Gov. Pat Quinn lost a battle Tuesday to persuade legislators to strike down controversial, $3.2 billion smart grid legislation but vows he’ll win the war.
Against Quinn’s wishes, the Senate approved a so-called trailer bill Tuesday that tacks utility concessions onto legislation supported by Commonwealth Edison Co., the utility subsidiary of Chicago-based Exelon Corp.
Quinn vowed to fight passage of the legislation with the help of state Attorney General Lisa Madigan. The House will now vote on the trailer bill, followed by a vote in both chambers to override Quinn’s veto of the original legislation.
“Legislators who accept lots and lots of campaign donations from utility companies want to write a law to raise consumer utility bills for the next decade,” Quinn said. He called the legislation the “smart greed” bill, saying the utilities were attempting an “end-run” around the Illinois Commerce Commission, which regulates utilities. Decisions on such requests for investments typically fall to the ICC, not the legislature.
“There is nothing in this trailer bill that is controversial or bad for consumers,” countered Sen. Don Harmon, D-Oak Park, who sponsored the measure.
In a statement, ComEd said it was encouraged by approval of Harmon’s bill to address concerns raised about the smart grid legislation.
The original legislation outlines cost increases to consumers amounting to $3 a month in ComEd’s territory to pay for smart grid and other infrastructure improvements that supporters say will help consumers monitor and manage electricity use and help ComEd more quickly pinpoint outages and make repairs.
Sen. Susan Garrett (D-Lake Forest), voted against the bill, saying it did not address concerns of dozens of Northern suburbs who were hit hard by power outages this summer. She wanted money set aside to buy electric cable to help fix problem areas.
The AFL-CIO labor organization and the International Brotherhood of Electrical Workers union rallied in support of the legislation Tuesday, saying it would create much-needed jobs.
Tenaska bill
Separately, Tenaska Energy’s proposal to build a $3.5 billion electric generating plant in Taylorville, near Springfield, fueled by gas produced from coal, is contained in another bill headed to the Senate.
Through legislation, the project’s developers are asking legislators to force the state’s utilities to purchase the plant’s output for 30 years, a tack that two other coal-to-gas developers successfully used last session. Tenaska’s original legislation failed to pass in the spring session.
The new Tenaska bill attempts to allay the fears of businesses that want a cap on how much their electricity rates would increase because of the project. Residential-customer increases would be capped at 2 percent over 30 years; other customers, between 3 and 4 percent over the same period.
Bart Ford, Tenaska vice president of business development, blamed Exelon Corp., ComEd’s parent, for lobbying against the project because it would cut into Exelon’s revenues, especially for electricity produced by nuclear power plants.
In a statement, Exelon said it welcomes competition but feels the project undermines Illinois’ competitive electricity market.
Financial exchanges
Proposed tax breaks for Chicago’s financial exchanges, which could cut state tax revenue by $66 million or more per year, ran into stiff resistance Tuesday from leaders of both political parties.
The legislation to slice state corporate income tax bills in half for CME Group Inc., the parent of the Chicago Mercantile Exchange and the Chicago Board of Trade, and CBOE Holdings Inc., parent of the Chicago Board Options Exchange, failed to come up in a Senate committee, as had been expected.
“At the moment, it does not appear to have bipartisan support,” a spokesman for Senate President John Cullerton, D-Chicago, said Tuesday, adding he expects it to resurface later in the veto session.
Republicans questioned giving a break to one industry rather than broader tax relief, and leaders from both parties said there was inadequate information on how many companies would be affected and what the total tax cost would be for the state.
“We certainly recognize that CME is important to Chicago and the state’s economy, but small- and medium-size businesses leave every day,” said Patty Schuh, a spokeswoman for Senate Minority Leader Christine Radogno, R-Lemont. “We need to step back and evaluate how to help everyone.”
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“We know why CME is in this dilemma, because of the massive tax increase passed over our objections,” she said. “We need to work collectively on how to fix the problem that created.”
The state’s corporate income tax rate applies to profits resulting from in-state sales. For many multinational corporations, this means Illinois’ tax applies to only a slice of their income.
But for the Chicago-based exchanges, the tax applies to all trades, and they have said this is unfair because many trades are placed electronically by out-of-state parties. Both companies declined to comment Tuesday.
“It is an unfair calculation … and it ought to be corrected,” Cullerton, the bill’s sponsor, said Tuesday.
The bill attempts to tax income attributed to Illinois-based transactions and would continue to fully tax income derived from open-outcry transactions on trading floors in Chicago. But most transactions are conducted electronically now.
Under the proposal, only 27.54 percent of income stemming from electronic trading and clearing fees would be subject to Illinois’ corporate income tax.
House Majority Leader Barbara Flynn Currie, D-Chicago, said she wants to know how it was determined that 27.54 percent of income comes from Illinois sales. Originally, CME proposed applying Illinois tax rates to only 6 percent of income, she said.
“I haven’t seen the basis for it,” she said.
Sears tax break extension
The battle over the proposed 15-year extension of tax breaks to Sears Holdings Corp. continued to rage Tuesday, with School District 300 unveiling a proposal that would allow it to receive a bigger share of property tax revenue from the corporate development than currently under consideration.
The district now receives close to $3 million a year from the development, which it says is far short of the $14 million it would receive annually if the tax break expires and Sears stays put. The district is proposing a structure in which it would get about $12 million a year.
Under a plan being developed by Sen. Dan Kotowski, D-Park Ridge, it likely would get less, more in the neighborhood of $6 million.
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