Comment of Commonwealth
    PCB Docket R01-10
    Edison Company
    ILLINOIS POLLUTION CONTROL BOARD
    IN THE MATTER OF:
    NATURAL GAS-FIRED, PEAK-LOAD
    ELECTRICAL POWER GENERATING
    FACILITIES (PEAKER PLANTS)
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    R01-10
    COMMENT OF COMMONWEALTH EDISON COMPANY
    Commonwealth Edison Company (“ComEd”), by its attorneys, Hopkins &
    Sutter, submits these comments to the Board regarding its inquiry into peaker plants.
    The record accumulated in this docket supports the current regulatory scheme.
    Significant departure from the present environmental and siting laws is unwarranted
    based on the facts, and could have negative effects on electric consumers in Illinois.
    Summary of ComEd’s Comments
    ComEd supports the restructuring of the electric industry as crafted by the
    Illinois Legislature and the Federal Energy Regulatory Commission. ComEd believes
    that, as designed by the Illinois Legislature, a free market for electric generation will
    lead to ample capacity at reasonable prices. A critical feature of restructuring is the
    availability of new privately developed electric generation to meet the State’s increasing
    demand for power. No longer will the customers of a utility be at risk that too much
    generation will be built, resulting in high rates based on the cost of building it.
    While the market now determines what generation is needed, the regulatory
    scheme currently in effect assures compliance with current and upcoming state and
    federal environmental requirements. Using their zoning authority, local governments
    possess substantial control over the process of siting non-utility generation. Using
    these established regulatory schemes, some plants proposed in Illinois have been
    approved and are now operating, while others have been rejected.
    Comment of Commonwealth
    2
    PCB Docket R01-10
    Edison Company
    New or more stringent regulation is not warranted, would interfere with the
    market-based approach envisioned by the Legislature, and would likely have a
    negative effect on the State’s generation capacity.
    California’s model for restructuring is significantly different from Illinois’ model.
    Whereas California has maintained tight regulatory control over wholesale prices and
    the approval of new generation, Illinois has allowed prices in a free market to
    determine what generation needs to be built. California’s experience this summer, in
    which demand has continued to grow while generation capacity has not, supports the
    view that the market should be allowed to operate in Illinois as the Illinois Legislature
    intended.
    ADDITIONAL PEAK GENERATING CAPACITY
    IS GOOD FOR ILLINOIS
    As the testimony of a number of witnesses revealed, peak load – the amount of
    electricity used when demand is at its highest point – is increasing substantially from
    year to year. (Fisher, p. 4; Tr. 298-301; see Bulley, p. 1). Because electricity cannot
    be stored, and must therefore be generated at the instant it is demanded, there must
    be enough generating capacity available to meet the peak load. (Juracek/Naumann,
    p. 3).
    It makes economic sense for a substantial portion of the generating capacity to
    be peaker capacity. (Juracek/Naumann, p. 4). Peak demand, or demand approaching
    the peak, only happens a handful of days per year. Base load plants are very
    expensive to build, and only make economic sense if there is sufficient demand to
    allow them to run continuously. What is needed for peak conditions are peaker plants
    that do not cost as much to build, so that they can economically be run only so many
    hours per year. (Id.)
    Comment of Commonwealth
    3
    PCB Docket R01-10
    Edison Company
    It is important for Illinois citizens and consumers that many of these new
    peaker plants be located in Illinois, or, more specifically, located so as to connect
    directly to the transmission grid of Illinois utilities. There are three key reasons why
    this is so:
    1.
    Illinois peakers will benefit Illinois consumers. Electric rates in Illinois
    are temporarily frozen during a transition to a restructured electric
    market. 220 ILCS 5/16-111(a). However, as the price of electricity in
    the future depends increasingly on market forces, keeping prices down in
    the face of increased demand requires more generation, and generation
    by a diverse group of electric producers. A large number of sellers with
    ample amounts of power to sell, directly connected to an Illinois utility’s
    transmission grid, will keep the price of electric power from jumping
    rapidly. (Juracek/Naumann, p. 9).
    2.
    Illinois peakers promote reliability. Local generation helps support
    voltage on the system, especially near the generator. ComEd studied its
    system and found a number of locations in Illinois where new generation
    would be a particular benefit to ComEd and its customers.
    (Juracek/Naumann, pp. 10-11). Moreover, the closer a generation
    source is to the load, the fewer potential problems there are with
    transmitting the power. If transmission lines become unavailable or
    overloaded, having local generation could allow nearby customers to
    remain energized. (Juracek/Naumann, p. 9). If the generation is
    distant, it may need to travel across numerous transmission systems
    with different owners and operators. (Id.)
    Comment of Commonwealth
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    PCB Docket R01-10
    Edison Company
    3.
    Distant peakers are not just as good. There was some uninformed
    discussion in the hearings that Illinois could rely on peakers built in
    other states, and merely transmit the power here. That view ignores the
    principles of power transmission and the reality that the interstate
    transmission grid evolves slowly. As a matter of physics and prudent
    operation, only so much power can be transmitted through a given line;
    at some point, to keep the lines from overloading, a transmission owner
    must turn down requests to transmit more power or curtail other
    transactions. The North American Electric Reliability Council and its
    regional member councils, such as the Mid-American Interconnected
    Network (MAIN), have rules and guidelines that prevent reliability–
    threatening overloads. Because the lines connecting neighboring utilities
    and neighboring states in the Midwest, like all transmission lines, have
    finite capacity, there have already been numerous instances on which
    transmission requests were denied. (Juracek/Naumann, p. 9) This is
    especially true during peak load conditions. It is therefore incorrect that
    either Illinois can depend heavily on generation in other states, or that
    Illinois-based generation will be used to supply huge amounts of load in
    other states. Unless or until massive new transmission line projects
    redefine the transmission grid, this condition will remain for the
    foreseeable future. (Tr. 294-95). And, regardless of interstate
    transmission availability, distant generation cannot support voltage on
    the local system to the same extent that local generation can.
    Comment of Commonwealth
    5
    PCB Docket R01-10
    Edison Company
    Accordingly, absent legitimate environmental concerns that are going
    unaddressed, the Board should not recommend actions that could affect the reliable
    and economic delivery of electric power in the state.
    ENVIRONMENTAL REGULATION SHOULD NOT
    UNDULY INHIBIT AND FRUSTRATE THE POWER
    MARKET DEVELOPED BY THE LEGISLATURE
    The Illinois Legislature in the Electric Service Customer Choice and Rate Relief
    Law of 1997 made the decision to break from the traditional method of the generation
    and sale of electric power. Under the new legislative scheme, alternative suppliers
    may sell power to customers in competition with utilities. (Juracek/Naumann, p. 7).
    Pursuant to federal law, a utility must transmit power for others pursuant to a tariff,
    on an open-access, non-discriminatory basis, assuring that new generating sources
    will be able to move and sell their power. Utilities like ComEd can focus on power
    delivery, not generation, and leave generation (and its inherent investment risks) to
    private companies. Significantly, in recognition of this new paradigm, the Illinois
    Legislature explicitly removed the Illinois Commerce Commission’s power to direct a
    utility to build additional generation. 220 ILCS 5/8-503 (1997). Rather, the
    Legislature has entrusted the emerging free market for electric power to cause the
    appropriate amount of new generation to be built.
    This scheme will not function as the Legislature intended, and the citizens of
    Illinois will be affected negatively, if Illinois’ environmental regulatory scheme is
    changed unreasonably. While ComEd is certainly not opposed to the application of
    appropriate environmental laws and regulations to peaker plants, like any other
    facilities, the Board must realize that restrictions on peaker plants will reduce the
    supply of electricity generated and available to consumers. Unduly ratcheting up the
    standards without a proven need would not be good for Illinois.
    Comment of Commonwealth
    6
    PCB Docket R01-10
    Edison Company
    THE BOARD SHOULD ADDRESS
    THE GOVERNOR’S SPECIFIC QUESTIONS
    The purpose of this docket is to seek answers to five questions posed by the
    Governor. The first three questions have a common theme: are peaker plants different
    from other industrial facilities in Illinois so as to require more stringent regulation?
    The answer, based on the record the Board has developed, is absolutely not. As the
    record demonstrates, especially through testimony by IEPA and various independent
    power producers, a well-designed peaker plant easily complies with all applicable
    federal and state environmental requirements and poses no significant environmental
    threat to the surrounding community. (Romaine, pp. 13, 24-25, Zak, pp. 3, 6; Kaleel,
    p. 13; Tr. 58, 115, 234-35). Just like other industrial facilities that produce important
    products, peaker plants have the potential to emit air pollutants, noise, and use water,
    and may not be suitable for a residential neighborhood if not regulated by appropriate
    health-based requirements. Just like other industrial facilities, their product may be
    consumed locally and may also be shipped elsewhere. However, adequate
    environmental standards do exist for these pollution sources, which increase in
    stringency depending on the size and location of the proposed source. (Romaine,
    p. 13). Application of those standards and numerous new more stringent regulations
    will well protect the public.
    The IEPA, with USEPA's concurrence, has clearly demonstrated that it can
    determine whether the plants meet the established environmental standards.
    (Romaine, pp. 16-17 and IEPA Ex. 3). Indeed, based on ample testimony in the
    record, it appears that peaker plants often meet the standards by a substantial
    margin. (E.g., Romaine, p. 13; Tr. 234-35). This record does not support new,
    burdensome regulation. The answer to the first two questions is “no,” Illinois does not
    need special regulations as to peakers, and they do not pose a unique threat.
    Comment of Commonwealth
    7
    PCB Docket R01-10
    Edison Company
    As to siting the new peaker plants, the current system is clearly working, so the
    answer to the third question is also “no.” The market and the existing transmission
    grid determines where developers propose new plants – places where the power can
    flow over the grid to customers, making a location profitable. (Juracek/Naumann,
    p. 10). However, unlike a state-regulated public utility, a private developer must fit its
    new plant into the zoning and siting scheme of the neighborhood it chooses.
    Municipalities are well aware of how to use their zoning power to locate industrial
    facilities where they will not adversely or unfairly affect other land uses, and have
    substantial discretion to grant or deny zoning changes or variances. For this reason,
    some plants have obtained approval, while numerous other plants have been turned
    down. (The latest example: since the first hearings before the Board in this docket, the
    Board of Trustees of the Village of Libertyville rejected a zoning request for a new
    peaking plant.) So, the current situation does not demand an overhaul of the siting
    mechanism. Certainly, a time-consuming, expensive, bureaucratic process would
    discourage independent power from locating in Illinois. (Juracek/Naumann, p. 11).
    The fourth question in this inquiry hearing, regarding the retroactive
    application of new regulations, need not be answered directly because no new
    regulations are needed. However, as discussed by the Agency witnesses, retro-fitting
    equipment is terribly expensive, and would be unfair considering that the facilities met
    the regulations pursuant to which they were permitted. (Zak, p. 5). Further, certain
    existing plants may already be subject to new stricter control requirements pursuant
    to USEPA's recently promulgated regulations.
    The record contains ample information to answer the fifth question, what other
    states are doing: different states take different approaches. (Responses to IPCB
    Questions to Charles Fisher, Answer No. 4). Some states use a similar system to
    Comment of Commonwealth
    8
    PCB Docket R01-10
    Edison Company
    Illinois. Others have adopted a more state-led approach to siting, replacing local
    zoning. The record reflects that in California, a slow bureaucratic process has kept
    construction of independent power plants to a minimum even though the electric
    industry has been restructured. (Tr. 293-94). The results in California this past
    summer – insufficient generation to keep prices stable – suggest that this model is one
    to avoid. As noted above, ComEd believes that the current system in Illinois has an
    appropriate balance that works to increase generation while protecting communities
    and the environment. (Juracek/Naumann, p. 12; Tr. 292-93).
    Based on the foregoing, ComEd urges the Board to answer the Governor’s
    questions in accordance with the record here, and to avoid new, unwarranted, and
    burdensome requirements that will not be in the public interest.
    Respectfully submitted,
    Dated: November 6, 2000
    C
    OMMONWEALTH
    E
    DISON
    C
    OMPANY
    By:
    One of its attorneys
    Christopher W. Zibart
    Sharon M. Neal
    Hopkins & Sutter
    Commonwealth Edison Company
    70 West Madison Street
    125 South Clark Street
    Chicago, Illinois 60602-4205
    Post Office Box 767
    (312) 558-6600
    Chicago, Illinois 60690-0767
    czibart@hopsut.com
    sharon.neal@exeloncorp.com
    Comment of Commonwealth
    PCB Docket R01-10
    Edison Company
    CERTIFICATE OF SERVICE
    I, Christopher W. Zibart, hereby certify that a copy of Comment of
    Commonwealth Edison Company was served upon Hearing Officer Amy L. Jackson at
    the Illinois Pollution Control Board, 600 South Second Street, Suite 402, Springfield,
    IL 62704 by overnight Federal Express and e-mail on November 6, 2000.
    Christopher W. Zibart
    This filing is submitted on recycled paper

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