Lawmakers approve measure giving utilities control over new downstate transmission lines

[May 31, 2023]  By ANDREW ADAMS
Capitol News Illinois
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SPRINGFIELD — In the final hours of their spring session last week, lawmakers approved a controversial measure that would give existing power companies in downstate Illinois, notably Ameren Illinois, the first crack at installing new transmission lines.

The measure applies to companies that already own or operate electric transmission lines under the purview of the Midcontinent Independent System Operator, or MISO, the grid operator for a wide swath of the Midwest, including much of downstate and parts of northwestern Illinois.

This “right of first refusal” would empower those companies to choose whether they want to build the new lines, replacing the current system of competitive bidding for such construction. This provision is temporary and would sunset at the end of 2024.

Critics of the proposal said that it would reduce competition, leading to higher costs for construction projects and ultimately higher costs to energy consumers. But proponents said that it will streamline the billions of dollars of construction planned for the coming years while creating union jobs for Illinoisans.

The proposal was in a broader piece of energy legislation, House Bill 3445, which was introduced in its final form last Thursday night and passed in the early hours of Saturday. It passed in the Senate 41-9 with a single member voting “present” and in the House 63-32, with two “present” votes.

While it needs only a signature from Gov. JB Pritzker to become law, he vowed last week to veto the bill. Pritzker spokesperson Alex Gough said the governor opposes the bill because it “puts corporate profits over consumers.”

The legislature could override Pritzker’s potential veto, but it would require three-fifths majorities in both chambers, a margin that it earned in the Senate, but not the House.

Bill sponsor Sen. Steve Stadelman, D-Loves Park, defended the proposal as a job-saving measure and emphasized it would be temporary.

“This is an 18-month temporary right of refusal,” Stadelman told Capitol News Illinois on Thursday. “I just want to make sure that over that time period, there is certainty to our grid and that the jobs are Illinois jobs. I don’t want these jobs going out of state.”

The right of first refusal provision is supported by both Ameren Illinois and labor unions, such as IBEW Local 51, IBEW Local 134 and the Midwest region of Laborers' International Union.

The bill’s house sponsor and the House Public Utilities Committee chair, Rep. Larry Walsh, D-Elwood, said that the proposal came to him from the union. In a Friday evening committee, Walsh said it would streamline the process of expanding the grid.

“If you have an entity that controls the transmission of our electric power throughout whatever region you’re in… It’s easier for them to do this type of work, interconnecting their system,” Walsh said.

The measure’s opponents, however, include a mix of environmentalists, business groups, renewable energy companies and the state’s attorney general.
 

Illinois Environmental Council Executive Director Jen Walling said the proposal will make it more difficult for the state to build out renewable energy resources.

“We need two to five times more transmission to be able to meet our clean energy goals in the state,” Walling said. “This is going to make it expensive and hard to achieve those goals when we could save money and have better systems through a competitive procurement.”

Energy companies that build transmission lines, such as NextEra Energy, echo Walling’s concern. Those firms contend the proposal will stifle competition and increase consumer prices, according to Jonathan Feipel, a representative of the industry group American Clean Power.

Rep. Ann Williams, D-Chicago, the chair of the House Energy and Environment committee, pointed to the significant cost of transmission line projects that have recently been approved by MISO.

“Right of first refusal is definitely problematic and when you’re talking about $10 billion – with a ‘B’ – dollars, that’s certainly a great concern,” Williams said during debate over the measure late Friday before voting against it.

Lawmakers of both parties, including Williams, took issue with the process of the proposal’s introduction. It was introduced as an amendment and passed through both houses within 36 hours.

Rep. Larry Walsh, D-Elwood, speaks to the powerful House Executive Committee in support of House Bill 3445, a package of energy legislation. (Capitol News Illinois photo by Andrew Adams)

Utilities having the right of first refusal has turned into a political hot topic in other states recently. In March, the Iowa Supreme Court issued a temporary injunction against a law in that state granting incumbent utilities the right of first refusal for transmission lines, noting that the Iowa law was “quintessentially crony capitalism.”

Clean energy studies

In addition to the right of first refusal provisions, HB 3445 would direct the Illinois Power Agency to study several potential developments in the state’s energy sector. That includes a potential offshore wind farm pilot program off the coast of Lake Michigan, dubbed the “Rust Belt to Green Belt” project.

Even the notion of commissioning a study on the subject drew criticism from some Democrats. Sen. Laura Murphy, D-Des Plaines, said she was concerned about developing a wind farm on Lake Michigan – northern Illinois’ main source of drinking water.

“Without any parameters on how this study is conducted, I am an absolute ‘no’ on this portion of this bill,” Murphy said during a Senate hearing on the measure Thursday, May 25.

Those studies were supported by the environmental groups that opposed the right of first refusal portion of the bill.

A bill outlining a funding scheme for the project was put forward earlier in the year. It passed in the House but stalled when it arrived in the Senate.

Rep. Marcus Evans, D-Chicago, an advocate for the offshore wind project, said that he will continue to push for its passage.

“There’s so much information worldwide about the benefits of wind energy that we’re not taking advantage of,” Evans said in a Friday interview. “We’re not going to meet our clean energy goals at the rate we’re going. We have to expedite.”

The bill would also require the IPA to study the implications of another proposal from earlier this year, the consideration of a renewable credit system to support deploying grid-scale energy storage, a longtime goal of renewable energy advocates. The agency would also be required to study the implications of a proposed high-voltage electricity transmission project.

Nuclear construction

Lawmakers also approved a measure, Senate Bill 76, that would allow for the construction of “advanced” nuclear reactors in the state.

A state law dating back to the 1980s placed a moratorium on building those power plants until the federal government designates a repository for nuclear waste, something the federal government has yet to do.

SB 76 was approved with bipartisan support earlier in May, passing on an 84-22 vote in the House and a 36-14 vote in the Senate.

The measure initially lifted the ban on construction for all nuclear plants, although debate on the bill focused primarily on the latest generation of nuclear technology. That includes prefabricated small modular nuclear reactors and microreactors.

That intention was eventually codified in an amendment and the final bill would only allow the construction of “advanced nuclear reactors” as defined in federal law.

The bill’s chief Senate sponsor, Sen. Sue Rezin, R-Morris, said that those types of reactors are valuable to provide reliability to the grid as the state shifts toward renewables.

“The value of the modular and the small advanced nuclear reactors are that we can drop them on coal plants that are shuttered,” Rezin said in an interview shortly after the bill passed last week. “We can drop them right on site and build them out there and tie them right into their transmission line or their grid system which they already have built into the plant.”

The proposal drew criticism from both environmental groups like the Sierra Club and anti-nuclear advocates like David Kraft, the head of the Chicago-based Nuclear Energy Information Service.

“The legislature has opened the door for more reactors and more waste,” Kraft said in an interview.

Capitol News Illinois is a nonprofit, nonpartisan news service covering state government. It is distributed to hundreds of print and broadcast outlets statewide. It is funded primarily by the Illinois Press Foundation and the Robert R. McCormick Foundation, along with major contributions from the Illinois Broadcasters Foundation and Southern Illinois Editorial Association.