POLITICOAL
Taylorville coal-gasification plant waiting on legislative action
TIM LANDIS and DOUG FINKE, STAFF WRITERS, THE STATE JOURNAL REGISTER

December 09, 2007 – TAYLORVILLE, ILL - Peabody Energy broke ground this summer for the coal-fired Prairie State Energy campus in southern Illinois. City Water, Light and Power has begun construction of a coal-fired plant on Lake Springfield. Developers of the $2.5 billion Taylorville Energy Center are still waiting.

Six years after the idea was first floated of a coal-gasification plant near Taylorville, designed to convert Christian County's ample supplies of coal to clean-burning gas, developers are frustrated by their inability to get legislative approval of a bill to guarantee a long-term market for electricity produced by the plant.

It's that guarantee, and the risk to consumers, that is part of the problem, according to the Illinois Attorney General's office.

While there are few outright opponents - the Sierra Club has challenged a state clean-air permit, claiming the plant does not do enough to contain emissions linked to global warming - even some supporters say timing has been a problem in a year that has seen more than its share of legislative fights over electric costs.

"We're committed. If we get this bill passed, we'll get this thing finalized and start building in 2008," said Bill Braudt Jr., general manager of business development for Tenaska Inc., a Nebraska-based company that has a major stake in the Taylorville Energy Center.

"That bill" is House Bill 3388, which would require Ameren Corp. and Commonwealth Edison to buy part of their power needs from alternative energy plants, such as the Taylorville project.

The legislation also would allow the companies to enter into long-term contracts for the power, a provision Tenaska executives contend is essential to attracting the private financing needed to begin construction. The company estimates it would take four to five years to build the plant and begin producing electricity.

Current rules limit Ameren and ComEd to three-year contracts. Initially, Tenaska and plant backers sought changes that would allow 30-to-40-year contracts, but subsequent negotiations have focused on a 12- to 30-year commitment.

At issue is the risk to Ameren and ComEd ratepayers if the plant fails to meet expectations or there are cost overruns.

Braudt said there would be minimal effect on consumer rates even if no power were sold. He also pointed out the Illinois Commerce Commission would have to approve the rates by reviewing construction and operating costs.

Supporters also say a new generation of coal-fired plants would save ratepayers money in the long run by providing clean-burning alternatives to nuclear and natural-gas fired power plants.
The bill passed the Senate 48-0 on July 27 and was sent back to the House. It's been sitting there ever since. The deadline to vote on the bill has been extended nine times, most recently on Nov. 30. The new deadline for House action is Jan. 10.

"There continues to be some concerns from the attorney general's office," said Steve Brown, spokesman for House Speaker Michael Madigan, D-Chicago. "Until those concerns are addressed, the bill probably won't advance. When constitutional officers have objections to bills, we tend to listen to them."

Ann Spillane, chief of staff for Attorney General Lisa Madigan, said the office wants to see the project completed, but there have to be additional protections for consumers who ultimately will pay for the electricity generated by the plant."The concern we have raised is the Tenaska folks want to lock in for a very long time a very high guaranteed rate that would be charged to consumers," Spillane said. "We understand there needs to be incentives, but we don't think consumers should bear all of the risk."

Rep. Gary Hannig, D-Litchfield, is the chief House sponsor of the bill. His district includes Taylorville and the Tenaska project.

Hannig said he, too, has concerns about the state ordering Ameren and ComEd to buy electricity from Tenaska that will be more costly than electricity from traditional coal-fired power plants. It's particularly tricky for lawmakers, he said, after they just spent months "trying to beat down" Ameren and ComEd rate increases that resulted from their higher electricity costs.

"It's a little counterproductive then to go in and say, 'But on the other hand we want you to buy this (higher cost) electricity made in the Tenaska plant,'" Hannig said.

Hannig said electricity generated by a plant using new technology "naturally is going to be more expensive" and that he believes the plant should get "some subsidies for some period of time." After that, he said, the plant should stand or fail on its own in the open market. He suggested 10 years.

Sen. Deanna Demuzio, D-Carlinville, sponsored the bill in the Senate. She said time is running out to act.

"I was notified ... that basically they are looking at other options besides the state of Illinois in terms of building a coal gasification plant," Demuzio said. Demuzio said she has not spoken directly with Tenaska officials but has with "some of their lobbyists and supporters."
Spillane said that during negotiations Tenaska officials "have not expressed to us that they are ready to pull out."

A Springfield-based consultant who has worked on the Taylorville Energy Center from the beginning said Illinois risks developing a reputation as a state that is not serious about coal.
"We're closing coal mines, and we should be opening coal mines. It's not just a single plant issue, it's an industry issue," said Todd Ely of Ely Consulting Group Inc.

Backers point to two local announcements as evidence of industry troubles - the August layoffs of 200 miners at the Crown II mine near Girard and last week's announcement the Monterey No. 1 coal mine near Carlinville will close this month, at a cost of 350 jobs.

Groups ranging from the American Lung Association to the Citizens Utility Board have backed the Taylorville project as an example of technology that can be used to burn Illinois coal cleanly while reducing reliance on oil imports.

CUB executive director Dave Kolata said the consumer advocacy group remains in support of the Taylorville Energy Center, but the project has suffered from the fallout from soaring utility bills that followed the end of a statewide rate freeze on Jan. 1.

"We're in support of new coal-gasification plants, as long as it's done in a consumer-friendly manner. I think what happened here is it's a timing issue. We just had a big electric rate debate," Kolata said.

In addition to converting coal to synthetic gas to produce enough electricity for 630,000 homes, developers say the plant would create 600 jobs in a county where the last coal mine closed in 1994.

Braudt confirmed Tenaska is in preliminary discussions with other states in the event the Taylorville project falls through, though he said the company is not threatening to "take its football and go home."

"We are starting to question whether this will ever get done in Illinois," Braudt said. But he also said the company has invested millions of dollars and several years in the project and prefers to build at Taylorville.

"This is where Tenaska has put its money, and this is where we want to make it happen," Braudt said.


----------

<<< back