Editorial cartoonist Scott Stantis on Gov. JB Pritzker and energy shortages for Wed, Sept 17, 2024. (Scott Stantis/For the Chicago Tribune)
By THE EDITORIAL BOARD | Chicago Tribune
In 2021, Illinois enacted a comprehensive clean energy law mandating the closure of all coal- and natural gas-fired power plants by 2045. As part of the Climate & Equitable Jobs Act, one of Gov. JB Pritzker’s signature legislative accomplishments, a large number of gas-fired facilities were to be shuttered by 2030.
At the time, there were warnings from industry and others that the intermediate 2030 mandate would jeopardize electricity reliability in the state. With Illinois then producing more power than it consumed, Pritzker and the many environmental groups that backed the law said such predictions were alarmist and off-base.
Just three years later, it appears the alarmists were right, and Pritzker and the green lobby were wrong.
Payments to power generators in return for their promise to produce to their capacity when demand is highest — as established via an auction overseen by PJM Interconnection, the grid manager for a large swath of the U.S. from northern Illinois to the mid-Atlantic — are set to soar more than 800% and will raise all our electric bills beginning next June.
That charge is embedded in the rates users pay for power and is in addition to the cost for the electricity itself. In effect, it is akin to an insurance premium — in this case, a payment each month to plant owners for their promise to deliver when the need arises.
In the northern Illinois territory served by Commonwealth Edison, average residential electric bills will increase by $15 per month beginning in June due to this effect alone, according to ComEd. That increase will be significantly more pronounced for single-family homes, since ComEd’s averages are skewed lower than in less urban areas by the large number of Chicago apartment dwellers it serves. (The blow will be softened a bit due to a ratepayer credit under state law of nearly $4.35 per month from nuclear operator Constellation Energy Group.) All told, even after that credit, ComEd residential bills will rise by about 10.5% due to this charge alone — and that’s before a possible ComEd power delivery rate hike.
Get prepared for worse beginning in mid-2026.
Wall Street firm Morgan Stanley projects this insurance-like charge could be up to 2,200% higher than it is today, inflating average monthly ComEd residential bills by more than $35 compared with current charges. We’ll know how bad the damage is in December when PJM conducts its power-generator auction for the year from June 2026 to May 2027.
The unprecedented spike in these “capacity” charges isn’t an accident. Simple supply-and-demand realities are the reason. Many fossil fuel power plants have closed in recent years, because of environmental rules and market conditions. And the growth in renewable power facilities such as wind and solar isn’t making up enough of the difference.
The problems are not limited to northern Illinois. Central and southern Illinois, which fall under the purview of multi-state grid manager Midcontinent Independent System Operator, will be about 50% short of the capacity to keep the lights on during highest-demand periods as soon as 2027, according to MISO. That situation should be ringing alarm bells.
The shortage issue isn’t as dire in northern Illinois. But the 2030 plant-closure mandates in Illinois’ clean energy law, if unchanged, will threaten reliability during peak periods by 2030 in the Chicago area, according to PJM.
But the crisis could be upon northern Illinois even faster than that, because future demand is projected to soar even as supply falls.
Read more here.
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