PJM market monitor intervenes in Illinois ZEC lawsuit
PJM Interconnection’s independent market monitor is opposing a new Illinois law that relies on a zero emissions credit program, or ZEC, to provide ratepayer-funded subsidies to keep two money-losing Exelon nuclear plants from closing.
Monitoring Analytics LLC, in a filing late last week with the US District Court for the Northern District of Illinois, said the so-called Future Energy Jobs Act, if allowed to stand, would deal a blow to competitive markets in PJM, a Pennsylvania-based regional grid operator that includes 13 states plus the District of Columbia.
Illinois currently is split, with PJM in Chicago and northern Illinois and the Midcontinent Independent System Operator in downstate Illinois.
The Illinois General Assembly, on the final day of its 2016 legislative session in Springfield, passed the legislation, then known as Senate Bill 2814. Republican Governor Bruce Rauner signed it into law in early December.
Several parties, including merchant generators Dynegy, NRG Energy, Calpine and Eastern Generation LLC, as well as national trade group the Electric Power Supply Association, soon filed suit against the new law, essentially claiming it violates the Commerce Clause of the US Constitution by favoring one form of generation over others.
Monitoring Analytics effectively sided with the plaintiffs. If the law is not overturned, it “would inhibit a robust and competitive market in PJM,” whose 982 members had combined generating capacity of 182,449 MW as of December 31, 2016, according to the Monitoring Analytics filing.
The ZEC subsidies program, it said, originates from the fact that competitive markets result in the exit of uneconomic and uncompetitive generating units. ZEC would provide subsidies to specific generating units.
But “the ZEC program is not designed to serve the public interest,” it said. “These subsidies were requested by the owners of specific uneconomic generating units … to improve the profitability of specific generating units. These subsidies were not requested to accomplish broader social goals. Broader social goals can be met with market-based mechanisms available to all market participants on a competitive basis and without discrimination.”
Chicago-based Exelon, which aggressively lobbied for last year’s legislation, said it was crucial to prevent the premature shutdown, for economic reasons, of its Quad Cities and Clinton nuclear plants, totaling about 3,000 MW, over the next two years.
Exelon was involved in a similar successful effort in New York, where it operates the 1,900-MW Nine Mile Point and 614-MW R.E. Ginna nuclear plants and soon will acquire the 838-MW James A. FitzPatrick nuclear plant from Entergy.
