Ambiguous State Zoning Law Could Cause Dispute in Whiteside Co

An ambiguity in state law is causing a disagreement in Whiteside County, with tiny Deer Grove claiming it has the power to regulate wind turbines outside the town, and one wind developer claiming the regulation of those unincorporated county lands rests with the county. According to an article from Sauk Valley Media:

Deer Grove’s village board believes it can regulate wind turbines within 1.5 miles of its boundaries.

But a wind energy company disagrees. It is planning two of its nine turbines within the 1.5-mile area, and it’s not seeking the village’s approval.

On Wednesday, the Whiteside County Planning and Zoning Commission continued its ongoing hearing for Ireland-based Mainstream Renewable Power’s proposal to build nine turbines in the far southeastern part of the county.

More than 80 people attended Wednesday’s session, including 17 of the 27 County Board members, who will make the final decision.

Late last year, Deer Grove, population 48, passed a zoning ordinance, which officials said was legally required before the village could regulate activities in the 1.5-mile area.

During Wednesday’s testimony, John Martin, Mainstream’s project manager, said the village’s zoning ordinance didn’t meet the “regulatory requirements” to keep out turbines. He didn’t provide details.

At issue is a 2007 state law that gives municipalities the power to regulate wind turbines within 1.5 miles of their "zoning jurisdiction." However, towns like Deer Grove (population 48) have no zoning code, and therefore have no legal right to zone wind turbines. The Village disagrees. Developers argue that towns like Deer Grove DO have the power to regulate wind turbines, by passing a zoning code.

Allowing Deer Grove to regulate wind turbines without a zoning code presents a host of problems. Namely, that it allows a town to control land use outside its boundaries, even though it has chosen NOT to control land use inside its boundaries (by establishing a zoning code). Plus, it would only apply to wind energy. Allowing a municipality to control a single type of land use is also a slippery slope, as it sets a precedent where all sorts of land uses can be singled out.

Further, it sets up the potential for conflict between counties and municipalities, who may have conflicting regulations for unincorporated county lands that lie within the 1.5 mile radius. Watch for the issue to heat up in Whiteside and other counties as wind development moves forward in the state.

Illinois Environmental Groups Split on Renewable Energy/Clean Coal Bill

An Illinois Statehouse News article highlights an interesting dynamic that has arisen around a comprehensive clean coal/renewable energy bill now pending in the Illinois House:

Illinois environmental groups are split over an energy bill that funds a controversial “clean coal” power plant, but also boosts renewable energy in the state's electricity market.

Senate Bill 0678  would require Illinois utilities to buy electricity at above-market rates from a coal-to-gas power plant in Taylorville, to be built by Omaha, Neb.-based Tenaska Energy. By some estimates, Illinois residents and businesses could see their electricity rates rise by $12 billion over 30 years.

The bill also would streamline the Illinois Power Agency’s procurement of renewable energy for utility companies, providing long-term certainty for state’s burgeoning wind industry.

Many of the state’s environmental groups have advocated for that streamlining, but only theEnvironmental Law and Policy Center said it’s worth supporting in tandem with the Tenaska coal project.

“I wish we could do this without compromising,” said Barry Matchett, co-legislative director at the Environmental Law and Policy Center, referring to the renewable energy procurement provisions. “But we’ve tried to push those (provisions) separately in recent years, and they haven’t passed.”

However, Jack Darin, president of the Sierra Club’s Illinois chapter, said the coal project is like a bailout and a bad idea.

“It's a sweetheart deal for a single company to make Illinois citizens and businesses finance a very risky project that private backers won't touch,” Darin said.

The Illinois Environmental Council and the Illinois Wind Energy Coalition are neutral on the bill, which awaits debate in the state House. 

Renewable Energy Saved Illinois Consumers Over $100 Million

 New report from the Illinois Power Agency shows wind and other renewables reduced wholesale power prices, boosted economic growth

WIND ON THE WIRES PRESS RELEASE -- CHICAGO, IL (April 10, 2012) - Illinois residents and businesses saved over $100 million in power costs thanks to wind and other renewable energy sources, a result that highlights the broad importance of wind energy to the state's economy.

In a study prepared for the Illinois General Assembly late last month, the Illinois Power Agency (IPA) found that adding wind power to the electric grid reduced wholesale power prices by $176.8 million while simultaneously creating jobs and other economic opportunities for residents and businesses. The conclusion affirms that renewables are a positive addition to the state's energy portfolio.  

"When the sun is shining or the wind is blowing," the report states, "the combined output of renewable generators benefits all customers by bringing down the market price of electric energy for all resources operating at that time. This is because wind and solar generation can effectively bid in at a zero fuel cost."

According to the study, renewable resources lowered Illinois' average locational marginal price (LMP) for electricity by $1.30 per megawatt-hour (1.3 cents per kilowatt-hour), for a total savings of more than $176 million.

"This landmark study affirms what the wind industry has known for years," said Wind on the Wires Policy Manager Kevin Borgia. "Wind energy has no fuel cost, which allows wind generators to bid lower spot market electricity prices than any traditional energy source. This translates to lower power prices for Illinois ratepayers and businesses."

 

The IPA analysis confirms similar studies from Massachusetts and New York, which also found wholesale price-reductions from incorporating renewables onto the power grids in those states.

 

Illinois businesses are also enjoying strong growth from the manufacturing of wind turbine components and construction of wind farms in Illinois, the study notes, highlighting a 2011 Illinois State University (ISU) report on the economic impact of wind energy in the state.  

 

The ISU report found that the first 2,422 MW of wind installed in Illinois has created over 13,000 temporary jobs and nearly 600 permanent jobs in the state, while also providing new business to construction, engineering and manufacturing-related firms. These new opportunities were in addition to the millions of dollars paid to Illinois landowners leasing space to wind farms, and millions in new property taxes that wind developers pay to local governments in Illinois.

 

Despite the positive findings, the IPA report also highlights the need for additional action to ensure Illinois ratepayers fully benefit from wind energy. The IPA analysis notes that renewables can be a hedge against electricity price volatility, but those benefits are not captured by a reliance on one-year contracts for renewable energy certificates (RECs), which has been the IPA's primary mechanism for procuring renewables since 2007.

 

A REC is a derivative product of renewable energy, it is not physical energy. A reliance on one-year RECs subjects Illinois ratepayers to volatility in both REC prices and fossil fuel prices because of the laws of supply and demand.  

 

The price of energy from wind is near an all-time low. Consumers would benefit from locking in long-term power-purchase agreements (PPAs) for wind energy now. Such long-term PPAs are standard in the renewable energy industry. Longer term contracts will lock in these low prices for a 10 to 20 year period. They also provide a stable revenue stream necessary for new generation to be built, bringing additional jobs and economic development to the state.

 

The full study can be found at the IPA website: http://www2.illinois.gov/ipa.

Vital Illinois Renewable Energy Reforms Tied to Controversial Coal Legislation

Midwest Energy News published an excellent piece describing the status of Renewable Portfolio Standards across the region today, including a concise description of pending reforms to the Illinois RPS, which are currently tied to controversial clean coal provisions. From the article:

Illinois established its 25-percent-by-2025 renewable standard in 2007, but the state’s competitive electricity market has limited utilities’ investments in new renewable energy projects.

Customers in Illinois can choose to purchase power from one of the state’s major utilities or any number of alternative suppliers, which pay a fee to sell their electricity across the utilities’ wires. Customers can also change electric companies much like cell phone carriers. This makes long-term planning a challenge for utilities and suppliers, because the number of customers fluctuates from month to month.

“A renewable energy developer needs long term certainty to build a wind project,” says Kevin Borgia, director of the Illinois Wind Energy Coalition. They can’t currently get that certainty from Illinois utilities, which have been meeting their RPS goals so far by purchasing renewable energy credits instead of investing in new projects.

A solution has been proposed in S.B. 678, which would establish a transmission tariff that would be used to fund renewable projects. The legislation would spread the cost of renewable investments proportionally across all utilities and electric suppliers, creating a steady stream of funding regardless of how customers move their dollars.

The bill is a broader piece of energy legislation that includes the controversial Tenaska Energy coal gasification project, which has overshadowed the renewable portfolio standard reforms. Borgia argues that it may be the most important renewable energy legislation in the region, considering Illinois has the Midwest’s largest electricity load.

“The most important renewable energy bill currently pending in the Illinois House is also the most important coal bill pending in the Illinois House,” says Borgia.

That’s made for some interesting bedfellows and a set of political dynamics that make it tough to predict how it will play out, Borgia says. The bill has cleared the Senate and is currently sitting with the House rules committee. The state’s legislative session lasts through the end of next month.

Great Lakes Offshore Wind Agreement May Have Minimal Impact

An agreement between five states and the federal government on expediting offshore wind permitting in the Great Lakes received wide press attention last week, with news sources hailing the agreement as a significant step toward developing wind farms in the lakes. But much of that enthusiasm may be premature.

While the Memorandum of Understanding could eventually prove beneficial for offshore wind, Illinois residents shouldn't presume that towers and blades will soon be rising over the waters of Lake Michigan. As this blog has noted for years, offshore wind in Lake Michigan is much more expensive than onshore wind, and private wind developers have not expressed much interest in developing in the lake off the coast of Chicago.

Still, intergovernmental agreements of this type are useful in speeding complex permitting regimes. The folks over at Changing Gears described what the MOU does and doesn't do:

The MOU includes nine federal agencies, and the states of Minnesota, Illinois, Michigan, New York and Pennsylvania. Not included are Indiana, Ohio and Wisconsin, though they can sign on later.

But what’s actually in the memorandum of understanding? Very little, but what’s there could still make a difference.

The entire agreement is 12 pages long. It spells out each agency that has a say in regulating offshore wind projects. All the MOU really requires is that these agencies make a reasonable attempt to work together with the states.

The MOU is just as clear about what it doesn’t do, for example, from the agreement:

Nothing in this MOU may be construed to obligate the Participants to any current or
future expenditure of resources.

The MOU also doesn’t create any new agencies or laws:

This MOU is intended only to enhance and strengthen the working relationships of the Participants in connection to offshore wind energy proposals in the Great Lakes region and is not intended to, and does not, create any right or benefit, substantive or procedural, enforceable at law or in equity by any party against the United States or any State, its departments, agencies, or entities, its officers, employees, or agents, or any other person.

Nonetheless, the MOU does include certain requirements of the participants, “including attendance at periodic meetings,” though this is only “to the extent resources allow.” So, basically, you don’t really have to show up at the meetings if you’re short on staff, or your travel budget is tight.

The one concrete, and possibly very useful provision of the agreement, is that the agencies and states agree to create a regulatory roadmap.

… a document that describes the regulatory review process and identifies current and anticipated data needed to inform efficient review of proposed offshore wind energy facilities in the Great Lakes.

The roadmap must be completed and published 15 months from now. It might not sound like a lot. But the truth is, offshore wind is incredibly confusing from a regulatory standpoint. Nine federal agencies have jurisdiction, plus each state has its own agencies, and in many areas there are tribal jurisdictions. Regulatory uncertainty is one of the things that’s held offshore wind back in the Great Lakes.

And while the ultimate impact of the agreement may be limited, it didn't stop public officials from hailing the agreement as a positive development. From a Lake County News-Sun article:

Waukegan Mayor Robert Sabonjian, who has been participating in Gov. Pat Quinn’s Lake Michigan Offshore Wind Energy Advisory Council to study turbine concepts along Illinois shoreline, said Friday the panel is making progress on addressing such matters as environmental impacts from offshore turbines and legal rights to the lake bed.

“Right now, we’re in a phase where the (Illinois) Department of Natural Resources is looking at things like how to protect migratory birds and bats, and how to preserve the lake bottom,” said Sabonjian, adding the council’s fourth meeting is scheduled for April 5 in Chicago.

Sabonjian added that other matters to be discussed before a formal recommendation is sent to the governor include what harbor or harbors will be used as points of assembly, and what roles public and private interests would have in offshore turbine development.

Evanston Mayor Elizabeth Tisdahl also praised the news in this Trib Local story:

“I think it’s terrific news, because I was told when I first started exploring wind turbines in the lake that no one would put them in the lake because there were no rules governing how to do it,” Evanston Mayor Elizabeth Tisdahl said. “So I’m delighted that five states made this pact and are looking at it. It’s exactly what they should be doing.”

Meanwhile, the Illinois Offshore Wind Energy Advisory Council holds its final meeting this Thursday, and officials are expected to release a draft version of their report detailing a state-level permitting structure for offshore projects. What impact the MOU will have on that report is unclear.

Gov Quinn Appoints Environmental Advocate to Utility Regulatory Post

Governor Pat Quinn appointed a strong environmental voice to the state's utility regulatory body last week, naming Ann McCabe to serve on the Illinois Commerce Commission. If confirmed, McCabe would replace former Commissioner Sherman Elliot, who had a weaker environmental record and several times voted against renewable energy issues. According to a press release from the Governor:

Governor Pat Quinn today announced his appointment of Ann McCabe to the Illinois Commerce Commission (ICC). Today’s action is the latest in a series of appointments Governor Quinn will make as he continues to fulfill his commitment to creating jobs, economic development, and increasing efficiency and accountability in all areas of state government.

“Ann McCabe brings a wide range of experience to the commission, and I am confident her strong leadership will enhance the essential regulatory and consumer protections the ICC provides every day,” Governor Quinn said. “I look forward to Ann using her extensive expertise to make sure Illinois consumers of all sizes have reliable, safe and affordable public utility services.”

McCabe has 30 years of experience dealing with energy and environmental policy in government and the non-profit and private sectors. She is currently a principal in her own consulting firm where she has analyzed policies and regulations affecting fuels and refineries in Illinois, Indiana and across the Midwest. She previously served as Midwest regional director for The Climate Registry and assisted the city of Chicago with presenting its Climate Action Plan to the business community.

“It's an honor to be appointed to the Illinois Commerce Commission, and I would like to thank Governor Quinn,” Ms. McCabe said. “I look forward to helping ensure that Illinois balances the needs and interests of consumers and businesses across the state.”

Additionally, McCabe previously served as partner and treasurer of Policy Solutions Ltd, where she worked on environmental and energy-related projects for corporations, trade associations, non-profits and foundations. She also managed policy and regulatory issues for BP (formerly Amoco). Her prior Illinois government experience includes serving as a budget analyst responsible for the Department of Natural Resources, an assistant to an ICC commissioner and associate director of Illinois’ Washington D.C. office, where she developed positions on amendments to the federal Clean Air Act.

McCabe is a board member of the Illinois Environmental Council and a founding member of the Foresight Sustainable Business Alliance, as well as a past president of Chicago Women in Government Relations. She has a bachelor’s degree from Williams College and a master’s degree in public policy from the Harris School at the University of Chicago.

The Illinois Commerce Commission acts as a bridge between consumers and Illinois’ utility companies, seeking an appropriate balance between the interests of consumers and service providers in order to ensure adequate, efficient, reliable, safe and low-cost public utility services for all 

Crain's Spotlights IPA Director Juracek, Discusses Possible Conflict of Interest

Crain's Chicago Business put a spotlight on Illinois Power Agency Director Arlene Juracek this week, focusing on her role in brokering 4.5-year power deals with her former employer Exelon and asking if a conflict of interest exists in a state employee brokering deals with a company in which she owns stock.

The piece makes for fascinating reading in the ongoing saga of Illinois energy politics, but also offers a few nuggets of information useful to the wind industry: 1) Juracek may not be long in the job, as the state's Ethics Commission is currently seeking a new director; and 2) Former IPA Director Mark Pruitt does not want the job back.

From the article:

Arlene Juracek—an Exelon shareholder whose October appointment to head the Illinois Power Agency caused an uproar—is about to solicit bids to provide electricity to utility customers statewide from mid-2013 until the end of 2017. Observers say Chicago-based Exelon may not have much competition due to the contract's duration and credit requirements that could disqualify many other suppliers.

The setup is yet another sign of the dysfunctional nature of state government. It puts a shareholder in the state's biggest power generator in position to strike a long-term deal for the same company despite conflicts of interest that were meant to be eliminated when the state wrested control of power purchasing from utilities four years ago.

Ms. Juracek, an employee of Exelon's Commonwealth Edison Co. for more than three decades until her 2007 retirement, has pledged not to sell her Exelon stock, which she declines to quantify, for at least two years.

.

In an interview, she minimizes her role in the upcoming procurement, saying, “I'm the orchestra conductor making sure all the instruments are playing their role in the symphony.”

SMART GRID

The IPA director is required to complete the solicitation by Feb. 23 under the “smart grid” law enacted late last year over Gov. Pat Quinn's veto. The act permits ComEd to raise electricity delivery rates annually for the next decade to finance a $2.6-billion power-grid modernization. The idea behind the long-term power contract was to lock in today's low energy prices to blunt the impact of the law's automatic rate hikes on utility customers, whose electric bills include both the cost of power and its delivery.

After being given oversight of the IPA in November, the Illinois Executive Ethics Commission quickly mounted a search to replace Ms. Juracek. But it won't have anyone in place before March 1, commission Executive Director Chad Fornoff says.

Former IPA Director Mark Pruitt, whom Mr. Quinn replaced with Ms. Juracek after Mr. Pruitt resisted the governor's calls to hand out 20-year sales contracts to Illinois wind farm developers, has rejected entreaties to return to the job.

House Speaker Michael Madigan, a Pruitt supporter, spearheaded the change in law that yanked the IPA from the governor. But his action came too late to protect Mr. Pruitt, who is building a burgeoning consulting practice.

A spokesman for Mr. Madigan says the speaker hasn't taken a position on Ms. Juracek or her management of the procurement. He says the issues are in the hands of the executive branch. “The Legislature's role really has kind of concluded at this point,” he says.

A spokeswoman for Illinois Attorney General Lisa Madigan, who along with Mr. Madigan, her father, championed the IPA's creation and backed Mr. Pruitt, declines to comment. Ms. Madigan's office expressed concerns about Ms. Juracek's potential conflict of interest when she was appointed.

FALLING DEMAND

In Northern Illinois, where demand from utility customers is expected to shrink as suburbs strike money-saving deals with alternative suppliers on behalf of their residents, the IPA is looking to buy just 500 megawatts of power, Ms. Juracek says. That's less than 10% of ComEd's current demand and a quarter of the 2,000 megawatts some in the industry were expecting. Bidders will offer one price, which automatically will increase 2.5% annually over the course of the contract.

She's hired a consultant to produce a “benchmark” representing what a fair price would be over the four years and seven months of the contract. She says she will play only an advisory role in that calculation and that the consultant will make the final call.

Bidders won't know the price target, and any bids above it won't be accepted.

There will be no haggling after the fact, no sitting across the table from execs at her former employer. “I don't negotiate with any of the bidders,” Ms. Juracek says.

Mr. Pruitt, who until October had been the state's first and only IPA director, says the IPA never deferred to a consultant to set a price benchmark before. He points out that the consultant works for the IPA, not the other way around.