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Lisa Madigan will defend Exelon nuclear bailout in federal court

During the long run-up to passage of the ratepayer-financed subsidies that will keep two money-losing Illinois nuclear plants open, Illinois Attorney General Lisa Madigan was one of the most vocal critics of the legislation.

Now her office is defending the law in federal court.

After a few weeks of consideration, Madigan has decided to represent the state in a lawsuit brought by power generators that compete against nuclear plant owner Exelon. They’re challenging the constitutionality of the nuclear bailout portions of the Future Energy Jobs Act, signed into law by Gov. Bruce Rauner late last year and aimed at preserving Exelon’s Clinton and Quad Cities plants, which the company was set to shutter.

The attorney general could have recused herself and let outside lawyers represent the state in the litigation.

“The case is assigned to a unit of experienced lawyers within our office who defend the state and its agencies in court, including in lawsuits that challenge the constitutionality of Illinois laws,” a Madigan spokeswoman said in an email.

For at least two years, Madigan’s office castigated the nuclear subsidies, which will be paid for via surcharges on electric bills statewide, as detrimental to consumers. At times, her representatives even questioned whether the concept would pass legal muster given that wholesale power markets are regulated by the federal government and not the states.

For its part, Exelon, which usually is at loggerheads with Madigan, professed not to be concerned.

“We have full confidence that the attorney general’s office will vigorously defend Illinois law,” a spokesman emailed.

Opposition to the subsidies, which will pump into Exelon’s coffers up to $235 million of extra revenue annually over the next decade beginning late this year, isn’t confined just to the Chicago company’s competitors.

In a court filing, an attorney for the official who functions as a sort of referee for the regional power market that includes Chicago wrote that Illinois’ nuclear subsidies are “incompatible” with the market’s design and “threaten (its) foundation.”

The independent market monitor for PJM Interconnection, which manages the multistate power grid from northern Illinois east to the mid-Atlantic, was harshly critical of the subsidies in his March 16 court filing. The attorney for market monitor Joseph Bowring explicitly repudiated Exelon’s claims that preserving at-risk nuclear plants was done for environmental reasons. In contrast to coal- and natural gas-fired plants, the nukes’ lack of carbon emissions help address climate change, according to supporters.

The subsidies, the filing stated, are “not designed to serve the public interest. (They) were requested by the owners of specific uneconomic generating units in order 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.”

The strong words from the market monitor are noteworthy because in the past he’s staunchly supported Exelon-backed changes to PJM’s market design aimed mainly at boosting revenues for at-risk nukes.

Now, though, he sounds a lot like Attorney General Madigan.

In a state Senate committee hearing last May, Cara Hendrickson, chief of Madigan’s public interest division, said, “We are concerned about the zero emission credits (subsidies) because they interfere with the market. . . .Supply markets are set nationally. There was recently a report by PJM that indicated that state efforts to subsidize generation in the aggregate have a negative effect on the market overall. Exelon itself in other states has also made this argument as well.”

Hendrickson’s role for Madigan is different from her litigators who represent the state in legal matters. She is Madigan’s chief consumer advocate.

Still, Hendrickson’s words surely will be referenced by attorneys for the plaintiffs, which include Houston-based Dynegy, the main power generator in downstate Illinois, and Princeton, N.J.-based NRG Energy, an owner of coal- and natural gas-fired plants in northern Illinois.

http://www.chicagobusiness.com/article/20170322/NEWS11/170329963/lisa-madigan-shifts-from-nuke-bailouts-chief-critic-to-chief-defender?utm_source=NEWS11&utm_medium=rss&utm_campaign=chicagobusiness

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March 22, 2017 - Posted by | Uncategorized

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