Illinois Governor Pritzker Issues Significant Energy Policy Proposals

Overview

On August 21, 2020, Illinois Governor J.B. Pritzker released a document called “Putting Consumers & Climate First: Governor Pritzker’s Eight Principles for a Clean & Renewable Illinois Economy.” Its issuance follows closely on the heels of a recent deferred prosecution agreement between the US Attorney’s Office and the state’s largest electric utility, Commonwealth Edison. The document outlines the following eight principles that represent the Governor’s recommended changes for Illinois’ energy industry:

1. Strengthen utility company transparency and ethics requirements.
2. Expand consumer affordability protections.
3. Make Illinois a renewable energy leader and phase out dirty power.
4. Implement a market-based solution that supports clean power and clean air.
5. Electrify and decarbonize Illinois’ transportation sector.
6. Support communities transitioning to clean energy.
7. Advance equity in the growing clean energy economy.
8. Enhance energy efficiency in Illinois.

The document contains a set of policy proposals associated with each of the eight principles. The discussion below highlights key proposals potentially affecting the interests of renewable energy developers and public utilities.

Renewable Energy Developers

The document sets a goal of 100% clean energy in Illinois by 2050, which is intended to facilitate additional solar and wind development across the state. It recognizes the need for a clearer interconnection process for renewable generation facilities, and proposes that interconnection of such facilities be part of an integrated distribution planning process, with an emphasis on increased transparency about costs and a reliance on “technology and dynamic data.” A new and standardized net metering methodology, as well as statewide “backstop” standards for zoning and siting, would also provide developers with additional certainty and stability. Other proposals aimed at supporting renewable energy include structural changes to existing procurement programs and processes, further incentivizing community solar, and facilitating the deployment of energy storage systems.

To advance equity in the clean energy economy, the document proposes changes to the procurement process that would incentivize companies to hire minorities and people with disabilities. Benefits such as tax exemptions and credits would be available for renewable energy developers that contract with diverse suppliers, and developers doing business in Illinois would be required to report their diversity efforts to regulators and lawmakers. Additionally, renewable energy developers would be encouraged to diversify their corporate teams and ownership.

Utilities

The Governor's proposal links enhanced utility transparency, accountability, and affordability for customers, with a set of recommendations regarding utility rate- and spending-related items. Examples include ending formula rates for electric utilities, implementing performance incentive mechanisms for all utility rates, prohibiting utilities from recovering charitable donations, and establishing a carbon price market-based program. The proposal would also end monthly infrastructure investment surcharges (Rider QIP) for gas companies. Instead, gas infrastructure spending would be approved through the Illinois Commerce Commission’s traditional ratemaking process, and both gas and electric utilities would be subject to independent third-party audits of all utility infrastructure expenditures to ensure cost effectiveness.

Additional proposals related to increased utility transparency and customer protections include: eliminating customer deposit requirements and late fees for low-income residential utility customers; requiring monthly reporting on the number of shutoffs and reconnections; and removing online payment fees for utility bills. The proposals also include stricter ex parte communication disclosure requirements, measures aimed at improving customer access to energy usage data, mandatory utility reporting on cybersecurity efforts, and C-suite diversity.

Next Steps on the Legislative and Regulatory Fronts

Working groups of Illinois energy stakeholders are expected to convene to discuss the eight principles. These working groups were meeting earlier this year, but talks were suspended upon the announcement of the ComEd deferred prosecution agreement.

The working group participants will likely include the Governor’s Office itself, members of the Illinois House and Senate, the Illinois Attorney General’s Office, consumer advocates such as the Citizens Utility Board and the National Consumer Law Center, environmental organizations such as the Environmental Law & Policy Center, the Sierra Club, and the Natural Resources Defense Council, electric and gas utilities, renewables developers, generation companies, and business groups representing industrial and commercial customers such as the Illinois Manufacturers Association and the Illinois Retail Merchants Association.

Some working group negotiations will likely lead to proposed legislation; other negotiations may lead to regulatory activity and changes at the agency level, such as the Illinois Commerce Commission and the Illinois Power Agency. In terms of legislative action, the administration’s current goal is to finalize the energy proposal in time for the “fall veto” session in November and December, provided there is an opportunity for public comments and legislative hearings. If the proposal is not acted upon at that time, then it would likely become a topic for consideration during the “spring” legislative session starting in January.

For more information on how these principles may affect your business, contact your Quarles & Brady attorney or:

• Joe Wilson: (414) 277-5839 / joe.wilson@quarles.com
• Adam Margolin: (312) 715-5089 / adam.margolin@quarles.com
• Chris Skey: (312) 715-5023 / chris.skey@quarles.com
• Anne McKeon: (312) 715-2727 / anne.mckeon@quarles.com