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Market Monitor – New Illinois Energy Legislation Likely To Increase Utility Costs and Energy Budgets

The new Illinois legislative measure includes several well-publicized components, such as the subsidy for nuclear power and the timelines for closure of coal plants, but it also contained many other items which will impact total electricity costs for all customers.

The impacts are concentrated on utility delivery cost components. Customers will not know the actual impacts on any specific account type until after the utilities file new tariffs.

Impacts over the next 12 months:
The subsidy for the Byron, Dresden, and Braidwood nuclear units could amount to $140M/yr, but only Byron and Dresden are likely to qualify

  1. With current electricity prices elevated due to high natural gas costs, the immediate funding requirements by Byron and Dresden are expected to be minimal

Job training programs

  1. Funding for up to $200M/yr in job training programs under the Energy Transition Program, which could amount to over $0.01/kWh fee added to all electricity bills

Increased spending for Energy Efficiency programs starting in 2022 (increasing by 4% from 2020)

  1. The 2021 EEPA rate for commercial users in Com Ed is ~$0.0026/kWh, so the budget impact will be minimal
  2. New requirements for users with peak demand >10MW’s to opt-out of the EE programs
  3. Specific energy efficiency programs for low-income users

Longer-term impacts over the next 5-10 years:
Expansion of the state RPS requirement beyond 2025, increasing by 3% per year from 25% in 2025 to 40% by 2030, with a goal of 50% by 2040

  1. RPS costs are collected on the utility side of the bill, so this will not impact supply contracts
  2. With no change in policy until after 2025, there is no immediate impact on costs to end-users

Requires privately owned coal and oil generators to close by 2030, and for municipal-owned coal plants to reduce emissions by 45% by 2035 and close by 2045

  1. Municipal plants are also given $20M/yr starting in 2026 to invest in carbon reduction technologies which equate to just over $0.0013/kWh of retail sales beginning in 2026 or later

Utility rate structure changes

  1. Shifts utilities to a Performance-Based Rate mechanism where they will receive automatic increases (or decreases) in their allowed profits based on customer-based metrics
  2. Should result in consistent annual increases, rather than large changes every few years

The requirement for co-generation and CHP units to close (or switch to hydrogen power) by 2045

  1. Consumers who currently use CHP or onsite generation should begin planning for adjustments to operations or large capital investments
  2. Extremely long-dated, and the total impact is very hard to determine, so it is best assumed as negligible

Non-Electricity Cost Impacts:
Rebate programs for Electric Vehicles starting in 2022

  1. Rebates start at $4,000 per vehicle and decline over time but are funded by a fee on ICE vehicle registrations

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