The Costs of a Dynegy Bailout
Illinois leads the Midwest in the number of clean energy jobs—more than 119,000—and jobs in this sector not only represented grew six times faster than overall jobs in the state. And it gets better. Illinois’ Governor signed the Future Energy Jobs Act into law in June of 2017, which strengthens the state’s energy efficiency and renewable energy standards, includes funding for job training, and will further boost growth in clean energy jobs in the state.
So with all this good news and focus on clean energy, we have to ask why the Rauner administration is now considering proposals to bail out Dynegy, a Texas Energy giant, at the expense of Illinois consumers, potentially offsetting the benefits of the burgeoning clean energy industry?
Dynegy is Illinois’ largest producer of coal-fired electricity. It owns 8 coal plants in central and southern Illinois. The falling prices of other power sources, including solar and wind, and the bailout of two Exelon nuclear power plants in Illinois as part of the Future Energy Jobs Act have hurt the company’s bottom line. In order to remain competitive, Dynegy tried to ramrod customer-funded coal subsidies into the Future Energy Jobs Act last year, but environmental and consumer advocacy groups blocked that effort.
Despite the trends and clear benefits of jobs and consumer savings associated with the Future Energy Jobs Act, Dynegy continues to lobby the Ranuer administration to find a way to help it maintain its position in Illinois as a lead generator of electricity. Since FEJA became law, Dynegy has proposed the following:
- Modifying pollution standards which would allow Dynegy to run its dirtier plans more often and increase its profitability. Operating dirtier coal plants more frequently releases climate-changing greenhouse gas emissions and other particulates in areas already experiencing health impacts from coal pollution. Many of these plants are located within or near communities already experiencing disproportionate impacts from coal and other pollution. Public hearings are now being held by the Illinois Pollution Control Board (the next one is January 18, in Peoria).
- A customer-financed plan that would keep Dynegy’s most polluting, least profitable plants open. Estimates from the Environmental Defense Fund show that legislation would raise rates on Central and Southern Illinois residents by more than $400 million per year, offsetting consumer savings associated with renewables and energy efficiency.
- Asking the state to pull out of the 15-state Mid-Continent Independent System Operator distribution system and establish its own Illinois-specific system that Dynegy claims would maintain downstate electricity reliability and allowing plants in the central and southern part of the state to remain open. But a recent report by the Illinois Commerce Commission finds there is a projected surplus of electricity in Dynegy’s region, and grid reliability is sound. In other words grid reliability is not a concern if Dynegy retire’s its plants.
Dyney’s proposed merger with Vistra Energy would create an integrated energy company worth $20 billion. Including debt, the companies combined are worth more than $20 billion as both have enterprise values exceeding $10 billion. This is the same company that wants to cap and leave its unlined, leaking, coal ash pits in the floodplain of the state’s only National Scenic River, rather than spend the money required to move it to a properly-designed and monitored location on its property. Why should Dynegy expect Illinois taxpayers to bail them out?
“The last thing that the Illinois General Assembly should do is to give a Texas-based energy giant, soon to be worth $20 billion, the chance to raise rates on Central and Southern Illinois households and consumers by a single dime, let alone by hundreds of millions of dollars per year.” – Illinois Clean Jobs Coalition
Costs associated with burning coal in Illinois already are externalized, without implementing any of Dynegy’s proposals. Burning coal pollutes our air, our water, and our land. As consumers, we paying these costs with our health and reduced quality of life. Clean energy advocates worked tirelessly to ensure a just transition from coal to clean energy would become a reality in Illinois. Subsidizing coal-burning power plants that are 50 or more years old benefits Dynegy, but not Illinois consumers who ultimately will pay to keep these aging plants open with rate hikes; increased pollution; and compromised health.