Organized Labor Declares Impasse With Environmental Groups Over Clean Energy Overhaul
A coalition of influential labor unions says negotiations with environmental groups over a massive new clean energy proposal have reached impasse, and is asking Gov. JB Pritzker and lawmakers to step back into talks to broker a compromise.
The impasse declaration comes just days after nuclear giant Exelon doubled down on its threat to close two of its power generators in mid-September and November — major pieces of Illinois’ energy puzzle that can’t immediately be replaced by other types of power generation.
Legislation addressing how to get Illinois to 100% renewable energy by 2050 — a major goal of Pritzker’s — while providing for nuclear energy stability failed to surface before lawmakers’ regular spring session ended on May 31, and also didn’t materialize in a brief special session held in mid-June. Since then, organized labor and environmental groups have been left alone to negotiate for most of the summer.
But labor characterizes this summer’s negotiations as mostly futile, and blames environmental groups for not making any progress. The coalition, whose members represent workers in all areas of Illinois’ traditional energy sectors, claims the environmentalists have failed to present new ideas that would get the two sides closer to a deal.
“We do not take this action without exhaustive deliberation and consideration, but in addressing our counterparts’ track record over the last several weeks following the spring session, it appears they do not share our goal of finding common ground,” the coalition’s letter said. “Rather, they seem intent on running out the clock in order to force events that actually detract from the state’s ability to generate more clean and reliable energy.”
State Rep. Ann Williams (D-Chicago), a lead energy negotiator aligned with environmental groups, said Monday that saving jobs and making moves toward defeating climate change aren't antithetical, and said both labor and environmentalists "share the same overarching goals" of growing the state's renewable economy, preserving jobs while also keeping energy reliable and affordable for Illinoisans.
But she said given the stakes, one priority rises to the top.
"I’ve been working on this issue for over three years and have spoken to people across the state about our clean energy future," Williams said. "People want to see a climate bill, not a utility bill. They want us to address the climate crisis first and foremost, and ensure we keep equity as the foundation of all of it."
Decarbonization, prevailing wage remain sticking points
When lawmakers left Springfield for the last time in mid-June, legislative leaders and Pritzker took a back seat to organized labor and environmental groups, leaving the sides to negotiate but promising results in short order.
Before going back home on June 15, Senate President Don Harmon (D-Oak Park) told reporters he was optimistic that as two of Democrats’ key constituencies, labor and environmentalists could work out their differences on the energy package sooner rather than later.
“I don’t think we’re going to have to wait until August,” Harmon said at the time. “I think parties are going to sit down again as early as this evening and recommence negotiations. And I think there’s a fairly clear path to a relatively rapid resolution.”
But seven weeks later, August has arrived with no significant movement, and organized labor says mediation from lawmakers is the only path forward, writing in the unions’ letter that the coalition is “no longer confident that a deal can be reached this summer.”
With a last-minute deal at the end of May on a $694 million subsidy for Exelon to support three of its unprofitable nuclear power plants to avert closure, other issues freed themselves from the logjam. And since then, unions and environmentalists had been pointing fingers over which side was injecting “new” elements into negotiations, specifically in two areas: decarbonization and prevailing wage.
Decarbonization refers to ways to eliminate fossil fuel emissions from Illinois’ energy sector, while prevailing wage laws mandate workers are paid the equivalent of what unionized laborers within an area make.
Pritzker has aligned himself with environmentalists’ goal to shutter coal- and natural gas-fired power plants well before 2050. While environmental groups’ original target was 2030, the groups moved to 2035 in the face of opposition from labor whose members’ jobs as they know them would be eliminated, though the energy framework provides for so-called “just transition” to train displaced workers for jobs building Illinois’ renewable energy grid.
Since the end of May, however, environmental said they were open to 2045 closure dates for coal- and gas-fired plants, though that comes with a major asterisk for coal-fired power plants. Illinois’ coal plants, most of which are already slated to close, would be able to remain open if the plants are able to sequester 90% of carbon — expensive technology that’s not yet efficient enough to meet that standard.
In a summer marked by environmental disasters in Illinois, the U.S. and abroad, Pritzker in mid-June laid down the gauntlet and threatened he would “not sign a bill that does not match the gravity of this moment.”
“Let me make myself perfectly clear: Our long-term goal is to create meaningful, climate change policy that makes Illinois, a leader in protecting our people, the environment, and the clean energy industry that we can grow,” Pritzker said. “Everything that gets brought up that takes us back from decarbonization is a backward movement. I’m not going to let it happen.”
When stakeholders left Springfield after that short June session, both labor and environmental groups to exchange new ideas to get closer to a compromise. But labor claims only unions held up their end of the bargain and submitted an altered proposal to environmentalists in late June.
At issue in the fight over decarbonization are two municipally owned coal-fired power plants in Springfield and the Metro East, along with a natural gas plant currently under construction in Grundy County.
While other fossil fuel power plants in Illinois are reaching the end of their natural lives and are set for closure in the next several years, the Dallman 4 plant owned by Springfield’s City, Water, Light and Power and Prairie State Energy Campus in Marissa are relatively new, with plans to run way beyond 2035.
Prairie State in Marissa, which opened in 2012, is backed by 180 communities and energy co-ops across the Midwest, including 36 municipalities and 20 electric co-ops in Illinois. Municipalities sold bonds to help build the massive coal-fired plant, and the complicated web of contracts with those cities, towns and co-ops not only means they’d be on the hook for paying off the bond debt if the plants are forced to close early, but would also have to essentially pay twice for energy after the plant’s closure.
Construction on Three Rivers Energy Center in Grundy County just began last year with plans to be operational in 2023, but the parent company has threatened to pull the plug on the project based on Pritzker and the environmental groups’ proposal. Illinois also has two other gas plants still in the permmitting stages.
After business groups and local unions also came out against that proposal, labor submitted an alternative proposal to the environmental groups, which it claims was not answered.
According to draft language obtained by NPR Illinois, organized labor adopted environmental groups’ basic framework for so-called declining carbon caps until 2035, but also proposed a carbon offset program to allow fossil fuel plants to achieve “net zero emissions,” which would open the door to allowing those facilities to stay open beyond 2045.
Environmental groups balked at that idea, but labor complained it its coalition had to learn about that rejection through the media, and not a direct response. In the four meetings since then, labor claims environmental groups have not put forward new ideas. The last meeting between the two sides was July 16.
Both sides say the fight over the last outstanding item — prevailing wage — is not as insurmountable.
While environmental groups wanted to exempt minority contractors from having to pay prevailing wage at first, labor claims that’s antithetical to diversity goals, and instead proposed a subsidy program to help those businesses pay the prevailing wage in their area.
Environmental groups, however, say it’s unclear where that funding would come from, but balk at the suggestion its coalition would do anything to set back away from equity goals.
Race against time on nuclear closures, solar funding
The nearly $700 million nuclear subsidy deal reached between Pritzker’s office and Exelon was expected to be the most difficult part of energy negotiations, and it was — until the very end of session. But the end of that public fight yielded the beginning of those over decarbonization and prevailing wage, and with most negotiators unwilling to separate elements of a climate and energy bill, the omnibus approach means the future of Exelon’s plants is tied to the fate of the other components.
While environmental groups have pointed to a summer filled with ominous signals of climate change as reason to adopt their aggressive decarbonization goals, labor is hoping to turn that message around and leverage the fear of not acting.
“As we see in the eroding shores of Lake Michigan and the hazy skies over Illinois caused by wildfires raging in the West, the threat of climate change is not an imaginary or far-off problem,” the coalition wrote in its letter. “It is a very real and imminent danger for our communities...The cost of doing nothing is too high to bear.”
Massive legislation promising a clean energy overhaul in Illinois has been in the works for years, almost as soon as the passage of the state’s last major energy law in Illinois, which also centered around Exelon. The so-called Future Energy Jobs Act, passed in late 2016, supports two Exelon power plants in Clinton and the Quad Cities to the tune of $235 million per year until 2027, in addition to providing support to get wind and solar energy projects off the ground in Illinois.
Exelon hoped for similar subsidies to keep its other nukes afloat, but ran into more skeptics than last time, due in large part to a significantly shifted political landscape as a federal investigation continues to shake up Springfield.
The company’s subsidiary, electric utility Commonwealth Edison, last summer signed a $200 million deferred prosecution agreement admitting it engaged in a years-long bribery scheme attempting to curry favor with the powerful longtime Illinois House Speaker Mike Madigan. And even before that, leaks of a widespread federal investigation that began to center around Madigan, ComEd and its emissaries emboldened environmental stakeholders to begin writing a climate and energy framework without the companies at the table.
Williams acknowledged getting all parties to yes on the current energy bill is more difficult than it's been in years past, but said dealing with sometimes frustrating negotiations is worth having a more open process.
"I’m sure it was 'easier' to get an energy bill done when utilities dictated what it contained and negotiations took place in their conference rooms," Williams said. "But doing the right thing, in the right way - and putting communities, climate and consumers first - is undoubtedly more challenging. I’m willing to keep working to get it right."
As stakeholders negotiated an energy plan this spring, Exelon’s threat to shutter nuclear plants without more financial support from the state loomed large. Illinois is the state most reliant on nuclear energy; about half of the state’s power power is generated by Exelon’s six plants while approximately 90% of the state’s carbon-neutral power comes from nuclear.
While Illinois’ renewable energy sector is growing, all parties acknowledge nuclear generation must bridge the gap to an energy grid powered largely by renewables someday, though how long that bridge should last is up for debate.
Exelon’s persistent warnings the company would close its unprofitable power plants threatens to upend Illinois’ energy portfolio, but there’s disagreement among labor and environmentalists — and lawmakers aligned with either side — about how seriously to take the company’s threats and how much to capitulate to Exelon’s ask.
Even as Exelon’s ex-CEO retired under the pressure of fallout from the federal investigation in the fall of 2019, the warned it would close as many as four of its six nukes — the four not covered by FEJA subsidies — and while the company has moved those deadlines, it’s ramping up the pressure.
Last week, Exelon announced it filed plans with federal regulators to shutter its power plant in Byron in September and the plant in Morris in November.
“With no signs of a breakthrough on clean energy legislation in Springfield, we have no choice but to take these final steps in preparation for shutting down the plants,” Exelon Generation Chief Nuclear Officer Dave Rhoades said in a statement. “We will never stop fighting for policies to preserve Illinois’ nuclear fleet, knowing that the minute these plants close our customers will experience dirtier air and higher energy costs. But with time running out, we must plan for the future and do everything we can to prepare our employees and the communities they serve for what lies ahead.”
But over the weekend, congressional Democrats surfaced new language for President Joe Biden's $3 trillion infrastructure bill, which includes funding for unprofitable nuclear plants. But there's a catch: federal support for those plants would be decreased depending on state support for nukes.
State Sen. Bill Cunningham (D-Chicago), a lead energy negotiator aligned with labor, said he's eager to receive a briefing from Illinois' congressional delegation about the proposal soon, but acknowledged it may take weeks until the final version is passed in D.C., which runs up against existing timing pressure from Exelon.
"It would be foolish to count on Washington but also foolish to ignore what’s happening in Washington and end up sticking ratepayers with a bill they shouldn’t have to pay," Cunningham said Monday.
Illinois’ burgeoning renewable sector is also vulnerable to whatever happens in a broader energy package. Credits set up under FEJA to help get solar projects started in Illinois have run out. Advocates for the industry had long warned of the so-called “solar cliff,” and for two years had agitated for a standalone deal for more credits to meet demand and keep companies afloat, but were not successful.
Funding to subsidize so-called “community solar” projects, which include solar farms and larger projects, immediately ran out after 112 projects were funded via lottery more than two years ago, and 800 projects are waitlisted pending more funding for credits. The second tranche of funding for large or commercial rooftop solar funding ran out last spring, and funding for residential rooftop solar projects ran out in December, and there are approximately 5,300 of those small solar projects are waitlisted.
Additionally, September marks a deadline contained in FEJA wherein the Illinois Power Agency will be forced to give back to ratepayers more than $300 million that was supposed to be used for renewable energy projects if there is no legislative fix to prevent that mass rebate.
The so-called Path to 100 Coalition, who has been pushing for the standalone renewable credit funding fix, on Monday largely agreed with organized labor’s contention that stakeholders have waited long enough, and claimed the delay was stalling the creation of 53,000 new jobs, along with diversity goals and the generation of local property tax wealth.
“Throughout the summer, solar businesses in Illinois have been forced to lay off workers and clean energy growth has ground to a halt,” Nakhia Crossley, the Central Region Director for the Solar Energy Industries Association, said on behalf of Path to 100. “There’s too much at stake to delay any further. It’s time for our state’s leaders to forge a compromise that will move Illinois forward to the clean energy future we desperately need.”
This story will be updated.
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