren, which serves the southern part of the state.

If the money remains unspent, the state is expected to slip further behind in meeting its green electricity mandate. By 2017, just 7 percent of Illinois electricity is projected to come from renewable resources, a little more than half the mandate of 13 percent set for that year under the law, according to an Environmental Law and Policy Center analysis.

“The IPA needs additional authority to spend those funds as the General Assembly intended,” said Anthony Star, the agency’s acting director.

As it now stands, most of the state’s renewable energy mandates are met through the purchase of energy credits, sold through a market-based system that supports existing wind farms in Illinois and surrounding states.

Comments are closed.