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One might be forgiven for mistaking the Federal Energy Regulatory Commission for an Agatha Christie mystery play in which the characters disappear one-by-one. With the earlier departures of three of its five commissioners, including former Chair Norman Bay, FERC is currently down to two: Acting Chair Cheryl LaFleur and Commissioner Colette Honorable. FERC has not had a quorum since those departures became effective. Honorable’s term ends in June, and she has said that she’ll step down then. LaFleur will be the sole commissioner at that point.

The Trump administration has named three replacements so far, but as of this date none of them have been confirmed by the U.S. Senate. Given the Senate’s work schedule (raising campaign funds is more important than all that boring Article I stuff), it’s not likely that the three nominees will be confirmed by June. So FERC could be hobbled for a while yet.

Exelon CEO Chris Crane

Exelon CEO Chris Crane

Chicago, IL February 14, 2017:  Chicago energy attorneys, Patrick N. Giordano and Paul G. Neilan, announced they filed a lawsuit in the U.S. District Court Northern District of Illinois today against Anthony Star in his Official Capacity as Director of the Illinois Power Agency.  Village of Old Mill Creek, et al. v. Anthony Star was filed on Tuesday, February 14, 2017 at the U.S. District Court Northern District of Illinois.

Attorneys Giordano and Neilan represent Plaintiffs that are governmental, residential, commercial, and industrial electricity consumers located throughout the State of Illinois. Plaintiffs claim that P.A. 99-0906, executed by Governor Rauner on December 7, 2016, violates the U.S. Constitution’s Supremacy Clause, Commerce Clause, and 14th Amendment Equal Protection Clause. The underlying basis for the constitutional claims is that the prices charged by electricity generating plants are subject to federal rather than state regulation. A similar case has already been filed in federal court in New York challenging that state’s subsidy of Exelon nuclear plants by the law firm Boies, Schiller & Flexner, LLP, which is headed by preeminent attorney David Boies.

Among other things, P.A. 99-0906 is designed to subsidize Exelon Corp.’s Quad Cities and Clinton nuclear plants. This subsidy will be charged to all Illinois electricity consumers beginning June 1, 2017 regardless of what company supplies the consumer’s electricity. The lawsuit specifically asks that the U.S. District Court grant a permanent injunction blocking the charges from going into effect as scheduled on June 1, 2017. According to Mr. Giordano: “These additional charges will reverse twenty years of deregulation in Illinois which have given us perhaps the one advantage we have over neighboring states: relatively low electricity charges due to an effectively functioning competitive market.” Mr. Giordano also said: “We’re challenging the nuclear bailout provision of the legislation because the prices charged by electricity generators have already been established by the competitive wholesale electricity market subject to federal jurisdiction and cannot be increased by the State of Illinois.”

The estimated impact to all Illinois consumers will be about $3.3 billion over the ten years of the nuclear bailout. Mr. Neilan points out that: “This nuclear bailout is one of four rate increases to Illinois consumers this year, including increased delivery charges, increased renewable energy subsidies, increased energy efficiency subsidies, and these nuclear energy subsidies.” When the nuclear subsidies go into effect on June 1, 2017, Illinois residents and businesses can expect to see an average 3% increase in their electricity bills due to the nuclear subsidies alone.”

Giordano & Associates, Ltd. is Chicago’s first law firm devoted to energy issues. We provide clients with experienced counsel on regulatory, litigation, transactional, and legislative matters in the areas of electricity and natural gas. Pat Giordano can be reached at pgiordano@dereglaw.com.

The Law Offices of Paul G. Neilan, P.C. represents commercial, industrial and governmental energy users in disputes against public utilities, as well as in litigation and transactional matters with non-utility competitive energy suppliers.

FACT SHEET

  1. Village of Old Mill Creek, et al. v. Anthony Star was filed in the United States District Court for the Northern District of Illinois on February 14, 2007.
  2. The Plaintiffs are: Village of Old Mill Creek, Ferrite International Company, Got it Maid, Inc., Nafisca Zotos, Robert Dillon,Richard Owens, and Robin Hawkins, both individually and d/b/a Robin’s Nest.
  3. The Defendant is Anthony Star in his official capacity as Director of the Illinois Power Agency.
  4. This case arises from unlawful Illinois legislation that invades the exclusive jurisdiction of the Federal Energy Regulatory Commission (“FERC”) over “the sale of electric energy at wholesale in interstate commerce” pursuant to the Federal Power Act. 16 U.S.C. 824(b)(1).
  5. The unlawful legislation is contained in subsection (d-5) Zero Emission Standard of Illinois Public Act 99-0906 (“P.A. 99-0906”), which was enacted on December 7, 2016 and is available at http://www.ilga.gov/legislation/99/HB/09900HB65761v.htm.
  6. Subsection (d-5) Zero Emission Standard of P.A. 99-0906 requires the Illinois Power Agency to procure contracts for Illinois utilities Commonwealth Edison Company, which serves northern Illinois, and Ameren Illinois Company, which services central and southern Illinois, for purchases of Zero Emission Credits (“ZECs”) from nuclear-fueled generating plants.
  7. The ZEC payments will be passed through by the utilities to all Illinois consumers through automatic adjustment tariffs.
  8. A. 99-0906 is designed to provide additional revenues to the Illinois-based Quad Cities and Clinton nuclear plants.
  9. Exelon Corp. owns both the utility ComEd and Exelon Generation, which owns the Quad Cities and Clinton nuclear plants that will sell the ZECs to the utilities.
  10. Although P.A. 99-0906 has many other provisions, this case concerns only subsection (d – 5) Zero emission standard.
  11. Plaintiffs are not challenging any other provisions of P.A. 99-0906. Section 97 of P.A. 99-0906 provides that the provisions of the Act are severable under Section 1.31 of the Illinois Statute on Statutes. 5 ILCS 70/1.31.
  12. In New York, ZEC payments to Exelon nuclear plants in that state are being challenged on the same grounds set forth by Plaintiffs in Illinois. Coalition for Competitive Electricity, et al. v. Audrey Zibelman, et al. was filed in the U.S. District Court Southern District of New York on October 19, 2016.
  13. A typical residential customer using 1 mWh (1,000 kWh) per month would pay an additional $2.64 per month beginning June 1, 2017 based on the initial ZEC price established in P.A. 99-0906.
  14. A manufacturing company using 10,000 mWh per month would pay an additional $26,400 per month beginning June 1, 2017 based on the initial ZEC price established in P.A. 99-0906.
Clinton Nuke Plant

Clinton Nuclear Plant

The history of the Big Bank Bailouts of 2008-09 is now repeating itself as farce. The 2016 tsunami of crony capitalist entitlement is scheduled to hit Illinois tomorrow in Clinton, where according to news reports Gov. Rauner will sign the Exelon Dividend Protection Act. We’ll have to more to say on the legislation, but one may read the story here.

 

Today’s  Chicago Sun-Times discusses the Exelon Bail-Out Bill.

What began as a means of rewarding Exelon Corp. for generating “clean” nuclear energy and  keeping unprofitable plants in Clinton and the Quad Cities open has evolved into a far-reaching and  contentious revamp of state energy policy.

Check out the article here.

Constantinople falls to Ottoman Ruler Mehmet II, 1453

Constantinople falls to Ottoman Ruler Mehmet II, 1453

For hundreds of years alum was mined in Smyrna, in Asia Minor, which back then went by the name of Anatolia. Anatolia was the breadbasket of Constantinople, the Queen of Cities, and was under the control of the Byzantine Emperors for nearly a millennium.

Alum was an essential commodity for the makers of fabrics and tapestries in Flanders and other cloth-making centers in northwest Europe. They used it to set the colors and make sure they did not run or fade too quickly. (The saying “These colors don’t run” might have been coined back then.)

In 1453, Constantinople fell to the Ottoman Turks. Then in 1455 the Ottomans occupied Smyrna and took control of its alum mines. Needless to say, this put quite a strain on the tapestry industries, cloth makers and dyers of Western Europe, who now had to pay through the nose to obtain this irreplaceable substance.

We in the contemporary United States get rather frosted when we consider that we have to buy petroleum from some countries who absolutely hate us, and who undoubtedly use some of that money to finance overseas terrorism in the West. We may question whether we’re financing a war against ourselves.

Western Europe had a similar problem. Having to pay the Ottomans for alum was particularly galling because there was a continuing low-intensity war between Christendom in the West and the Ottoman Empire in the East. The Ottomans continually probed into the Balkans and the Mediterranean. Think of Malta around 1565 or the gates of Vienna in the 1680’s. (Vienna had (and may still have) a residential district called the Turkenschanze, or Turkish Redoubt, which was where part of the old city’s walls faced the Turkish armies. It was Sigmund Freud’s neighborhood, until he left.) So, after the fall of Constantinople, Western Europe was in effect financing the war against itself.

Then, in the 1480s alum deposits were discovered in one of the Papal States in Italy. The Pope moved quickly to establish a monopoly on the alum trade. A papal bull (which doesn’t mean what you think it means) was issued prohibiting the purchase or importation of any Turkish alum under pain of excommunication and eternal damnation. In fact, the written text of the indulgences that were being sold to finance the Vatican’s wars (mostly against other Italian city-states like Florence) and its construction of St. Peter’s was revised to carve out the purchase of Turkish alum and make it a mortal sin that could not be absolved by any indulgence. These were the same indulgences which, a few decades later, really upset an Augustinian friar named Martin Luther.

Try to imagine what it must have been like for some cardinal or canon lawyer laboring in the bowels of the Vatican to come up with the theological underpinning for making the purchase of Turkish alum (but not the Pope’s alum) an unforgivable mortal sin.

Nowadays, there are threats to slap 35% or 50% tariffs on some goods manufactured overseas. Could we try a threat of eternal damnation for buying a Ford Escort assembled in Ciudad Juarez? The more things change….

trump

The factors that went into the Hillary loss/Trump win will keep historians and political scientists busy writing books for a decade, if not more. Some will adopt a monocausal theory and blame the emails, or the combination of Comey and the emails. Others will view it as a more a generalized phenomenon of how dysfunctional our politics have become. My own view, as I said in my last post, is that his success owes to the lingering effects of the 2007-09 Great Recession, which for anyone not living in the Wall Street-Washington corridor or the West Coast, is really the 2007-2016 Continuing Great Recession. And while the Iraq War began a long time ago, even its erstwhile supporters (other than Dick Cheney) view it as perhaps the biggest foreign policy blunder in the history of the United States. The “elites” of both left and right have shown conclusively that they’re about as competent as Laurel and Hardy trying to move a piano up a flight of stairs.

DNC Leadership deciding the best way to get Hillary up all those steps.

DNC Leadership deciding the best way to get Hillary up all those steps.

Trump’s problem will begin not with his opposition from the left, but rather with his supporters on the far right. That may sound counter-intuitive, but the left at least has some idea of what to expect from a Trump Administration. The right, on the other hand, is in for some major disappointments. Though I don’t like to predict the future, I will make three predictions right now. First, there will never be a wall with Mexico. Second, there will never be a ban on entry of Muslims into the United States because they happen to be Muslim. Third, there will never be a deportation force running from house to house rounding up some 11 million undocumented (or illegal, if you prefer) immigrants. (And, by the way, Trump will not be locking up Hillary.)

The net effect of these and other unfulfilled promises will be to disappoint the neo-Nazi, KKK and alt-right types who supported Trump. Steve Bannon, an alt-right mouthpiece, will likewise lose a lot of support among his ilk. Economist Paul Krugman said that, during this election cycle, the problem with the left and the media was that they took Trump literally, but not seriously. A large majority of white voters, the “lost white voters,” many of whom are not racists, took him seriously but not literally. But to complete Krugman’s logic is to understand where Trump’s difficulties will begin: namely, with the people of the alt-right/white supremacist persuasion who took him both literally and seriously. That group comprises the racist element of the Republican right. When they learn, as they soon will, that there will be no wall, no deportation force, no ban on Muslims, etc., they will turn on him in a New York second. Everything costs something, and soon Trump will learn the high cost of the rhetoric that got him into the Oval Office.

2016-election

Well, there it is. The candidate that no one would give credence to has won the Oval Office, and in about two months he’ll take the helm on the bridge on the S.S. United States. There are lots of things that can be said about the view off the bow, but we’ll limit this post to the view from the stern. There will be no reaching for apocalyptic metaphors from Bronze Age Biblical passages.

The roots of Trump’s victory date back to the major events of the 2007-09 Great Recession. The people have rejected, decisively, the power of the Wall Street-Washington Axis. Until last night, the United States was not a democracy; it was a corporatist state, one in which the unproductive financial capitalists of Wall Street ventriloquized Washington, D.C. and ran the country by themselves, for themselves.

Just look at the wake our ship of state has made. The U.S. Gov’t. made sure that all the AIG executives got their bonuses, even though it was they who almost drove the global economy into a bottomless abyss. The megabanks all got bailed out on the taxpayers’ dime, even though they had to be bailed out because they’d spent years packaging and selling trillions of dollars of collateralized debt obligations that they themselves didn’t understand, and knew were worthless. Meanwhile, those same taxpayers who bailed out Wall Street lost their jobs, then lost their homes, and, of course, lost their health care coverage.

For decades, the Wall Street-Washington Axis preached the gospel of Rugged Individualism and The Free Market, which was all a lie. Goldman Sachs perfectly exemplifies why: when the market turned on Goldman Sachs during the Great Recession, Lloyd Blankfein, its CEO, called his good old buddy, old chum, old fellow alumni Hank Paulson, who just happened to be U.S. Treasury Secretary. And, presto change-o, Goldman Sachs became a bank holding company with access to the Federal Reserve cash window before the weekend was over.

See? It pays to have friends in high places.

The Americans who voted yesterday don’t have friends in high places, and they’re sick and tired of seeing the country run for the exclusive benefit of those who do. Washington in 2007-09 refused to countenance an economic reckoning for Wall Street because that would have affected their compatriots (and the campaign donor class) in the banks. But in economics, one link forges the next, and the reckoning that should have happened in the markets was translated to the political sphere. Think Tea Party. Think Occupy Wall Street.

And not one banker ever went to prison. In fact, the best thing that happened to Wall Street during the Great Recession, the guy who did the world’s biggest favor for the banksters, was Bernie Madoff. Bernie may be the Platonic Form of Ponzi Schemer, but he had no connection whatsoever to the Wall Street madness that brought on the Great Recession. Still, he became the face of it.

Places like Westchester County, NY, and Fairfax County, VA, came out of the crisis more prosperous than they’d ever been. But it you were not within that Charmed Circle because you lived, say, in a place the Wall Street-Washington Axis labeled “Flyover Country,” you were financially doomed. The elites were not affected by the downturn. Out of sight, out of mind.

The Wall Street-Washington Axis sold themselves on the basis of merit, they convinced the country that they knew best. “If you let us bail out the banksters, we’ll be back to the boom times in no time!” But that didn’t happen. They were wrong. Take Alan Greenspan, once viewed as the Grand Poohbah of All Economics, given to cryptic utterances that verged on the unintelligible. Turns out that he was just an old Ayn Rand fanatic, a rooster claiming credit for the dawn.

These examples could be multiplied. The mistake of Establishment politicians was to think that people would just forget about all that. The political legitimacy of the Wall Street-Washington Axis is based on alleged merit. When that merit is shown to be a complete falsehood, their political legitimacy dissolves.

More than anything else, the Great Recession and how it was handled threw a decisive advantage into the scale on the populist side. Whatever faults Trump may have, he was sharp enough to see this when everyone in the Wall Street-Washington Axis did not. Sanders saw it too, which accounted for his relatively successful campaign, which also surprised the media.

I don’t attribute Hill’s loss to the private email server business, which most people didn’t understand, much less follow. Nor to Benghazi, a word that practically became a Republican mantra. Nor is it the trust/distrust factor.

No, the real issue is that, no matter how hard she tried, Hillary could never portray herself as an “agent of change,” to use an overused term. Forget exit polls, forget college-educated or not. All that’s just trivia and beside the point. She represented continuity with the unacceptable status quo, continuity with a way of governing that the American people want smashed into atom-sized pieces and rebuilt from the ground up.

Ergo Trump.