Lobbying Scandal Rattles Alliance Backing Illinois Clean Energy Legislation

Lobbying Scandal Rattles Alliance Backing Illinois Clean Energy Legislation

A lobbying scandal involving Illinois’ largest power companies threatens to unravel an already tenuous coalition supporting a new round of ambitious clean energy legislation in the state.

As federal investigators issue subpoenas and search warrants related to lobbying activity by ComEd and Exelon, some clean energy and consumer advocates have already said they will no longer work with the companies. ComEd is the state’s largest electric utility, serving the Chicago area and much of northern Illinois. Its parent company, Exelon, also operates six nuclear power plants in the state.

Meanwhile, the clock is ticking to extend funding for the state’s solar incentives, which will likely run out of money next year without new legislation. The federal probe is widely seen to have torpedoed the bill’s chances in a six-day veto session concluding next week, and cast doubt on its chances in next year’s regular session.

The Investigation

Subpoenas issued in the federal investigation involve communications between ComEd and Exelon and at least two public officials: Martin Sandoval, a prominent state senator representing Chicago, and Michael Zalewski, a former Chicago City Council member who was reportedly seeking lobbying work with ComEd.

ComEd and Exelon have long been known to have immense political power in the Illinois Capitol, and ComEd’s lobbyists include a number of former staffers of Michael Madigan, the powerful speaker of the Illinois House of Representatives. Sandoval’s daughter Angie Sandoval also works for ComEd.

The homes of Zalewski along with retired ComEd lobbyist Michael McClain and Madigan staffer Kevin Quinn were searched in May by federal investigators looking into whether ComEd funneled payments to legislators in violation of lobbying rules.

Martin Sandoval’s home and office were raided in September by federal agents, and the Illinois Senate was also served with a search warrant. In Securities and Exchange Commission filings, Exelon and ComEd told investors about subpoenas this summer and again in October.

The Senate search warrant sought “items related to ComEd, Exelon, any employee, officer or representative of any of those businesses, Exelon Official A, Exelon Official B, Exelon Official C, Exelon Official D, and/or any issue supported by any of those businesses or individuals, including, but not limited to, rate increases,” as reported by the Chicago Tribune.

In October, Exelon Utilities CEO Anne Pramaggiore abruptly retired, causing a dip in the company’s stock price. And Exelon convened its own independent oversight board to investigate.

This federal investigation comes on the heels of an unrelated major federal sting last year that resulted in corruption-related charges against veteran Chicago council member Ed Burke, after another council member wore a wire for the FBI.

Hence in Illinois, long infamous for corruption and again in the federal spotlight, elected officials and other stakeholders appear to be on edge and eager to keep their distance from brewing scandal.

The Legislation

The federal investigation comes at a bad time for backers of the Clean Energy Jobs Act, a bill meant to propel the state to 100% clean energy by 2050 and provide funding to fulfill the ambitious promises of the 2017 Future Energy Jobs Act.

The 2017 law called for increasing the state’s solar capacity from around 55 megawatts to about 3,000 megawatts and for securing a quarter of the state’s energy from renewables by 2025. Incentives for distributed and community solar created by the law have been wildly popular, with applicants far outpacing availability for some components of the program.

Many solar projects — from small residential installations to 2-megawatt community solar arrays to utility-scale installations — are in the works thanks to the Future Energy Jobs Act. But funding for the program is expected to run out as soon as next year, and the state is still nowhere near on track to meet the 25% renewables target or the specific solar goal.

The Clean Energy Jobs Act would provide funding to continue solar incentives and also continue the Future Energy Jobs Act’s focus on making sure solar is distributed across the state and available to low-income and environmental justice communities. It would raise funds in large part by reforming the state’s capacity market — payments to generators for the promise to provide power if needed. It would allow the state to create its own capacity market wherein renewables would be paid a premium. Currently capacity is procured through the PJM regional transmission organization, and reforms proposed by PJM could actually penalize renewables.

The proposed legislation would also allow nuclear plants to take advantage of higher capacity payments under a state market, because of their designation as zero-emissions sources. Exelon says such supports are needed or three of its six Illinois plants could close. The Future Energy Jobs Act provided supports in the form of “zero emission credits” to two of Exelon’s plants, a move that critics called an unnecessary “bailout.”

In PJM’s 2018 auction for 2021-22 capacity, several of Exelon’s northern Illinois plants weren’t chosen at the prices they were offering — among the largest chunk of nuclear ever to fail to secure payments in that auction, according to Exelon. The Quad Cities plant was able to bid in at a low enough price to be chosen only because of the state supports created by the Future Energy Jobs Act, Exelon said. The Clinton plant, which received supports under the 2017 law, is in the MISO capacity market.

The Coalition

The Future Energy Jobs Act was considered to have passed — after several years of contentious negotiations — only because of support from Exelon once the zero emission credits were added to the legislation.

Clean energy advocates, solar developers and environmental justice groups celebrated the law as landmark clean energy legislation, even as some stakeholders and residents rued the necessity of collaborating with and offering ratepayer-funded supports to Exelon.

ComEd was also a powerful stakeholder in the negotiations, and while the utility didn’t get everything it had hoped for, the bill ultimately included funding for a ComEd microgrid and other major provisions the company sought.

Hence the Clean Jobs Coalition — including consumer groups, clean energy advocates and labor unions — found it necessary to work with Exelon and ComEd in pushing for the Clean Energy Jobs Act. At a press conference last winter announcing the legislation, residents and reporters asked about Exelon’s participation and the bill’s support for nuclear, and environmental justice advocates appeared uncomfortable with the alliance.

That uneasy collaboration came apart in late October as news about the federal investigations snowballed. The Clean Jobs Coalition told Crain’s Chicago Business that shortly before heading to Springfield for the start of the veto session, they voted to no longer negotiate with utilities — including ComEd and parent company Exelon — in pushing for the Clean Energy Jobs Act. While Exelon sought the capacity market reforms, ComEd was pushing to continue a rate-setting formula that has raised rates. Crain’s reported that the coalition had voted to suspend talks with all utilities, which would include the downstate utility Ameren, another stakeholder in energy legislation.

ComEd’s and Exelon’s support could now be toxic for the bill, with legislators afraid of appearing to work closely with the companies under scrutiny.

At the same time it seems unlikely clean energy legislation can pass without such heavy hitters backing it, especially since the renewables industry is pushing a competing bill, called the Path to 100. Backers say that bill provides much more money upfront to ensure new renewables are built soon. It would raise funds in large part through lifting the cap on what ratepayers can be charged for renewables, from 2% to 4% of their bill.

What Happens Next?

The veto session, which included three days in October, continues Nov. 12-14, and the next regular session starts in January and runs through May. In early October, Gov. J.B. Pritzker said it was unlikely clean energy legislation would pass this fall.

Now it appears in doubt whether legislation can pass in the 2020 session.

Some solar developers say that without new funding for incentive programs, they may have to lay off employees they’ve hired since the Future Energy Jobs Act, and tell customers hoping to install solar that incentives are no longer available or certain.

Legislators have enthusiastically touted their support for renewables during and since the passage of the Future Energy Jobs Act. But the extent to which they truly back renewable energy will be tested in whether they will consider legislation to boost renewables that doesn’t involve or fund Exelon and ComEd, as many see it.