Illinois commission approves power sales provisions for FutureGen 2.0

In a major step forward for the FutureGen 2.0 coal-fired project, the Illinois Commerce Commission on June 26 issued an order that essentially deals with issues about how electricity out of the project will be sold and paid for.

The following parties intervened in this case: Ameren Illinois; the FutureGen Industrial Alliance; Commonwealth Edison; Dynegy Midwest Generation LLC and Dynegy Kendall Energy LLC; the Illinois Power Agency (IPA); the Illinois Competitive Energy Association; and the Coalition of Energy Suppliers. The commission had previously approved a Phase 1 in this proceeding, then opened this Phase 2 docket on Jan. 9 to deal with remaining issues.

Among other things, the commission ruled June 26 that the pre-approved total capital costs submitted in this proceeding by the FutureGen Industrial Alliance on Feb. 19 should be approved and such costs should be used for calculating the initial electricity sales rate under the “Sourcing Agreement.”

The commission said that Commonwealth Edison and Ameren Illinois should, not later than 60 days after the date of this order, execute the Sourcing Agreement approved by the commission in this proceeding.

Among the arguments in this case, ComEd said that the state’s IPA Act requires that the commission’s authority to approve a sourcing agreement with a “retrofitted clean coal facility” is contingent upon its determination that the Sourcing Agreement does not exceed certain cost-based benchmarks developed by the procurement administrator. ComEd contended that because the Sourcing Agreement is not the result of a competitive bidding process, determination of the Sourcing Agreement’s compliance with this requirement must occur in the instant proceeding to approve the Sourcing Agreement. ComEd submitted that a Sourcing Agreement may not be fully or finally approved in this proceeding unless and until the commission expressly finds that: it has reviewed and approved the requisite benchmarks; and the Sourcing Agreement does not exceed such cost-based benchmarks.

This is a coal-fired repowering of a shut unit at the Meredosia plant

The FutureGen Industrial Alliance on Feb. 19 filed with the commission in this proceeding a report that said, among other things, that it has been able to bump up the planned capacity of the FutureGen 2.0 by 8 MW and that the project is targeted for completion in mid 2017.

The Illinois Power Agency Act (IPA Act) created a state agency responsible for procuring electricity for Illinois retail ratepayers. Under the IPA Act, the IPA serves as a procurement agent that acquires power for two of Illinois’ regulated utilities – ComEd and Ameren Illinois. The IPA primarily fulfills this procurement function via an annual Power Procurement Plan, which is implemented through an annual power procurement auction. The IPA also helps administer compliance with the IPA Act’s Clean Coal Portfolio Standard for both the regulated electric utilities and Alternative Retail Electric Suppliers (ARES). The IPA Act also directs the IPA, as part of the procurement planning process, to consider sourcing agreements from qualifying clean coal facilities for utilities and ARES.

The FutureGen Industrial Alliance is a non-profit corporation engaged by the U.S. Department of Energy (DOE) under a federal financial assistance award to implement the DOE’s FutureGen 2.0 Program. The FutureGen 2.0 Program will develop, repower, own and operate the Meredosia Energy Center and the integrated CO2 pipeline and storage facility in Morgan County, Ill. Alliance members include U.S. coal producers Alpha Natural Resources (NYSE: ANR) and Peabody Energy (NYSE: BTU).

FutureGen 2.0 was initiated in October 2010 by DOE, which has committed more than $1bn in American Recovery and Reinvestment Act (ARRA) funds and other appropriations for research, development and demonstration activities of oxy-combustion and CO2 capture, transportation, and storage.

The oxy-combustion project will retrofit and repower with a near-zero emissions oxy-combustion process utilizing the Unit 4 steam turbine generator, certain coal-based infrastructure associated with Units 1-3, and some of the site’s common facilities. The project will use a blend of high-sulfur Illinois bituminous coal (60%) and low-sulfur Powder River Basin (PRB) coal (40%) and have a gross output capacity of 176.3 MW, which includes an approximate 8 MW capacity increase that results from a steam turbine upgrade. This configuration enables the project to exceed the DOE minimum capture target requirement of 1 million tonnes of CO2 per year at an 85% availability/capacity factor.

The CO2 storage project will transport the captured CO2 about 30 miles in a newly-constructed pipeline from the Meredosia site to the proposed storage facility in Morgan County. The CO2 storage facility is being designed to accept approximately 22 million tonnes of CO2 over a 20-year period from the oxy-combustion project.

The Reference Case oxy-combustion project cost estimate was developed from the ground up, with each supplier (The Babcock & Wilcox Co. for the boiler and gas quality control system, and Air Liquide for the CO2 part of the project) providing the costs for their respective island scopes, URS for the balance of plant, and the Alliance and URS providing the estimate of the owner’s costs. This estimate includes the purchase of the Meredosia assets by the Alliance from Ameren Energy Generating.

Three nearby coal mines identified as possible coal suppliers

In assessing the coal sources for this project, the Feb. 19 report noted that no rail unloading facilities currently exist at the site, so the primary Illinois coal sources it looked at were three mines within 50-75 miles of the plant for truck deliveries: Arch Coal’s (NYSE: ACI) Viper deep mine; coal operator Chris Cline’s Shay #1 deep mine; and Tri-County Coal’s Crown III deep mine. Mines greater than 75 miles from the Meredosia site would require both truck and barge transportation, increasing the delivered cost of fuel for the project.

PRB coal was assumed to be sourced from mines located in the southern portion of the basin because of higher thermal content (8,800 Btu/lb) and lower transportation costs. These mines include the North Antelope Rochelle mine of Peabody Energy, the Antelope mine of Cloud Peak Energy (NYSE: CLD) and the Black Thunder mine of Arch Coal. Transportation from the PRB would consist of rail transport from the basin to the Cahokia Dock barge loading facility, and then barge moves up the Illinois River to the Meredosia site.

DOE was taking public comment until June 17 on the draft environmental impact statement for this project. The DOE-funded plant demonstration period would last for 56 months, from the start of plant operations (planned for July 2017) through February 2022. The plant is expected to continue commercial operations after this date, of course.

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.