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Businesses and Organized Labor Warn Energy Proposal Will Result in Largest Rate Hike in Illinois History, Send Jobs to Neighboring States

July 1, 2021

Businesses and Organized Labor Warn Energy Proposal Will Result in Largest Rate Hike in Illinois History, Send Jobs to Neighboring States

SPRINGFIELD – A coalition of businesses and organized labor are uniting in opposition to an energy proposal backed by Gov. JB Pritzker, warning it will result in the largest rate hike on consumers in Illinois history while exporting jobs to neighboring states.

While the plan is being drafted behind closed doors, an analysis of the proposed legislation indicates it will cost families, businesses and organizations across Illinois a minimum of $700 million a year, including an additional $215 million for new programs. This is likely just a first installment, with ratepayers on the hook as costs will continue to increase year after year.

This effort to impose higher energy costs stands in stark contrast to Illinois’ success in deregulating the energy market in 1997, which resulted in tens of billions of dollars in savings for families and businesses. The state’s low-cost energy prices and reliable electric grid have been cited by governors time and again as reasons why businesses should stay in or relocate to Illinois. Now, Illinois is poised to eliminate this economic development incentive at a time when businesses need help to recover and rebuild from the upheaval caused by the pandemic.

“This massive electric rate hike couldn’t come at a worse time for Illinois’ businesses and families, who will be asked to pay significantly higher monthly electric bills. Manufacturers use one-third of all energy consumed in the United States so this will have a disproportionate impact on the industrial sector,” said Mark Denzler, President and CEO, Illinois Manufacturers’ Association. “Manufacturers have reduced emissions by 21 percent in the last decade while increasing economic output by 18 percent. After more than a year of disruption and uncertainty, they need help getting back on their feet, not new hurdles in the form of higher electric prices. We ask the governor and lawmakers to rethink this proposal, which will end one of best competitive advantages in Illinois.”

Since deregulation was enacted in 1997, Illinois families and businesses saved more than $37 billion in energy costs, according to a 2013 economic analysis.

Continental Envelope in Geneva, one of the largest direct-mail envelope manufacturers in the Midwest, estimates the energy proposal will result in the family-run business struggling to compete against competitors in other states, including Missouri, Iowa, Wisconsin, Minnesota, Indiana and Ohio.

“Illinois has some great advantages within the mailing industry. This bill will lessen those advantaged and impair our ability to grow and hire more Illinois residents,” said Jacob Margulies, President, Continental Envelope.

For Alton Steel, an employee-owned steel mill with more than 250 workers, the energy proposal will threaten the company’s ability to grow by offering competitive prices. It is estimated the proposal will cost the company at least a half a million dollars a year.

“It is important that any bill contemplated does not take away one of the biggest competitive advantages that Illinois manufacturers have. This is important to protect the well-paying jobs with excellent benefits at Alton Steel, for our local community and Southern Illinois,” said Jeff Dorries, Chief Financial Officer, Alton Steel.

The proposal would also have a detrimental impact on the state’s agricultural sector, dramatically raising costs of grain storage and processing, which will mean farmers are paid less for their commodities while consumers will pay higher prices.

“Handling grain and manufacturing feed is a high volume, low margin commodity business which needs a reliable power supply,” said Jeff Adkisson, Executive Vice President, Grain & Feed Association of Illinois. “This proposal will simply reduce the reliability of the power supply from Illinois and saddle the agricultural industry with a significant rate hike, resulting in lower prices paid to farmers and higher prices for animal food.”

To make matters worse, businesses and families across Illinois are being asked to shoulder rate hikes without any data to explain the increase in costs. Members of the business community have repeatedly requested economic, reliability, and rate impact studies, but those inquiries have been ignored.

“If businesses and families are being asked to pay more for electricity they rely on, the very least they deserve is an explanation why. Instead, they are being asked to cover the costs for a process completely devoid of transparency or accountability,” said Rob Karr, President and CEO, Illinois Retail Merchants Association. “This proposal will only make it more difficult for retailers to get back on their feet after a year in which many were forced to close or limit operations.”

At the same time families are being asked to pay more for energy, this proposal would leave more than a thousand workers without a job as state-of-the-art energy plants are set to be shuttered decades before the end of their useful lives.

“The transition to cleaner energy must be done in a thoughtful way that doesn’t pick winners and losers. Under this plan, there are a lot of losers – including businesses, consumers, and workers who rely on these power plants for their livelihoods,” said Rick Terven, Legislative and Political Director, Illinois Pipe Trades Association. “At the same time when these employees will be put out of a job, they will be asked to pay more to power their homes. It’s a cruel double-whammy that can and should be avoided.”

Under this legislation, Illinois would sacrifice grid reliability and affordability.

“This issue is personal to me. I helped build Prairie State, so I know how important it is not just to our power grid but also our state and regional economy,” said Chad Goldschmidt, Vice President, Southwestern Illinois Building Trades Council. “If these plants are prematurely shuttered, Illinois will need to import power from other states, likely from less efficient coal plants. Working Illinois families should not be asked to pay more for less reliable power.”