 A much-anticipated report on a clean coal proposal in central
Illinois questions both the costs and benefits of the $3.5 billion
project.The report, released Wednesday by the Illinois Commerce
Commission, says Nebraska-based Tenaska Energy's proposed plant is
costly, incomplete and potentially harmful to competition in the
marketplace.
"The General Assembly should consider whether the current plant
configuration best balances the interests of rate payers and the
goals of the Clean Coal Act," it read. "The cost associated with
electricity generated by (the plant) is substantially higher than
... other types of generation."
And that may be an understatement, according to commission member
John Colgan.
The plant would use technology to convert coal into natural gas
with near-zero emissions. Project developers are hoping to funnel
carbon through a pipeline to the Gulf states, where it can be used
to extract oil from wells. While the grand idea may work on paper,
it still produces an incomplete picture of the project. Developers
came to the $3.5 billion price tag without assessing the costs of
carbon sequestration and the potential pipeline -- significant gaps,
according to Colgan.
"Their initial report did not have a final decision of how to
sequester the carbon," he said. "It is difficult to make a decision
without knowing what those costs are going to be."
The high construction costs and costly nature of producing
electricity -- about 40-50 percent higher than traditional coal
production -- will have to be passed on to commercial customers.
Residential consumers will not see their rates increased by more
than 2 percent over the next 30 years, according to a law passed in
2009.
That leaves businesses and industries vulnerable to bearing the
cost. Colgan says Illinois' competitive markets could dry up as
large electricity distribution sources like Exelon force out smaller
startups.
"If these alternate sources are forced to buy from Taylorville
and this 2 percent cap is reached, they'll have to buy the overflow
at a much higher rate," he said.
Colgan said the federal government has taken a keen interest in
clean coal technology, especially in Illinois, where carbon
sequestration is thought to be ideal. The government is directly
financing a $1 billion retrofitting in the FutureGen project and has
offered to guarantee $2.7 billion in loans for the Taylorville
project. But private investors are not biting at the prospect of
projects like the Taylorville plant -- a warning sign about the
financial risks associated with clean coal technology, according to
Colgan.
"It's a whole new approach to energy that the federal government
threw a lot of stimulus money into, but there's probably not a lot
of venture capital out there to support this kind of project," he
said.
If the state does not approve the Tenaska plan, it will fall
apart, along with federal backing.
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While the ICC did not discuss whether the plant should be built,
its message clearly hurts the project's chances of passing the
General Assembly.
"We understand what the General Assembly is trying to do --
moving to cleaner technology in a carbon-based economy -- but there
is going to be a rate impact," Colgan said.
Backers of the project are optimistic that lawmakers will look
beyond costs and approve the project based on the environmental and
technological impacts of clean coal.
"I am fairly confident we can convince the legislature that the
project makes sense on all levels," Taylorville Mayor Greg
Brotherton said. "It will stimulate the economy, it is
environmentally safe, and it uses resources we have widely available
to us."
Opponents like Kevin Wright, president of the Illinois
Competitive Energy Association, hope lawmakers will take the report
seriously.
"It should be persuasive with legislators, given the high cost
and the rate impact on consumers and the engine of the Illinois
economy," he said.
But Tenaska representatives countered that the ICC report seemed
to misunderstand the purpose of the project, though their figures
were similar.
"The premise under the Clean Coal Law of providing for an initial
clean coal facility is that it is important to develop the state's
coal resources in an environmentally friendly manner," said the
company in a statement. "No one has ever tried to tell the General
Assembly that the initial clean coal facility is going to be the
cheapest option."
The report was given to lawmakers on Wednesday. They are expected
to reach their final decision on the matter later this fall.
[Illinois
Statehouse News; By BILL McMORRIS]
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