A Billion Reasons Why NPP Negotiations Went Well for ComEd Clients
Sometimes an electric shock can be a good thing.
ComEd Clients To Receive Unexpected $1 Billion Payout, Yes billion, state nuclear power plants. We would like to see more forward-thinking negotiations from the government and the advocates that resulted in this.
Last year, Chicago-based Exelon said it would close nuclear plants in Byron, Dresden and Braidwood unless it secured state financial assistance. In February, Exelon transformed its power generation subsidiary into a standalone company named Constellation.
The threat to close the factories came amid an effort to pass legislation requiring the use of more renewable energy in Illinois.
During the negotiations, supporters of the Climate and Employment Equity Act, which Governor JB Pritzker signed in September, has agreed to help keep nuclear power plants open because they are needed to provide carbon-free power until the state can ramp up production of renewable energy, such as solar and wind energy. CEJA requires Illinois utilities to get 40% of their electricity from renewable sources such as solar and wind by 2030.
At the time, negotiators expected – based on existing prices – that customers would pay some $700 million to operate the nuclear plants. It would have been a lot of money to shell out, but it was necessary to strike a deal to move the state away from fossil fuels.
Instead, taxpayers will get a $1 billion return.
Illinois already had renewable energy legislation and a nuclear bailout in the Future Energy Jobs Act of 2016. Here’s what was different this time. Generally unnoticed by the public, environmental and consumer advocates and the Pritzker team included a caveat that said if electricity prices hit a certain level – putting more money in people’s pockets operators of nuclear power plants – consumers would get money back.
And customers will be largely refunded.
According to the Illinois Commerce Commission, the credit will reduce ComEd consumer bills by approximately $19.71 per month, saving the average family $237 per year. Savings will be higher in summer, lower in winter. ComEd only distributes the electricity, but it passes on the cost of production on its bills to subscribers.
Total savings will be approximately $1 billion. When was the last time consumers received a billion dollars from anyone?
Here’s why timing is so important.
Since the beginning of the year, already high electricity prices have started to climb due to the Russian invasion of Ukraine. In response to the invasion, Europe is trying to wean itself off Russian natural gas, and the United States is shipping more liquefied gas to Europe in tankers.
The supply strain is driving up prices for natural gas which, like electricity, were already high. Higher natural gas prices are affecting electricity bills because most of the country’s electricity is generated by burning natural gas. As natural gas prices rise, so does the cost of electricity.
All of this is happening when people are already suffering from higher prices at the gas pump, inflation and other punches to the wallet.
According to the Department of Energy, electricity prices in Illinois have increased about 15%. Electricity across the country is expected to cost 50-80% more this summer.
Prices could continue to rise for years as some of the costs of hardening power grids against extreme weather will show up on bills. Also, as the climate warms, people will use more electricity in the summer to cool their homes. Costs for wind and solar installations had been steadily declining, but have recently increased due to supply chain issues.
But while ratepayers in other areas only see higher prices, Chicago-area residents stand a chance of recouping $1 billion.
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