Legislators' plan offers relief from high propane prices

By Caitlin Rydinsky 

As Illinoisans face a propane shortage, lawmakers propose a plan to help some businesses and families pay their growing bills.

State Sen. Sam McCann, a Republican from Carlinville, and Sen. Bill Haine, a Democrat from Alton, are proposing legislation to help those who are unable to afford the price of propane from December 2013 to March 2014. The plan would allow more families to apply for the Low Income Home Energy Assistance Program (LIHEAP) by temporarily loosening requirements. They also are looking to establish a $20 million short-term loan program with the Illinois Finance Authority for small businesses, propane distributors and farmers.

“The big concern for everybody right now is $900 to $1,000 is a lot to spend on propane, but I’m worried right now if I don’t buy it, I won’t be able to get it from anywhere,” said Arend Poe, who lives in a rural area between Stewardson and Charleston. Poe said the last time he filled his tank, he was only able get 150 gallons, which will last him a month. He normally fills his 500-gallon tank to 400 gallons. His supplier, Effingham Equity, gave him a smaller amount because they are experiencing a shortage. They also confirmed they are not accepting new customers.

“Price increases have been quite dramatic, and it is just the market responding to the tight supply and demand,” said Harry Cooney, the manager of energy and customer risk management at GrowMark, which supplies propane to businesses and farmers. Typically, the price is about $2 per gallon during the winter, but due to the shortage it has spiked to around $5 a gallon. Lawmakers who are proposing relief are looking to increase LIHEAP funding by $10 million. However, supporters of the idea do not know yet where the money will come from. As part of the plan, the group says the eligibility requirements for LIHEAP would be temporarily raised by $10,000, making a family of four with a yearly income of $44,000 eligible.

As the prices have spiked, families already eligible for LIHEAP assistance are having trouble covering their heating costs. Mindy Brown, the LIHEAP coordinator for Embarras River Basin Agency, which provides assistance to families in eastern Illinois, said that this past week, the agency has assisted 42 families. Even with LIHEAP assistance, which allows up to $1,000 a month, she says households are getting behind on their bills.

Multiple factors contributed to the shortage of propane over the past year, such as pipeline maintenance, exporting propane during milder past winters and the 300 million gallons of propane used to dry crops this past wet harvest season. The recent cold weather that Illinois has experienced has made it worse. The U.S. Energy Information Administration projected earlier this year that prices for propane and several other natural resources would increase. The price of propane was estimated to increase from last year’s $1.74 a gallon to $2.10 in the Midwest, but because of the cold weather, it has gone higher. “If you bring all those together, along with what weather people are calling ‘the polar vortex,' which is bitterly, bitterly cold weather, and the result is individuals and families who are having to make very real decisions about whether or not they can adequately heat their homes in the coming days or weeks ahead,” said Sen. Dale Righter, a Republican from Mattoon.

On Monday, Gov. Pat Quinn declared a propane emergency, which has allowed truck drivers within the state to travel longer distances, waived requirements for them to apply for additional licenses while driving through multiple states to bring propane to Illinois and temporarily exempted the tax for out-of state truck drivers within Illinois. Quinn has not taken a stance on the plan from lawmakers. “We are carefully reviewing the proposal as a way to alleviate the crisis,” said Quinn’s spokesman, Dave Blanchette.

Fracking bill has a clear path to becoming law

By Jamey Dunn

The Illinois House today overwhelmingly approved regulations for horizontal fracturing, which supporters say will be the strictest in the nation.

Hydraulic fracturing, also known as fracking, is a process used to extract oil and natural gas by pumping water, chemicals and sand into the ground. The water fractures a source rock, allowing gas or oil to escape and be collected. Sand is used to hold the cracks in the rock open. Chemicals are added to the water for a variety of reasons, such as disinfection, lubrication and making the water thicker to keep the sand from sinking. “There are strong requirements and standards regarding water usage, regarding water disposal, regarding water containment,” said Marion Democratic Rep. John Bradley, who sponsors the bill. Senate Bill 1715 would create standards for drilling wells and requires water testing before and after fracking begins. If fracking chemicals are found in water, it would assumed that it was the well operator's fault, and the operator would be required to prove otherwise.

It also sets fees for permits at $13,500 per well. The measure would set the tax on oil or gas extracted from fracking wells at 3 percent for the first two years of the life of a well and then on a sliding scale based on production. Supporters say that fracking will be a boon for the state and struggling economies in southern Illinois. “When the coal mines closed, we lost tens of thousands of jobs downstate,” Bradley said.

The bill has a broad coalition of supporters, including business leaders and environmental groups. The environmental advocates who backed the bill said they would prefer a ban on fracking, but they said it is already happening in the state, and current law would not specifically regulate it. The Department of Natural Resources has reported that according to their permits, fracking is already taking place in Illinois. “While it will not make fracking safe, this is a critical step to make sure that Illinois has some protections to prevent environmental degradation,” said Democratic Rep. Sam Yingling of Round Lake Beach.

Some southern Illinois groups and environmental activist have been leading a loud push back against the bill. They were not involved in the negotiations, and members of those groups have been staging sit-ins this week outside Gov. Pat Quinn’s office, hoping to get a meeting with the governor, who supports the bill, and change his mind. Quinn’s staff met with some of those in opposition, but they did not have a sit down with the governor. Chicago Democratic Rep. Deborah Mell, who cast one of the nine votes against the bill, said she would like to see fracking put on hold for a few years so the results of some high-profile pending studies could come in before the state makes a decision on the issue. “I just hope that we’re not making a big mistake here. I just wish that we could kind of stop the clock a little bit.”

 Champaign Democratic Sen. Michael Frerichs, who sponsors SB 1715, said he expects it to pass in the Senate tomorrow. The Senate approved a fracking regulatory bill last year with no votes in opposition. Quinn plans to sign the bill. “Today’s passage of hydraulic fracturing legislation in the House brings good news for jobs, economic development and environmental protection in Illinois. This legislation will unlock the potential for thousands of jobs in southern Illinois, while ensuring that our state has the nation‘s strongest environmental protections in place for this industry,” Quinn said in a written statement. “Over the past year, we have brought together lawmakers, industry and labor leaders and environmental groups in a collaborative, bipartisan effort to develop the best possible legislation. This approach has not only worked but been praised as a national model for transparency, public participation, environmental safety and economic development.”

Deal reached on fracking fees

By Jamey Dunn

A day after House Speaker Michael Madigan said he supports a ban on hydraulic fracturing in Illinois, supporters of a bill to regulate it say they have reached a deal with the industry.

Rep. John Bradley, a Marion Democrat, said he expects a House committee to approve House Bill 2615 on Friday. (UPDATED: The Friday hearing on the bill was cancelled, and Bradley was excused from legislative session. The bill remains in committee.) “We’ve got a historic compromise here on the issue of horizontal high volume hydraulic fracturing, and we intend to move forward with that.”

Madigan told reporters yesterday that he supports a moratorium on the practice, commonly referred to as fracking. It is achieved by pumping water mixed with sand and chemicals through a well into rock that holds a carbon fuel, such as oil or natural gas. The sand holds the cracks open so the gas and/or oil can be extracted. Horizontal drilling allows gas and oil companies to drill down into the Earth and then permeate rock along a horizontal line, which is sometimes miles long. Industry experts say that it is likely both oil and gas will be extruded from fracking wells in southern Illinois, where drilling companies have spent about $150 million to lease mineral rights. “Until you really get down there and drill, you don’t know what’s going to come up,” said Mark Denzler, representing the Growing Resources and Opportunity for the Workforce in Illinois coalition, a business group supporting fracking in the state.

Each blue dot represents an oil and gas test drill. Data, which was obtained from the 
Prairie Research Center at the University of Illinois at Urbana-Champaign, 
was current as of Dec. 2012. Graphic by Andrew Thomason

Madigan referred to the fallout that fracking has caused in other states, particularly Pennsylvania, where methane leaked into drinking water wells. “Read about what happened in Pennsylvania,” he said. Methane is not toxic but is dangerous at certain levels because it is flammable. Negotiations over fracking regulations in Illinois have been going on for years. A regulatory framework in the Senate passed last year with no opposition. However, the plan fell apart in the closing days of the legislative session because a deal could not be reached over the fees and taxes that well operators would pay and last minute consideration of proposals to temporarily ban the process while a task force conducted research.

After Madigan’s talk to the press yesterday, industry representative met with Bradley and came to a deal on the taxes and fees. Denzler, who is also vice president and chief operating officer of the Illinois Manufacturers’ Association, said the state stands to gain an estimated $200,000 in revenue per well. He denies that industry concerns over Madigan’s statement pushed the negotiations. “I don’t think so. We’ve been negotiating on this for three years and focused on the revenue for about three weeks. So we were actually very close. We were close to an agreement before the comments yesterday, and we were hoping to get an agreement reached so the bill could move this week,” Denzler said. “I think we would have gotten the agreement yesterday regardless of comments that might have been made.” Operators would pay $13,500 in fees for each well. $11,000 would go to the Department of Natural Resources, which would oversee licensing, and $2,500 would to the Illinois Environmental Protection Agency.

Supporters say they do not expect the speaker’s stance to stop the bill from being approved in the House. “We feel really good about the package, and we’re moving it forward,” Bradley said.

“We feel pretty good about it,” Denzler said. “We think it’s a strong regulatory framework. It’s endorsed by the business community, the Farm Bureau, the major environmental interests in the state of Illinois. So we think it’s a good comprise. We have nearly 60 legislators who have signed on as [co-sponsors], so we feel pretty good about its chances.”

Environmental groups were encouraged by Madigan’s words. “We absolutely support the speaker’s call for a moratorium. ... That remains our first choice. That remains the safest thing for the state of Illinois to do, but if that doesn’t pass, we have to do whatever we can to protect ourselves,” said Jack Darin, director of the Illinois chapter of the Sierra Club. Darin and representatives of other environmental organizations have been criticized by some southern Illinois community groups for coming to the table over regulation instead of taking a hard line stance on a moratorium.
Darin said he takes Madigan’s statement at face value and does not see it as a strategic effort to push an agreement from the industry on takes and fees. “I do think that the speaker has been focused on this issue for over a year, and I do think the speaker understands the problems that have been created in other states. And we see that he’s been trying to get the strongest possible protections that we can. We worked with the speaker for the better part of 2012 to try to pass the moratorium. And if he supports the moratorium now, then we stand with him in trying to get that to happen.”

But Bradley said he does not expect that the bills calling for a two-year ban on fracking and a task force to study the issue will progress. They are currently assigned to the House Revenue and Finance Committee, where he serves as chairman. “If bill sponsors want to come to committees and call their bills [for hearings], they’re welcome to do that. It’s a democratic process. But I’m not expecting that to go anywhere.” Bradley was coy about his thoughts on the speaker’s intent or the possible effect the highly publicized statement had on negotiations yesterday. “Well, I’m just happy that we got something done and that we were able to resolve all the unfinished issues.”

Fracking opponents call for ban

By Jamey Dunn

A coalition of Illinois groups opposed to horizontal hydraulic fracturing is pushing for a ban on the practice in the state.

Hydraulic fracturing, which is commonly referred to as fracking, is achieved by pumping water mixed with sand and chemicals through a well into rock that holds a carbon fuel, such as oil or natural gas. The water creates pressure, which fractures the rock or opens up pre-existing cracks. The sand holds the cracks open so the gas and/or oil can be extracted. It has been done since the 1930s. But recently, fracking has been coupled with horizontal drilling, which allows gas and oil companies to drill down into the Earth and then permeate rock along a horizontal line, which is sometimes miles long. The marrying of the two technologies has allowed for projects that are much larger in scale. (For more on fracking, see Illinois Issues May 2012.)

Lawmakers, regulators and many environmentalists agree that it is coming to Illinois. Oil and gas companies and have spent hundreds of thousands of dollars leasing mineral rights in southern Illinois. House Bill 2615 seeks to regulate the practice and has a broad group of supporters.

“There’s kind of a gold rush mentality surrounding all of this isn’t there? But what happened after the gold rush? Ghost towns,” said Rich Whitney, who is on the legal committee for Southern Illinoisans Against Fracturing Our Environment (SAFE). A group of anti-fracking activists that rallied at the Capitol today say they reject the prevailing belief that fracking in Illinois is inevitable, and they are calling for a two-year moratorium on the practice. “Fracking is not inevitable, and it is offensive to suggest that is inevitable without hearing from the people first and hearing what their concerns are. They’re very legitimate concerns,” said Whitney. Senate Bill 1418 and HB 3086 both call for a two-year ban on fracking and the creation of a task force to study the issue.

Whitley, who ran as the Green Party candidate for governor in 2006 and 2010, took Gov. Pat Quinn to task for highlighting fracking in his budget address. "Hydraulic fracturing, commonly called fracking, is coming to Illinois, with the strongest environmental regulations in the nation,” Quinn said. “This legislation has the potential to create thousands of jobs in downstate Illinois. It will also ensure that our natural resources are protected for future generations.” Quinn encouraged lawmakers to approve HB 2615 this year.

“Gov. Quinn is wrong when he said. ...that this bill will be the strictest regulations in the country. No. New York has a moratorium. That’s the strictest regulation in the country. And what’s good enough for New York, we think is good enough for Illinois. We think that they had the wisdom. We need the wisdom,” Whitley said. Fracking opponents said that the process for appealing drilling permits in HB2615 would be overly burdensome on residents. They argue the Illinois Department of Natural Resources, which has seen deep cuts in recent years, is not prepared to properly regulate fracking. “Nobody listened to the people of southern Illinois” before HB2615 was introduced said Annette McMichael, a SAFE spokesperson. “I assure you southern Illinois was not represented in the closed door sessions [to negotiate the bill]. We are going to continue to educate our legislators that southern Illinois is not a playground for the oil and gas industry.”

Several environmental groups support HB 2615. However, the say they would also be open to a moratorium. Jack Darin, director of the Illinois chapter of the Sierra Club, said most groups just want to make sure that if fracking comes to Illinois, there is a regulatory plan in place. “In the environmental community, we have a lot of concerns about what fracking is going to bring to Illinois, and when we look at some of the controversies that have happened in other parts of the country, there’s a real need for us to prepare for that,” Darin said.

 However, Environment Illinois, which describes itself as a citizen-based environmental advocacy organization, has joined the call for a moratorium. Bruce Ratain, state policy associate for Environment Illinois, called fracking a “rolling environmental disaster” across the country. Ratain pointed to incidents that occurred in the last two months. A fracking well operator in Ohio was accused of illegally dumping thousands of gallons of chemical-laced wastewater and contaminating the Mahoning River. A broken well-head near the northern Colorado town of Windsor spilled an estimated 84,000 gallons of contaminated water. In a rural northeastern area of West Virginia, a worker was killed by an explosion on a drilling site. 

Lawmakers in support of HB 2615 say that potential environmental dangers are part of the reason they believe the bill is needed. “It does concern me — there’s no doubt about it — but now with these rules and regulations in this legislation,I think it’s going to help things. ... Some rules and regulations are better than none,” said Rep. Brandon Phelps, a Harrisburg Democrat. He said he does not think groups like the Sierra Club would support the bill if they thought it would be bad for his region of the state. “I just can’t for the life of me not vote for this knowing that there are companies that want to come to Illinois and spend millions of dollars, and in my area especially, where unemployment is high because we’ve had some layoffs in coal mines and things shut down, like the prisons. This is going to be a huge economic boon in my area.”

Plan to regulate fracking has broad support in the House

By Jamey Dunn

After a bipartisan bill to regulate hydraulic fracturing stalled last year, supporters think they have a better chance at success with a new plan.

Hydraulic fracturing, which is commonly referred to as fracking, is achieved by pumping water mixed with sand and chemicals through a well into rock that holds a carbon fuel, such as oil or natural gas. The water creates pressure, which fractures the rock or opens up pre-existing cracks. The sand holds the cracks open so the gas and/or oil can be extracted. It has been done since the 1930s. But recently, fracking has been coupled with horizontal drilling, which allows gas and oil companies to drill down into the earth and then permeate rock along a horizontal line, which is sometimes miles long. The marrying of the two technologies has allowed for projects that are much larger in scale.

The combined practice is not specifically regulated in Illinois, but many lawmakers, environmentalists and regulators agree it is coming to the state. Two Illinois rock formations, the New Albany Shale in the southeast and the Maquoketa Group Shale in the north, could potentially hold carbon fuels. Energy companies across the nation have spent hundreds of thousands of dollars to lease mineral rights for land above these formations, mainly in southern Illinois. “We don’t have regulations in the state of Illinois, we don’t have laws that will deal with horizontal fracking,” said Chicago Democratic Rep. Barbara Flynn Curry. She said that fracking could start in the state at any time without a bureaucratic system to regulate it or bar certain practices.

 House Bill 2615 has a broad coalition of supporters, including Republicans, Democrats, environmental groups, unions and representatives of the coal and natural gas industry. The bill would create a permitting and regulatory system for horizontal fracking. It would not apply to vertical fracking wells. The measure would:

• Set standards for the cement casings that are put into wells to prevent leakage of fracking fluid.
• Require water testing before and after hydraulic fracturing wells are constructed.
• Require disclosure of chemicals used in the process.
• Set standards for the disposal of water used for fracking.
• Prohibit hydraulic fracturing near certain sensitive sites and water sources, including schools, churches and health care facilities.

 If water pollution were detected near a fracking wells, it would be the owners’ responsibility to prove that it was not caused be the well. “We have crafted a piece of legislation, which first and foremost protects our water supply and the communities and families of southern Illinois but allows an industry to develop in a responsible manner for the creation of thousands of jobs and the potential for tens of millions of dollars of revenue for the state of Illinois,” said Marion Democratic Rep. John Bradley, who sponsors the bill.

Willow Hill Republican Rep. David Reis, who also sponsors the measure, said that fracking revenues could help bolster the state’s struggling budget. “This is historic from an economic standpoint. We know we have to put the safeguards in place, and we’ve done that with this [bill]. But the revenue that this is going to generate for the entire state of Illinois through income taxes and severance taxes — that we’re still going to negotiate — reoccurring sales taxes is going to be maybe one of the things we need to get out of our financial challenges that we face in this state.”

Environmental groups that worked on the bill say they do not support the practice, which has vocal detractors in other states that already have horizontal fracking operations, coming to the Illinois. “In the environmental community, we have a lot of concerns about what fracking is going to bring to Illinois, and when we look at some of the controversies that have happened in other parts of the country, there’s a real need for us to prepare for that,” said Jack Darin, director of the Illinois chapter of the Sierra Club. But they say fracking in Illinois may be inevitable, and they want to make sure that there are regulations in place when that day comes. “We understand that the industry is coming to Illinois ... and I think we all understand that our current set of rules and regulations and laws are not up to the task of looking at the potential impacts from this industry.”

But those who support a moratorium on fracking disagree. “Fracking is not inevitable,” said Liz Patula, coordinator of Southern Illinoisans Against Fracturing Our Environment (SAFE). Senate Bill 1418 calls for a ban on horizontal fracking and the creation of a task force to study the issue. Patula called the move a “common sense” approach. “The idea of just writing a regulatory bill out of fear, that doesn’t make any sense.”

Patula said SAFE has several concerns with the bill. “The idea that the bill is written on so-called best practices in other states — well, that hasn’t exactly worked in other states.” She said that any fracking regulation should allow for local controls, including local bans on fracking. SAFE plans to do a comprehensive analysis of the legislation in the coming weeks. Patula said there is also worry that the state lacks the funds and manpower to enforce the proposed regulations. The Department of Natural Resources would be responsible for much of the permitting process. The legislature recently passed a funding package for DNR, which included an increase to license plate fees, because the agency lacked the funds to keep up with maintenance of the state’s parks.

“Whatever is written, how could it possibly be enforced?” Patula asked. SB 2615 does not address the fees that would be paid by licensees. Bradley said the need for additional funding and manpower to regulate the new industry would be a consideration when negotiating such costs. “We’re going to have to figure out in the process of coming up with permits and applications. We’re going to have to make sure that they have sufficient funding in order to process the increased amount of work.”

 Bradley said he thinks horizontal fracking could start in Illinois by the end of the year. “The pressure is on for the state of Illinois." He said he hopes to move through the process soon and not wait until the end of the spring legislative session to get it passed.

Gov. Pat Quinn supports SB 2615. “Today’s proposal is good news for southern Illinois and our entire state’s economy. This legislation has the potential to bring thousands of jobs to southern Illinois, while also ensuring that Illinois has the nation’s strongest environmental protections,” Quinn said in a prepared statement. “I am committed to creating jobs and economic growth in every part of Illinois and always making sure our water and natural resources are protected for future generations.”

Future of coal-to-gas plant rests with Quinn

By Jamey Dunn

A year ago today, Gov. Pat Quinn signed legislation meant to clear the way for construction of a plant on the southeast side of Chicago that would convert coal to natural gas. Now, the governor’s pen may yet again decide the future of the controversial project.

Under the original plan, four utility companies would have covered construction costs and purchased gas from the plant, which would be owned by Leucadia National Corp. But Peoples Gas and North Shore Gas backed out of the project, leaving only Ameren and Nicor. The Illinois Commerce Commission (ICC) ruled this week that the two remaining companies would not be required to pay for all the costs but only cover a percentage equal to the amount of gas they are each required to buy. “The commission determined that in accordance with the law, Nicor and Ameren Illinois would each be responsible for 42 percent of the capital costs and operational expenses, for a total of 84 percent of the total, since they are required to take 84 percent of the substitute natural gas plant’s output,” said a written statement from the ICC.

Construction is scheduled to start in 2015, and the plant would be built on the polluted site of the former LTV Steel plant. It is designed to trap most of its emissions underground instead of releasing them into the air.

But according to Chicago Clean Energy, a subsidiary of Leucadia, the project is now in jeopardy. The group says the plant cannot be financed unless there is guarantee that all the construction costs are covered. Supporters of the project are calling on Gov. Pat Quinn to sign Senate Bill 3766, which would override the ICC’s ruling and require the two utilities to pay all the construction cost.

“The Chicago Clean Energy project is the most significant economic investment that the southeast side has ever seen,” Ted Stalnos, president of the Calumet Area Industrial Commission, said during a recent rally in favor of the project. “Let’s clean up that site. Sign this bill. Let’s put people back to work.” Chicago Clean Energy plans to clean up the site before building the plant there. “The southeast side of Chicago is currently a jobs desert, an opportunity desert. We need this investment,” said Dan McMahon, business representative for Carpenters Union Local 272. The plant is expected to create an estimated 1,000 construction jobs and 200 permanent jobs after it is built.

But others representing industry throughout the state say the plant would be bad for business because it would increase rates far beyond the current cost of natural gas. “It’s not fair for rate payers in the Ameren and Nicor territories to subside 100 percent of the cost,” said Mark Denzler, vice president and chief operating officer of the Illinois Manufacturing Association. “Gov. Quinn, who is the founder of [the Citizens Utility Board (CUB)], now solely has the power of whether to sign one of the biggest rate increases in history or not.” Jim Chilsen director of communications for CUB, a Chicago-based consumer advocacy group, agrees. “We’re not universally opposed to projects like these, but we are concerned that the way that the legislation is structured that it is extremely unfair to suburban, central and southern Illinois consumers who could be forced to pay up to triple costs.”

He says the fact that Quinn founded CUB does not necessarily give the group a leg up when it comes to persuading Quinn to veto the bill. “The governor, he has a long history of consumer advocacy. He listens to all sides of an issue. I don’t think that we necessarily have an advantage.” However, he said that the governor should take notice that business groups, environmental groups and consumer advocacy groups, which are not often unified on an issue, have teamed up to ask Quinn to reject the plan. “I think that’s a pretty powerful message. I think that the facts speak for themselves.”

A spokeswoman for Quinn said the governor is reviewing the bill. 

Proponents say there are no guarantees that natural gas prices will stay low. They argue that having a consistent source of natural gas in the state for the next 30 years would help protect customers from volatility. “Prices fluctuate -- gas station prices, and so do natural gas prices, as well,” said Chicago Democratic Sen. Donne Trotter, who sponsored the legislation enabling the project. Trotter argues that the plant would bring desperately needed jobs to the area.

 Environmental groups say that the southeast side, which has a history of dangerous pollution, should not have to take an environmental risk to have economic development. (For more on the environmental history of the area, see the current Illinois Issues.) “They are looking for jobs,” said Becki Clayborn, a representative of the Illinois chapter of the Sierra Club’s Illinois Beyond Coal Campaign. “But because the community has seen it time and time again, they are not buying it.” Local environmental groups hope that the area can bolster its economy through renewable energy projects and by becoming a recreation destination.

'Smart grid' passes, but Quinn vows veto

By Jamey Dunn

Lawmakers approved a measure that would allow Illinois’ two largest utility companies to raise rates to fund power grid upgrades, but Gov. Pat Quinn has vowed to veto the bill.

Senate Bill 1652 (House Amendments 1, 2 and 3) would allow Ameren and Commonwealth Edison to increase customers’ rates 2.5 percent annually to pay for improvements to the state’s electric grid ranging from basic repairs to poles and lines to cutting-edge technology that could allow utilities to prevent outages and customers to track their energy usage. The companies would be required to invest a total of $3.2 billion in the grid over 10 years. The measure also requires ComEd to create 2,000 new jobs through the plan and Ameren to create 450 jobs. If they do not meet those goals, they will be subject to fines.

Opponents said rate increases might be too much to ask of families coping with the economic downturn and recent income tax increase. “I’m concerned about the impact that higher rates are going to have on our consumers who are already struggling right now in these tough economic times. … And I’m not sure that right now is really the time to add an increase in their utility bills,” said Sen. Linda Holmes, an Aurora Democrat who cast a “present” vote on the bill.

“Sometimes we’ve got to do what we’ve go to do,” said East Moline Democratic Sen. Mike Jacobs, who sponsored the plan. “If we’re going to have success in the 21st century, we need to have a 21st century grid”

Supporters said that to hang onto manufacturing jobs and attract new businesses to the state, Illinois needs improvements to a grid that they claim is frightfully out of date. They said the improvements to the grid could eventually lead to savings and greater reliability for customers. “You’ve got to invest in your electric infrastructure to keep businesses here, and to keep my grandmother and my elderly mother from having their air conditioning go out — which happens a lot. Far too often,” said Sen. Kirk Dillard, a Republican from Hinsdale.

Dillard said consumers cannot expect the utility companies to invest in upgrades without knowing they will be getting some money to direct toward improvements.

However, Doug Scott, chairman of the Illinois Commerce Commission, which signs off on rate increases and would oversee the utilities under the plan, says that the bill strips away too much regulation. “In the normal circumstance, our review serves a check to companies to spend money only on the items they are allowed by law. … We think that this bill significantly weakens that check and provides no real incentive for the companies to control their costs.”

Scott added that the rate increases the utilities are seeking include some costs that should not be passed on to the customers. “It’s not just about smart grid, and it’s not just about infrastructure. All of the costs of the utility are built into the new procedure that’s set up. … It’s not just meters and poles and cables or even personnel. But it’s attorney fees advertising, charitable contributions, pensions bonuses for executives — everything.”

Jacobs said if the state does not move forward on the plan, Illinois could be left behind when it comes to smart-grid innovations. “If we don’t spend the necessary resources, we will lose the opportunity to modernize our grid.”

As for Quinn’s opposition, Jacobs said: “If he vetoes it, I’ll override him. That’s what will happen. And I think the House will override him, too.” The bill, however, did not pass either chamber with enough votes to override a veto.

House approves rate increase plan for smart grid

By Jamey Dunn

The two largest electric utilities in Illinois would have the opportunity to annually increase the rates they charge customers, under a plan approved today by the Illinois House that would require the companies to make billions of dollars worth of improvements to the state’s electrical grid.

Under Senate Bill 1652, Commonwealth Edison, which provides power for much of northern Illinois, and Ameren, which services much of downstate, would be allowed to increase rates up to 2.5 percent a year to pay for work on the existing grid, as well as adding so-called smart-grid technologies. The new features include smart meters that customers can use to track their power consumption and cut costs by reducing usage during peak hours, when energy costs more.

The Illinois Commerce Commission, which rules on rate hike requests from the utilities, would still have the power to review and potentially reject increases meant to fund grid projects. The bill caps the utilities’ profits and sunset in 2017, so legislators would have to reapprove the plan at that time. If a review in 2014 finds that rates have increased by more than 2.5 percent annually, the law would phase out then.

Ameren and ComEd would be signed on to investing about $3.2 billion in the grid over 10 years. The measure also requires ComEd to create 2,000 new jobs through the plan and Ameren to create 450 jobs. If they fall short of those totals, the companies must pay $2,000 in fines for each job, to be spent in part on training and development programs.

Proponents lauded the bill as a boon for the Illinois economy because of the job growth included in the plan, as well as the potential for cutting-edge energy infrastructure to help attract new businesses to the state.

Both Gov. Pat Quinn and Attorney General Lisa Madigan have voiced strong opposition to the bill, and Quinn has threatened to veto it if it comes to his desk.

“We understand that electric utility companies must make investments to ensure consumers across Illinois have reliable and safe energy. In fact, Illinois law already requires this investment. But utility companies must not be given a blank check to spend billions of dollars at the expense of the hard-working men and women of our state. They should justify their multibillion-dollar investment plans before consumers are on the hook to pay for them,” Quinn and Madigan said in a joint prepared statement.

The statement goes on to say: “We believe there are ways to encourage greater investment to upgrade the electric grid and create more jobs while protecting consumers. We urge members of the General Assembly to reject Senate Bill 1652 and send a strong message to Commonwealth Edison and Ameren that we care more about protecting the pocketbooks of Illinois families, than the profits of electric utility companies.”

The measure passed with 67 votes in favor and 47 votes in opposition and awaits a vote in the Senate. Supporters will need 71 House votes and 36 in the Senate to override a potential veto from Quinn.

Legislators start final push on big issues

By Jamey Dunn and Lauren N. Johnson

With less than a week before their adjournment deadline, Illinois lawmakers are making final attempts to get several large proposals passed in the last days of regular session.

Pension benefits
House Minority Tom Cross submitted his proposal today to reduce future retirement benefits for current state employees. According to Cross' spokesperson, Sara Wojcicki, he plans to present his amendment to Senate Bill 512 in a House committee tomorrow morning. Under the proposal, current employees would be able to keep the benefits they have already earned. But starting July 1, 2012, they would have to pick one of three plans that call for larger contributions or reduced benefits. Employees could stay in their current defined benefits plan, but their contributions would increase:

• State Employees’ Retirement System (SERS) State employees who will also receive Social Security benefits currently contribute 4 percent of their salaries. Under the proposal, they would have to pay 9.29 percent. Members of SERS who do pay into Social Security now contribute 12.5 percent of their pay. They would have to kick in 18.91 percent under the proposal.State Employees’ Retirement System Alternative Plan Members of the alternative SERS system, which includes workers with potentially dangerous jobs, such as prison guards, and who also have an earlier retirement age, contribute 8.5 percent of their salaries now, if they also pay into the Social Security system. Under Cross’ plan, they would have to chip in 16.65 percent of their pay. Those who will not get Social Security pay 12.5 percent of their salary now and would have to pay 18.91 percent.
• Teachers’ Retirement System (TRS) Illinois teachers, except Chicago teachers, currently pay 9.4 percent of their salary and will not receive Social Security benefits. Under the bill, they would have to contribute 13.77 percent. Chicago teachers would see their contributions increase from 9 percent of their pay to 12.75 percent.
• State University Retirement System (SURS) University employees currently contribute 8 percent of their pay. Under the proposed change, they would pay to 15.31 percent.
• General Assembly Retirement System (GARS) Legislators currently contribute 11.5 percent of their income to retirement benefits. They would pay 24.89 percent under the proposed legislation.
• Judges Retirement System (JRS) Judges kick 11 percent of their pay into their retirement. Under Cross’ plan, they would pay 34.04 percent. Lawmakers reportedly considered leaving judges out of the plan, but according to Wojcicki , they will be included in Cross’ proposal.

The amount that employees would have to pay to stay in their current benefit plans would be recalculated every three years.

Under Cross' amendment, employees could also opt to move down to “tier two” of the system — which was passed by legislators in one day during last year’s legislative session — and applies to all employees hired after January 1 of this year. Or they could choose to participate in a self-managed plan, similar to a 401K. Under the self-managed plan, employees who would collect Social Security would contribute 6 percent of their salary, and those who would not would contribute about 4 percent. The state would match those contributions

Employees who chose the old benefits could opt to switch when the rates they must pay are refigured every three years. If they left the so-called tier one plan, they could not return to it but would keep all the benefits they earned under it.

Senate President John Cullerton has said he believes changes to current employee benefits would be unconstitutional. However, he has vowed to call the bill for a floor vote in the Senate if it passes in the House.

Borrowing
A Senate committee today approved a plan to borrow about $6 billion spread out through four proposals to pay down the state’s unpaid bills to vendors, schools, hospitals and local municipalities.  “In some instances, those bills are months and months old; in some cases they are over a year old. So, a tremendous backlog of unpaid bills,” said Sen. John Sullivan, a Rushville Democrat who is backing the legislative package.

Sullivan sponsored four Senate bills that make up the plan and total $6.17 billion:

• SB 342 would pay $1.5 billion owed to state vendors, non-governmental entities and private businesses. Sullivan said vendors have had to take out lines of credit, cut jobs and reduce their services as result of late payments or nonpayment.
• SB 343 would address payments owed amounting in $1.1 billion for health care providers whom the state contracts with for its group health insurance programs.
• SB 344 would restructure debt for private businesses waiting to be paid their corporate tax refunds by paying $800 million to the sector.
• SB 345 would provide the largest amount of money from the state to school districts, universities, community colleges and local units of government, amounting in $2.7 billion. Schools say that have had to make layoffs and cut programs as result of unpaid bills from the state.

Sullivan said his plan would pay off the bonds over the next seven years using money from the recent income tax increase. It would cost the state about $804 million in interest. “Even though it’s slightly different from the variation that we proposed three weeks ago, we think it makes a lot of fiscal sense and economic sense,” said Gary Plummer, president of the Springfield Chamber of Commerce, a group that suggested a similar plan almost a month ago. “It will allow the state to make good on past due bills owed for goods and services provided by agencies and vendors in good faith throughout the state.”

Although, the plan differs from an earlier borrowing proposal by Gov. Pat Quinn that called for borrowing $8.7 billion to be repaid over 14 years, Kelly Kraft, spokeswoman for the governor’s office, said Quinn has remained flexible with his proposal and supports Sullivan’s plan. “Overall, when you’re dealing the budget, it’s a negotiation process, so there’s give and take throughout. So this is something that we do talk about with legislators, as well as the budget,”  Kraft said. “We just want to come up with the best plan for everyone.”

However, the plan will need Republican support in each chamber to get the required super majority needed for the state to borrow. Senate Republicans, who have opposed additional borrowing, agree that individuals and businesses owed by the state should be paid in a timely matter but suggest that there are other ways to address the backlog. Sen. David Luechtefeld, an Okawville Republican, remarked: “Yes, you want your money, but it’s not going to be too long before those bills are going to go right back up because there’s no way to pay them anymore. We’ve borrowed too much.” Cullerton said Senate Democrats are looking for the Republican backing needed to pass the borrowing plan. “That will take some time,” he said.

Energy
House members are supporting a new version of a controversial proposal that would allow utility companies to raise rates while also requiring them to invest in infrastructure, as well as a proposal to build a coal plant that would utilize carbon emission reducing technology.

SB1652 would allow Commonwealth Edison and Ameren, the state's largest electric utilities, to increase customers’ rates by up to 2.5 percent annually and would require both companies to invest a combined $3.2 billion  in infrastructure to upgrade the existing electric gird and add so-called smart grid technology. Unlike in previous incarnations of the plan contained in House Bill 14, the Illinois Commerce Commission, which currently has to sign off on rate hikes, would decide on the increases.

The measure would also require utilities to meet benchmarks for customer service and reliability. The ICC would monitor the progress, and the utilities would face fines if they failed to meet the goals. The ICC would also review rates in 2014, and the entire bill would sunset in 2017, meaning lawmakers would have to approve it again.

David Kolota, executive director of the Citizens Utility Board, said the changes to the proposal are encouraging, but he said the customer-service benchmarks may be set too low.

On the policy front, on smart grid policy, it’s definitely a significant step forward,” said Kolota, whose consumer advocacy group opposed the original plan. “All [the previous plan] said was, ‘We’re going to do smart grid.’ It was like one sentence.” He said he is concerned that the rate cap is only in place until 2014. “We certainly wouldn’t want to see a situation where consumers are soaked and suddenly get hit with a significant rate increase.”

Orland Park Democratic Rep. Kevin McCarthy, a sponsor of the bill, acknowledged that the changes will not be enough to please all stakeholders. “I don’t pretend that these changes are everything some of our colleagues wanted.”

Sen. Mike Jacobs, an East Moline Democrat who sponsors the bill in his chamber, said the benefits that customers will see in future savings, as well as in more reliable power, are worth the up-front investment of higher rates,which sponsors estimate will average about $3 per household each month. “You can’t base this off price. That’s kind of silly. We’re dealing with hundred-year-old technology, and if consumers want something to work, they’ve go to pay for it. And the fact is, it costs money, and you know there’s nothing for free. My cable bill went up $10 a month last month nobody even asked me if they could raise it,” Jacobs said.

The changes were not enough to win the support of one vocal opponent, Attorney General Lisa Madigan. “A day after winning a $156 million rate increase, ComEd just can’t help itself. Today, their legion of lobbyists continue to push legislation that will require consumers to fund billions more in guaranteed profits. This new proposal is just more of the same — a plan that hits consumers where it hurts the most — their wallets,” Madigan said in a written statement. The ICC approved a ComEd Rate increase yesterday. Gov. Pat Quinn, who vowed to veto the earlier version of the plan, declined to weigh in on today’s proposal.

“If you want to vote in this General Assembly, run for the office,” Jacobs said in response the Madigan’s opposition.

Meanwhile, the attorney general did throw her support behind an attempt to resurrect a plan to help Tenaska Energy build a “clean-coal” plant near Taylorville. Paul Gaynor, chief of the Public Interest Division of the attorney general’s office, said that the Tenaska plant is a better investment for Illinois utility customers, calling the plan rate neutral. Energy generated by the plant would initially come at a greater cost, but supporters say that a provision giving the Illinois Power Authority more flexibility in purchasing power would result in savings that could negate any substantial rate increase.

Northbrook Democratic Rep. Elaine Nekritz, one of the House sponsors of SB 1653, said she hopes to get the plan through both chambers before the end of the regular session on Thursday.

Budget
Senate President John Cullerton said that the House and Senate are working to bring their proposed budget numbers in line and that a vote could come over the weekend. He said the Senate will likely come down to the House’s revenue estimate, which is $1 billion less than the estimate contained in the budget proposal passed by the Senate. Echoing House Speaker Michael Madigan, Cullerton said revenue that comes in beyond the estimate could be used to pay off overdue bills.

Workers' compensation
A House committee approved SB1933, which would repeal the current worker’s compensation system. House Democrats, including Speaker Madigan, have threatened to destroy the current system if stakeholders cannot agree on a reform package. The legislation would force any worker's compensation claims into the courts. The bill is sponsored by Marion Democratic John Bradley, who has been working on negotiations. Bradley said that the passage of the bill was not a indication that talks had fallen apart, but said he wanted to keep all options open. Cullerton said, “I think we’re really close to an agreement on workers’ comp — an agreement on workers’ comp among a number of the stakeholders.”

Redistricting
Cullerton also said he expects some changes to the Senate Democrats’ proposed legislative map to surface tomorrow and that the proposed map of congressional districts would come sometime after that.

Tomorrow is expected to be a busy day for the legislature. Check back for updates.

Utilities seek to increase rates to upgrade grid

By Jamey Dunn

Utility companies hope to raise rates to help finance upgrades to the state’s electric grid and infrastructure, but regulators and community advocates say the proposed changes would result in automatic annual rate increase for consumers.

In its current form, House Bill 14 would let utilities that commit to investing in upgrades to set their rates annually through a formula. The Illinois Commerce Commission — which currently approves or rejects requests for rate increases after an 11-month review process — would have 45 days to object to new rates. The commission also would be tasked with policing how the utilities are spending the new revenues and verifying that the money is going to projects to strengthen the grid.

“Under the current system, do the utilities always get what they want? No. Do the consumer advocates always get what they want? No. This means the process is balanced, and it falls somewhere in between, and it works,” said Paul Gaynor, chief of the public interest division in Attorney General Lisa Madigan’s office.

Susan Satter, a senior attorney in Madigan’s public utilities bureau, described the legislation as an “automatic annual rate increase” because the commission would not have the necessary time to research the rates. Satter said the proposed process would “effectively leave the Commerce Commission, the attorney general and other consumer advocates on the sidelines as Illinois utilities automatically raise their rates year in and year out.”

The Commerce Commission opposes the bill in its current form. Spokeswoman Beth Bosch said the agency has questions about the rate formula, the smart grid plan and the spending oversight in the legislation.

However, representatives of the state’s major utility companies say the state needs to update its woefully out-of-date grid to make it more reliable and efficient, as well as to prepare for the technology of the future, such as electric cars. Under the plan, Commonwealth Edison (ComEd), which is pushing the change, would invest $2.6 billion in grid upgrades. Rates for ComEd customers would increase by about $3 a month. Ameren would invest about $950 million, and its customers would see an estimated $5-a-month rate increase. Those increases would come on top of regular rate jumps that utilities describe as the cost of doing business. Utility providers say that in return for the rate increases, customers will eventually see more reliable services, as well as ways to save on their bills through energy efficiency and an updated metering system.

“If Thomas Edison and Sam Insul, the innovators of the original grid, took a tour in 2011 of any system in the United States, they would not bat an eye as they would see essentially the same technology they deployed 100 years ago, operating in much the same way,” said Anne Pramaggiore, chief operating officer of ComEd. She added that 44 other states are taking “significant action” to modernize their grids. Pramaggiore said ComEd is already making investments in the grid but can only make limited changes because the company cannot predict its future revenues, as determined in part by rate increases that the Commerce Commission approves or rejects.

Craig Nelson, senior vice president of regulatory affairs and financial services, agreed. “We need to upgrade, strengthen and modernize our utility structure. … In order to make these incremental investments, we must also upgrade, strengthen and modernize the rate-making process in Illinois.”

Advocates for grid upgrades say they would make the state’s energy system more environmentally friendly, but environmental advocates said HB 14 does not do enough.

Jack Darrin, director of the Sierra Club's Illinois chapter, said the group is in favor of updating the state’s power grid. However, he says the bill needs more specific commitments to encouraging renewable energy and making sure Illinois is prepared for the infrastructure that would be needed for widespread use of electric cars. “House Bill 14 currently doesn’t do those things.”

Parties on all sides of the debate said they are willing to work on the concept and find areas of compromise, and sponsor Rep. Kevin McCarthy, an Orland Park Democrat, said he plans to make changes to the bill.

On one side, you have utility companies with lots of money and lobbyists. On the other is a regulatory body, backed by the attorney general, that does not want to give up its oversight powers. Look for this to be a hot topic throughout the legislative session.

Wind power brings jobs to Chicago

By Jamey Dunn

A new report by the Environmental Law and Policy center found that wind power means job growth for Illinois, predominantly in the Chicago area.

The Environmental Law and Policy Center found that more than 100 businesses in Illinois are involved in the supply chain of the wind industry. About 60 of them are in or near Chicago. The city is home to 13 corporate headquarters of American and international wind energy companies.

“A major wind power project creates a lot of jobs. Everything from electric workers to construction workers to people who lay the concrete pads,” said Howard Learner, executive director of the ELPC. Learner said there is also potential for growth for financial and accounting firms, as well as Illinois’ stagnant manufacturing sector.

Learner added, “What we are seeing are old-line manufacturing firms retooling to make wind power components that are part of the clean energy economy future.”

Jerry Roper, president and chief executive officer of the Chicagoland Chamber of Commerce, said federal stimulus funds helped to jump-start the wind sector in Illinois.

Ashley Craig, and environmental business expert for the ELPC, said public money helps, but it doesn’t beat out a friendly policy climate for stimulation growth. “More than the federal subsidy money, I think the thing that has positively impacted the business the most is the policy decisions, and that’s consistent, really, with any business innovation that our country has experienced — everything from the Internet from the car industry to air travel. You don’t launch a large industry like this without federal and state support, and that doesn’t have to come in the form of money. Policy is just as important.”

Learner said the Illinois Renewable Electricity Standard, which requires utilities to purchase 25 percent of their power from renewable sources by 2025, has been key to the growth of wind power in the state. Of the 25 percent, 75 percent of the energy must come from wind power. The report also attributes growth to sales tax breaks on materials used to build wind energy projects, tax-free bonds to help spread out initial investment costs, and a consistent system for wind farm property tax assessments across the state

Sen. Mike Jacobs, chair of the Senate energy committee, said alternative energy sources, such as wind and solar, may not yet be consistent enough to rely upon, and lawmakers should be judicious when considering tax breaks or subsidies. He is concerned about asking consumers, especially in a down economy, to pay more for power. Jacobs, an East Moline Democrat, said it is a constant balancing act to keep old power sources thriving while still encouraging development of renewable energy.

“Everybody is really interested in jobs. … I just don’t think weakening incumbent utilities who provide us cheaper power is a good trade-off for us,” Jacobs said.

Roper said it will take more than government support to make the state a leader in wind power. He said the business sector also needs to focus on the potential of wind energy in Illinois. “Illinois can own a big part of what they’re calling … green jobs in America. [Wind energy] is probably the best definition of green jobs, as far as I’m concerned, and it’s something that needs to be touted out there in the marketplace.”