In December 2016, Illinois passed the Future Energy Jobs Bill (SB 2814) that covers many sectors of the power industry and establishes a zero emissions credit (ZEC) that will help nuclear plants. There are also several other aspects of the bill that will impact the Illinois utilities, including new incentives for energy efficiency and renewables development. These elements of the bill are forecasted to increase intermittent generation from renewables, add more distributed generation, and increase energy efficiency through targeted spending programs.

Key Details

• The ZEC program is forecasted to provide $235 million per year for 10 years to economically unviable Exelon nuclear plants. Consumer protection measures are built in to the program to reduce the credits if projected energy and capacity prices rise in the future
• The energy efficiency program sets demand reduction targets for ComEd and Ameren, Illinois’ largest utilities, of 17% and 13% respectively by 2025 and 21.5% and 16% by 2030. The program also raises the cap on related spending from 2% to 4%. If utilities meet their energy efficiency performance targets, they can include the depreciated value of their energy efficiency assets in rate base
• Other key allowances include $360 million for low-income solar programs and $180-$220 million annual enhancements to the state’s renewable portfolio standard (RPS) program to incentivize the development of renewable generation. Half of the funds for the solar spend are targeted for distributed energy resources
• RPS-targeted funds are forecasted to translate into 3,000 MW solar and 1,300 MW wind by 2030, which represents significant growth over the current installed capacity levels (70 MW solar, 4,000 MW wind). Although Illinois has maintained strong RPS targets for several years, this bill ensures that funds meant for renewable energy can’t be swept into other programs
• The law is set to take effect June 1, 2017

Implications

There are two primary implications for utilities in Illinois:

• The first relates to adding intermittent and distributed generation sources. This change will increase the complexity of grid operations and transmission and distribution planning
• The second is the impact of reduced energy sales attributable to energy efficiency programs. Illinois utilities currently utilize a volumetric charge to recover a portion of their fixed costs. Under the new framework, utilities could be allowed to earn a return on certain energy-efficiency-related investments thereby offsetting at least a portion of the lost revenues stemming from reduced sales levels

Additional Resources

Utility Dive: Why Exelon’s mammoth Illinois Energy Bill could set a precedent for other States

Greentech Media: Clean Energy Advocates Praise Passage of Major Illinois Energy Bill

Forbes: Illinois Sees the Light – Retains Nuclear Power

This report is part of the Grid Edge Minute series. To view all featured Minutes, please click here.

Additional Contributing Authors: Michael Morley, Quentin Watkins