A billion reasons nuclear plant negotiations turned out well for ComEd customers
Sometimes a shock from electricity can be a good thing. ComEd customers are going to get an unexpected payout of $1 billion, yes billion, from the state’s nuclear plants. We’d like to see more of the kind of foresighted negotiation by government and advocates that brought this about.
Last year, Chicago-based Exelon said it would close the Byron, Dresden and Braidwood nuclear plants unless it got financial help from the state. In February, Exelon spun off its power generation subsidiary into a stand-alone company named Constellation.
The threat to close the plants came amid an effort to pass legislation to require the use of more renewable energy in Illinois.
During the negotiations, supporters of the Climate and Equitable Jobs Act, which Gov. J.B. Pritzker signed in September, agreed to help keep the nuclear plants open because they are needed to provide zero carbon energy until the state can ramp up production of renewable energy, such as solar and wind. CEJA requires Illinois utilities to get 40% of their power 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 keep the nuclear plants going. That would have been a lot of money to fork over, but it was necessary to get a deal on moving the state away from fossil fuels.
Instead, ratepayers will get a return of $1 billion.
Illinois had renewable energy legislation and a nuclear bailout before in 2016’s Future Energy Jobs Act. Here’s what was different this time. Generally unnoticed by the public, environmental and consumer advocates and Pritzker’s team included a guardrail that said if electricity prices shot up to a certain level — putting more money in the pockets of nuclear plant operators — consumers would get money back.
And customers will get money back, in a big way.
According to the Illinois Commerce Commission, the credit will lower ComEd consumers’ bills by about $19.71 a month, saving the average family $237 per year. The savings will be higher in the summer, lower in the winter. ComEd only distributes the electricity, but it passes on the cost of generation in its bills to ratepayers.
The total savings will come to about $1 billion. When is the last time consumers got a billion dollars from anyone?
Here’s why the timing is so significant.
Starting earlier this year, already-high electricity prices began climbing 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 tanker ships.
The strain on supply is driving up natural gas prices, which, like electricity, were already high. Higher natural gas prices affect electricity bills because most of the nation’s electricity is generated by burning natural gas. As natural gas prices go up, so does the cost of electricity.
All this is happening while people already are hurting from higher prices at the gasoline pump, inflation and other wallops to the wallet.
According to the Energy Department, electricity prices in Illinois are up about 15%. Across the country, electricity is expected to cost 50% to 80% more this summer.
Prices might keep rising for years because some of the costs of hardening power grids against weather extremes will show up on bills. Moreover, as the climate gets hotter, people will use more electricity in the summer to cool their homes. The costs of wind and solar installations had been steadily declining, but have recently increased because of supply chain snags.
But while ratepayers in other areas are seeing nothing but higher prices, Chicago area residents are fortunate to get $1 billion back.
ACCORDING TO THE ILLINOIS COMMERCE COMMISSION, THE CREDIT WILL LOWER COMED CONSUMERS’ BILLS BY ABOUT $19.71 A MONTH, SAVING THE AVERAGE FAMILY $237 PER YEAR.