Tenaska disputes Exelon-backed study of Taylorville impacts

Independent power producer Tenaska, the managing partner of the Taylorville Energy Center (TEC) coal gasification power project, on April 17 released a rate impact analysis by Pace Global, an international energy consultancy, which shows the project is of benefit to Illinois ratepayers.

Tenaska has been battling critics for years, including Illinois-based, nuclear-energy-dependent power provider Exelon (NYSE: EXC), as it tries to get the TEC project built. The Pace Global analysis found that significantly lower interest rates have more than offset the additional rate impact caused by changes in the energy market, Tenaska said.

Last month, the STOP Coalition released an Exelon-funded study claiming that the rate impact for the project had gone up by over $100m annually (40%) because of lower power and natural gas prices. Tenaska said it believed the study was deeply flawed and took neither accelerating coal plant closures nor lower interest rates into account. So Tenaska asked Pace Global, author of the original rate impact study from the 2010 Facility Cost Report vetted by the Illinois Commerce Commission, to update its study, replacing the 2010 commodity price forecasts with the most recent U.S. Energy Information Administration data.

The Pace analysis found that over 30 years, interest rate reductions alone will save Illinois ratepayers $882m, more than offsetting other rate impacts from energy market changes.

“Simply put, our opponents seem to have trouble with basic math. Not only has the sky not fallen on the Taylorville project, but it has become even brighter,” said Tenaska Vice President Bart Ford. “Because Exelon stands to lose as much as $100 million annually in windfall nuclear profits if Taylorville is built, it is not surprising that it commissioned these results.”

In addition to interest rates, the most significant beneficial change is imminent coal plant closures in the region due to new U.S. Environmental Protection Agency emissions rules. “With more than 319 announced coal unit closures totaling nearly 43,000 megawatts, every day it becomes clearer that our plant closure predictions were accurate while our opponents’ dismissal of this issue as ‘merely speculation’ was as phony and deliberately misleading as the latest Exelon ‘study,’” Ford said.

An Illinois legislative bill, SB 678, and the Taylorville Energy Center continue to earn the strong support of a broad coalition of labor, business, environmental and community interests including the state’s leading consumer advocates Attorney General Lisa Madigan and the Citizens Utility Board, Tenaska noted.

“We support the Taylorville project because the legislation contains strong consumer protections and ensures that Tenaska will live up to its pledge to sequester more than 50% of its carbon emissions,” said Paul Gaynor, Chief of the Public Interest Division for Attorney General Madigan.

“This legislation protects residential ratepayers and helps offset the problem of coal plant retirements and that’s why we support it,” said Bryan McDaniel, CUB senior policy analyst and legislative liaison.

In addition to a rate cap for all residential customers, legislative changes in recent years have ensured that at least two thirds of any capital cost overruns and two thirds of any carbon sequestration cost overruns will be paid for by the project’s owners and not by ratepayers. This benefits not only residential customers, but government and commercial customers as well, Tenaska noted.

The Illinois General Assembly website shows that SB 678 passed the Senate late last year, but since then has been stalled in the House. The bill would amend the Illinois Power Agency Act and the Public Utilities Act to provide for the procurement of renewable energy resources from a “clean coal” facility.

Plant would produce gas for power generation and outside sales

Incidentally, the Illinois EPA had out for comment last fall a proposed revision in the Taylorville project’s air construction permit. The Illinois EPA website indicates that revision has not been approved yet. The permitting is being done by Tenaska’s Christian County Generation LLC affiliate.

A fact sheet on the proposed permit revision said plant would make substitute natural gas (SNG) from coal using gasification technology. SNG is composed of methane, the principal component of commercial natural gas, and is interchangeable with pipeline natural gas. The design feedstock for the plant would be Illinois Basin coal. Rhino Resource Partners (NYSE: RNO) has an undeveloped coal mine nearby that it would like to use to supply the plant.

The gasification section of the plant or “gasification block” would have a nominal capacity of about 64 million cubic feet of SNG per day. The SNG would either be sold as a product and leave the plant by pipeline and/or be used on-site in the plant’s “power block” to generate electricity. The power block at the plant would have two combined cycle combustion turbines and a single shared steam turbine. Heat energy from the gasification block, recovered as steam, would also contribute to the electrical output of the power block. The nominal net output to the grid from the plant is expected to be about 630 MW after accounting for electricity used in the gasification block and other operations at the plant.

Tenaska is one of the largest independent power producers in the United States. Tenaska has developed about 9,000 MW of electric generating capacity across the United States. Tenaska affiliates currently operate and manage eight power plants totaling more than 6,700 MW that it owns in partnership with other companies. Tenaska is headquartered in Omaha, Neb., with offices in Dallas, Denver, Pittsburgh and Calgary, Canada.

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.