Archive for March, 2015

Tinky Winky, the purple Teletubby, after being turned away from Indiana Governor Pence's office.

Tinky Winky, the purple Teletubby, after being turned away from Indiana Governor Pence’s office.

Barely a week after signing into law a so-called “religious freedom” law that effectively legalizes discrimination against persons based on their sexual orientation, Indiana Governor Mike Pence refused to meet with Tinky Winky, the famous Purple Teletubby, who traveled to the state to persuade the governor to act to repeal this law.

Indiana Governor Mike Pence Addresses the Teletubby Controversy

Indiana Governor Mike Pence Addresses the Teletubby Controversy

A spokesman for Governor Pence said the governor refused to meet with Tinky Winky because “it would infringe on the Governor’s religious freedoms.” The spokesman went on to say that:

“Christian bakers, florists and photographers should not be punished for refusing to participate in a homosexual marriage. Nor does a Christian governor need to listen to a person who has a purple triangle on his head and carries a purse.”

The Governor later addressed the Tinky Winky controversy yesterday on ABC’s This Week with George Stephanopoulos:

STEPHANOPOULOS: So we understand you told Tinky Winky that tolerance is a two way street. Does that mean that Christians who want to refuse service or people of any other faith who want to refuse service to purple cartoon characters who carry purses, that it’s now legal in the state of Indiana?

That’s the simple yes or no question.

PENCE: George, the — the question here is if the — my refusal to meet with Tinky Winky does not constitute a government action or a law impinges on religious liberty, nor on purple people. Rather, I was exercising my religious liberty. Tinky Winky has the opportunity to go to court, just as any other cartoon character does.

When you see these headlines about — about Indiana rejecting Teletubbies, a license to discriminate in Indiana against Teletubbies and — and — it just — I’m telling you, George, it is a red herring, or maybe even a purple herring, and I think it’s deeply troubling to millions of Americans and — and, frankly, people all across the state of Indiana who feel troubled about government overreach on little purple people who carry purses. This isn’t about disputes between individuals, it’s about government overreach. No one can compel me to talk with someone like Tinky Winky. And I’m proud that Indiana stepped forward and I’m working — I’m working hard to clarify this. We’re reaching out to business leaders. I’m pleased to be on your show speaking across the country on this.

We are determined to make it clear that what Indiana has done here is strengthen the foundation…

STEPHANOPOULOS: But if a person does have a purple triangle on their head, I…


STEPHANOPOULOS: Sir, I’m trying to…

PENCE: — the constitutional First Amendment rights of religious liberty of our people.

STEPHANOPOULOS: I’m trying to get that same clarity. And it sounds to me like what you’re saying is that someone could use their religious faith as a defense against any kind of a suit brought there, whether it’s by a purple Teletubby or someone else whose appearance you don’t like.

PENCE: Equal rights for Teletubbies… That’s a — that’s not on my agenda and that’s not been the — that’s not been an objective of the people of the state of Indiana. And it doesn’t have anything to do with this law. I mean, hell, George, you keep up these questions and pretty soon I’ll start to look and sound like a cartoon character.

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Redheaded stepchild: Exelon's Byron nuclear plant

Redheaded stepchild: Exelon’s Byron nuclear plant

Listening to Exelon CEO Chris Crane extol the virtues of the free market and claim that his nuclear plant bailout bill is “market-based” is like listening to heavy metal/punk rock music performed by Pat Boone. The inauthenticity and cognitive dissonance are so fundamental as to cause revulsion at the cellular level.

Exelon introduced its bail-out legislation in the Illinois House of Representatives (HB3293) a few weeks ago. When we say Exelon introduced it, we mean exactly that. The notion that any of the bill’s sponsors in the House could understand the legislation, much less write it, is something only employees of Exelon and its public relations firm could say with a straight face.

The fiction that the Exelon bailout bill provides a “market-based” remedy is embarrassingly unconvincing, but, as Illinois’ long history shows, embarrassment is an emotion unknown to either Exelon or Springfield.

The key to HB3293 is Exelon’s Newspeak definition of “low carbon energy resources.” The Exelon lawyers who drafted HB3293 have cleverly sought to superimpose the imagery of the free market on a mechanism engineered to ensure that Exelon will have a monopolistic stranglehold on the sale of LCE credits. Exelon has tailored the term “low carbon energy resources” like a bespoke suit: it includes its own nuclear plants but excludes virtually all other generation that the average ratepayer might reasonably consider “low carbon.”

Exelon modeled HB3293 after the Illinois renewable portfolio standard. The bill amends the Illinois Power Agency Act by establishing a new “low carbon energy (LCE) credit” portfolio standard.

Beginning January 1, 2016 all electric utilities (such as ComEd, which, like the General Assembly, is one of Exelon’s wholly-owned subsidiaries) must purchase sufficient LCE credits to satisfy the LCE credit standard. The trick, of course, is that the bill authorizes electric utilities to recover all costs of purchasing the LCE credits from ratepayers. Thus, ComEd would once again serve as the tube through which Exelon hoovers up cash from ratepayers’ wallets for the benefit of its corporate treasury. (Headline: “Illinois legislation frees Exelon shareholders from fear of dividend cut.”)

Exelon’s definition of “low carbon” generation stipulates that no low carbon generation resource may have a power purchase agreement longer than 5 years. The effect of this unassuming little statutory quirk is to exclude virtually all wind, and much solar energy from the “low carbon” category. It would also exclude solar energy participating in the IPA’s supplemental procurement, which requires purchase contracts of at least five years.

The quantity of LCE credits that each utility must obtain is set at 70% of annual retail electricity sales. Taking 2012 as a sample year, total retail sales of electricity were approximately 143,540,000 megawatt-hours. http://www.eia.gov/electricity/state/illinois/ . (This figure would need to be adjusted by subtracting sales by electric cooperatives and municipalities that run their own systems, but it’s a serviceable proxy for our purposes.) This means that if HB3293 had been in effect for 2012, utilities would have had to acquire roughly 100,000,000 megawatt-hours of LCE credits. That’s a lot of LCE credits.

Exelon’s bailout bill then provides that the LCE credits must be procured from generating resources that are consistent with the “Minimum Internal Resource Requirements” (sic) for capacity established by the applicable regional transmission organization. HB3293 does not define this capitalized term, and a search of PJM (including the PJM manual on capacity markets) and MISO websites did not yield any defined term to match it. However, the term is likely another way to exclude wind, solar and perhaps other renewables from the LCE credit market because the concept of a minimum internal generation resource requirement applies in the context of assessing reliability across a given territory based on generation within it. Reliability, in turn, depends on dispatchable resources. Wind and solar are generation resources, not dispatch resources. Thus, if a particular wind or solar generator made it past HB3293’s first trench because it had a PPA with a term less than five years, it would still get caught on the barbed wire of Exelon’s “Minimum Internal Resource Requirements” criterion. Drafting a statute with a term that is both capitalized and in quotation marks without defining it may strike one as odd, but it’s not so by Exelon’s standards. Like Humpty Dumpty, when Exelon uses a term, it means exactly what Exelon wants it to mean, neither more nor less.

The first procurement of LCE credits will be under a five-year contract beginning January 1, 2016 to May 31, 2021. Just like Exelon’s Electric Infrastructure Modernization Act of 2011, the Exelon bailout bill gives the Illinois Commerce Commission a ridiculously short time period to review the LCE credit procurement plan: it must either approve the plan or approve it with modifications by November 1, 2015. The ICC has no power to disapprove the plan. Exelon wants to make sure that no one has a realistic opportunity to derail its bailout by asking annoying questions during pesky public hearings.

Although Exelon’s bailout bill will ensure that it can use ratepayer wallets as its own private ATM, it tries to camouflage this by providing that the LCE credit procurements must be “cost effective,” meaning that the incremental costs to consumers may not exceed certain limits (an annual average net increase in total costs per kilowatt-hour of no more than 2.015% of the amount paid by eligible retail customers for the planning year ending May 31, 2009).

Then, in a true Newspeak flourish, the Exelon bailout bill provides that “to ensure benefit to consumers,” winning LCE suppliers (note the plural noun; let’s pretend along with everyone in Springfield that there might be more than one) must commit to reimburse the cost of LCE credits for each planning year that the “forecasted average revenue” of the LCE resource that produced those LCE credits exceeds a set price per megawatt-hour. Note that this limitation applies only to the specific nuclear plant that generated the LCE credits in question. That means that if Exelon as a whole is doing just fine revenue-wise, but the three redheaded stepchildren (Byron, Clinton and Quad Cities) aren’t, ratepayers would still have to pay into Exelon’s corporate treasury. This is single-issue ratemaking writ large; that is, allowing a utility to single out specific cost or revenue components in order to recover them separately from ratepayers, without regard to the utility’s costs or revenues as a whole.

Yep, the Illinois Commerce Commission will hardly need any time to review Exelon’s procurement plan.

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