By David From, AFP-IL's Executive Director -
A controversial energy bailout, Senate Bill 2814, is set to be voted on this week. The legislation takes an already complex and distorted electricity market and makes it worse by adding another layer of subsidies. Instead of a bailout, Illinois lawmakers should create a true level playing field by ending all energy subsidies and mandates, rather than demanding more money from ratepayers.
The monster 450-page bill contains subsidies for a variety of groups, but at its core it is a bailout for nuclear power plants. Nuclear plants in Illinois are threatened by wind power plants that can offer electricity at cheaper prices. But the electricity from wind is only cheaper than nuclear because of the massive subsidies wind power plants receive from the federal government’s production tax credit as well as a state mandate that utilities use electricity generated from wind.
Seeing the subsides and mandates for wind, Exelon, which owns all the nuclear plants in Illinois, is demanding its plants get a piece of the subsidy pie. The Power Bureau, an energy consulting firm, estimates the cost of the nuclear bailout alone at $5.3 billion over the coming decades. Attorney General Lisa Madigan described the situation for Exelon as “a bailout for an already profitable company.” In order to get more political support, the bill also hands out subsidies demanded by environmental groups. These include a $1.9 billion expansion of Illinois renewable energy mandate and $7.6 billion for energy efficiency programs that will pad the pockets of ComEd, a subsidiary of Exelon.
An expansion of the renewable energy mandate is the opposite of what’s needed. Not only does the program pick favorites by mandating what type of power plants utilities build, it also increases costs. A study by the Beacon Hill Institute estimated that the mandate will increase electricity prices by 4.7 percent, costing ratepayers an extra $574 million and would reduce employment by 8,000 jobs.
Instead of bailing nuclear plants, Illinois lawmakers should address the underlying problem of government favoritism for wind. Exelon wants subsidies for nuclear because of the preferential treatment given to wind. Giving Exelon subsidies for its nuclear plants only adds to the complex web of government subsidies and mandates. A better path forward would be to end all energy subsides and mandates, letting true competition take place. The Exelon bailout bill should be voted down instead of rammed through the legislature during Veto Session.
David From is executive director of Illinois' chapter of Americans for Prosperity (AFP), which exists to recruit, educate, and mobilize citizens in support of the policies and goals of a free society at the local, state, and federal level. AFP has more than 2.8 million activists across the nation and a local infrastructure that includes 35 state chapters. For more information, visit www.AFPIllinois.org