Illinois Power Coal Fired Power Plant News | ||
Jan 9, 2011 | St. Louis Post-Dispatch | |
-=-=-=-=-=-=- Green Blog Web Post Sponsor:-=-=-=-=-=-=-=-= The Illinois Senate's rejection of a bill to advance a next-generation coal plant just southeast of Springfield did more than potentially kill the $3.5 billion project. It highlighted the Catch-22 facing developers of this new breed of power plants: The steep price of building so-called clean coal plants deters investment -- but the cost won't come down until companies can prove the technology works, which requires actually building and operating plants. The legislation defeated at the Illinois capitol on Wednesday would have authorized the plant's owners to charge utilities above-market prices for electricity produced at the Taylorville Energy Center, which would generate enough electricity to power about 600,000 homes. But the impact of the vote could ripple even farther, potentially having a chilling effect on future clean coal proposals, including the federal government's revamped FutureGen project, a planned retrofitting of Ameren Corp.'s (NYSE:AEE) 70-year-old power plant in Meredosia, Ill. If such projects fail to move forward, that could also be a missed opportunity for Illinois coal miners, who would probably supply the fuel. "Long-term, (the effect) could be huge," said Phil Gonet, president of the Illinois Coal Association. Unlike the state's existing coal-fired plants, the Taylorville plant would not burn coal directly; instead, it would convert the black rock into a gas to more easily remove pollutants -- including much of the heat-trapping gases blamed for global warming. Developers, led by Omaha, Neb.-based Tenaska Inc., had secured $3 billion in federal tax credits and loan guarantees from the administration of President Barack Obama. But they can't begin construction without assurance that they'll be able to recover their costs over the next 30 years. Those assurances were a nonstarter for a coalition of some of the state's largest parent companies and electricity customers who argued that the bill, while protecting residential customers, would have left large employers exposed to big rate increases. Parent company information from Corporate Affiliations can give you access to nearly 700,000 company profiles. Philip O'Connor, a former Illinois Commerce Commission chairman who led a business coalition that lobbied fiercely against Taylorville, said the group didn't oppose clean coal projects in principal. "The problem was the economics of it," he said, over budget, under fire The economics are spelled out in a lengthy study filed with Illinois regulators last year. Tenaska was required to pay for the report under a measure approved by the Legislature in 2008. Among other findings, it revealed that electricity from the Taylorville plant would cost 21.3 cents a kilowatt-hour -- about three times what big electricity users currently pay, and far more expensive than new wind power (8 cents to 12 cents per kwh) or nuclear power (10 cents to 13 cents). And that report assumed the Taylorville project would be completed on budget. The business group, which includes the Illinois Chamber of Commerce and Illinois Manufacturers' Association, worried that they would bear the brunt of any cost overruns. The spectre of runaway costs has played out in Indiana, where Duke Energy Corp. (NYSE:DUK PRA) (NYSE:DUK) disclosed last spring that the cost of its Edwardsport clean coal plant had spiked by more than $500 million to $2.88 billion. That translated to an average 16 percent increase in electricity bills by 2013. Mounting concern over the impact on electric rates convinced Illinois Sen. Kyle McCarter, R-Lebanon, to withdraw support for the Taylorville legislation. The biggest employers in his district said they faced increases of 3 percent to 7 percent. That included agricultural giant ADM, which estimated its annual electric bill would go up by $5 million. "It was made very clear, through all the research that I did, that costs to businesses in this state were going to outweigh the benefits of new jobs created," he said. Backers of the Taylorville project have rejected that argument as a red herring. They called the Senate's decision short-sighted and said it would only drive up electricity rates in the future, as aging, inefficient coal plants shut down. different plans, same problem Plans for the Taylorville and FutureGen projects, which would be about 90 miles apart, differ in key ways. They would use different technologies, and the Taylorville plant would be newly built whereas FutureGen calls for conversion of an existing coal plant. But, like Taylorville, Ameren has said FutureGen would require state legislation to guarantee that plant owners could recover their investments. An Ameren spokeswoman had no comment on the potential impact of the defeat of the Taylorville bill. "We are at the earliest stages of our project development and can't speculate on the impact this might have," spokeswoman Susan Gallagher said. The Illinois coal mining industry, meanwhile, is likely to suffer (OOTC:WLVTQ) little immediate effect from the Senate vote, said Gonet, of the state's coal association. But it could mean a lost opportunity in years to come, he said. Producers had hoped projects such as Taylorville and FutureGen would help boost Illinois coal output, which is about half of what it was 20 years ago, before restrictions on acid-rain-causing sulfur dioxide emissions led utilities to switch to cleaner-burning western coal. (OOTC:WTNCF) (TSX:WTN') (TSX:WTN) "We have 55 million tons of coal that comes in each year from Wyoming to burn in Illinois power plants," Gonet said. "We'd like the opportunity to replace that with Illinois coal." Walking away? Tenaska executives -- who have spent five years and $40 million trying to get the Taylorville project off the ground -- have threatened to walk away unless the Senate reverses itself before noon Wednesday, when the lame-duck session ends. Company officials declined to comment after Wednesday's Senate vote. But other backers of the Taylorville project say a revote by the Senate seems unlikely. John Mead, director of the Coal Research Center at Southern Illinois University Carbondale, said national energy policy was needed to help developers get projects OK'd at the state level. "I think the country as a whole expects improvement in emissions performance, and whether it's through Congress or the EPA, we're going to see that expectation turned into requirements," Mead said. "Projects like Taylorville are going to help us meet those requirements." Hannah Hess of the Post-Dispatch contributed to this report. Author: Jeffrey Tomich Jan. 9, 2011 (McClatchy-Tribune Regional News delivered by Newstex) -- Newstex ID: KRTB-0187-50770891 |
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