told the Illinois Commerce Commission last week. “Competitive forces will not attract base load generation in Illinois,” he says, justifying requirements on ratepayers to pay above-market prices for energy produced by the Taylorville Energy Center. “Base load generation” refers to power plants that are on at all times, providing for the steady electricity needs of the state. When demand rises above those plants’ capacity, additional power plants, called “peakers,” are turned on, at an additional cost, to provide supplemental power.
Ford told the ICC that one in four Illinois coal plants likely will retire by 2020, reducing the state’s capacity for base load generation and requiring increased use of the costly peakers – unless new plants are built. The problem will be compounded with an expected increase in energy consumption, he says.
Under the Illinois Clean Coal Portfolio Standard, signed into law in January 2009, electric companies would be required to enter into 30-year purchase agreements with Tenaska. The cost of producing the Energy Center’s “clean” coal electricity is higher than that of conventional coal power plants, but the same legislation ensures that residential and small business customers wouldn’t see rates increase by more than about 2 percent each year. But, for those not protected by the legislation, such as some manufacturers, schools and hospitals that use industrial-sized supplies of power, the cost per kilowatt hour would increase by as much as the plant’s construction cost requires – even if that turns out to be more than expected.
Potential increases could have an adverse impact on Illinois’ overall economy, says Phil O’Connor, former ICC chairman, now spokesman for the STOP Coalition (Stop Tenaska’s Overpriced Power), a group repre senting businesses and manufacturers. The group estimates that its members’ rates would increase between 3 and 5 percent, causing the state to lose at least 15,000 jobs each year.
But Tenaska says industrial users’ costs would still be low. Right now, such customers pay 6.8 cents per kilowatt-hour, while residential customers pay 11.5 cents per kilowatt-hour.
The percentages look scarier than the actual numbers, says Tenaska consultant Dave Lundy. “The large … customers have worked hard to create and protect their 40 percent rate advantage over residential customers, it’s not surprising that they’re trying to prevent that from changing,” he says.
Over 30 years, the above-market rates customers would be paying for the Taylorville Energy Center’s electricity would mean Tenaska gets an $8.7 billion subsidy from ratepayers, O’Connor says. About $4.5 billion of that would come from industrial customers while about $4.2 billion would come from residential customers. “It’s just an extraordinary amount of money,” he says. “Imagine if anybody else walked in the door and said ‘I want you to go on the hook on my behalf for almost $9 billion in subsidies so I can build a relatively small gas plant.’” The Energy Center will provide about 3 percent of Illinois’ energy needs.
The Illinois Sierra Club, an environmental advocacy group, takes issue with what it considers another form of subsidy – the tax credit.
The U.S. Department of Energy earlier this month approved the Taylorville Energy Center as a recipient of $417 million in tax credits, if it successfully captures 65 percent of its carbon emissions. The largest tax credit ever awarded for a single project, the sum would be taken from the same funding allocation as that for renewable energy projects, such as wind and solar – technologies in which the Sierra Club would rather see the money invested.
“I don’t think that wind is going to fix the problem in and of itself. It’s definitely going to have to be a whole portfolio of energy sources, but we shouldn’t be investing in coal at this point,” says Becki Clayborn, Illinois Sierra Club regional representative.
She adds that Illinois residents’ pocketbooks would get hit too many times – increased rates, federal credits and loans, and state grants – if the project goes through. Already the state has given Tenaska $23 million in grants, $18 million of which the company will repay, assuming the plant is built. The Taylorville Energy Center is also still eligible for a $2.57 billion loan guarantee from the U.S. Department of Energy.
“There’s a whole clean energy economy that could be invested in for jobs,” Clayborn says, noting that investment in wind and solar could mean jobs just as investment in “clean” coal means jobs.
A filthy fuel The Illinois Sierra Club points to coal fuel as inherently damaging – from the point that it’s mined to the moment it becomes electricity. “They [coal plant developers] are trying to be as environmentally responsible as they can with coal, but we still think that it either may not be possible to do clean coal at all or that they could do a little bit more for this one,” Clayborn says. “Unfortunately, it’s just a dirty business in general.”
Tenaska contends that coal is necessarily part of the state’s energy portfolio – about 43 percent of Illinois’ electricity comes from coalfired power plants – and that its Taylorville Energy Center project would make the fuel as efficient as possible.
Instead of directly burning coal, which results in all kinds of harmful emissions, the Energy Center would morph the hard, black rock into a synthetic gas, “syngas.” In doing so, Tenaska can more easily separate and sell
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