Illinois businesses battle bill to aid Tenaska IGCC project

A long-running fight over state support of the Tenaska Energy integrated gasification combined cycle (IGCC) power plant in Illinois is continuing, with the COMPETE Coalition issuing a March 28 statement opposing a legislative bill that would help the project.

The coalition said this pending legislation in the state General Assembly would impose $12bn in costs on Illinois electricity customers to subsidize a power plant that is not necessary to meet demand and would produce electricity at far higher cost than abundant supplies readily available from the wholesale power market.

“We cannot afford this costly legislation,” eight Illinois businesses that are part of the coalition said in a letter to Illinois lawmakers. “Through its direct impact of significant rate increases and its indirect impact of substantially weakening both Illinois’ thriving retail electricity market and the market’s cost-savings benefits, the Tenaska bill will actually destroy more jobs than it will create and will harm, not help, Illinois’ businesses and economy.”

At issue is SB 678, which passed the Senate last year and is now before the Illinois House, with that bill essentially subsidizing the construction and operation of the Taylorville IGCC project. The legislation would require Illinois utilities and competitive power providers to enter into 30-year contracts to purchase power from the coal-fueled facility at above-market rates.

The proposal to subsidize an uneconomic and unnecessary power plant is the equivalent of enacting a $12bn tax increase, the coalition said. The Illinois employers signing the letter include The Andersons Inc., Boston Market Corp., Cargill Inc., Leggett & Platt Inc., Macy’s, PetSmart Inc., Safeway and Wal-Mart Stores Inc. Collectively, these companies spend over $112m each year on electricity in the state.

The letter points out that consumers in the state are already benefitting from cheaper power prices due to a deregulated electricity market. Since early 2011, over 260,000 residential customers have switched to retail electric suppliers as their source of electric supply. This number is expected to significantly increase due to the more than 200 municipalities planning to launch Municipal Aggregation for their residents, the coalition noted.

Since retail competition was adopted in 1997, more than 9,500 MW of gas-fired generation has been built in Illinois and upgrades at existing nuclear plants have added 900 MW of reliable supply – all at no risk to consumers, the coalition said.

By subsidizing the Taylorville project, lawmakers transfer the large financial risk of developing the facility to the state’s electricity consumers, undermining a significant benefit of the competitive marketplace, the coalition added. Also, by assigning consumers the financial risk of developing the project, Tenaska has no incentive to control costs and avoid cost overruns. Duke Energy’s (NYSE:DUK) nearly-completed Edwardsport IGCC plant in Indiana is more than $1bn over budget, providing a stark example of the likely cost overruns to be incurred in building Tenaska’s Taylorville project, the coalition said.

The COMPETE Coalition is more than 620 electricity stakeholders, including customers, suppliers, traditional and clean energy generators, transmission owners, trade associations, technology innovators, environmental organizations and economic development corporations.

A synopsis of the bill on the state legislative website said: “Amends the Illinois Power Agency Act and the Public Utilities Act to provide for the procurement of renewable energy resources from a clean coal facility, initial clean coal facility, and clean coal SNG facility, including amending provisions concerning Agency powers, aggregate distributed renewable energy, the renewable portfolio standard, and procurement of energy efficiency products and adding provisions concerning the development of feedstock procurement plans and feedstock procurement processes; makes corresponding changes in various other Acts. Allows certain facilities to recover certain costs and revenue associated with the generation of electricity and sequestration. Contains provisions concerning the permitting, oversight, and investigation for capture, transport, and sequestration of carbon dioxide.”

SNG is a reference to substitute natural gas. Last year, Tenaska was amending the air permit for the Taylorville project to allow not only production of electricity by burning some of the plant’s SNG production, but to also allow extra SNG to be produced for sale into the gas pipeline system.

“Taylorville Energy Center (TEC) is a proposed 716-megawatt (gross), 602-MW (net) coal-fed power plant using an advanced technology called Integrated Gasification Combined-Cycle (IGCC) with Carbon Capture and Storage (CCS) to make it among the cleanest power plants in the world,” said the project website. “Located a mile northeast of Taylorville in central Illinois, the plant will convert Illinois coal into clean substitute natural gas (also known as methane) to generate enough electricity to power about 600,000 homes.”

The project website said that advantages of the TEC would be millions of dollars saved annually on power costs, economic development for a job-starved region, creation of a new market for Illinois coal and protection of the environment and public health through clean-coal technology.

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.