The Sierra Club immediately slammed a Nov. 21 decision by the Illinois Pollution Control Board to grant Dynegy (NYSE: DYN) the same break the board had previously given Ameren (NYSE: AEE) on SO2 emissions standards for coal plants in Illinois.
The coal plants that Ameren plans to buy are Ameren’s Newton, Coffeen, Duck Creek, Joppa and E.D. Edwards plants. Ameren and Dynegy have said this board approval was the last remaining obstacle to closing this transaction.
“Today, the Illinois Pollution Control Board put polluter profits above public health by granting Dynegy’s variance request,” said Robin Garlish, a Peoria mother who lives close to the E.D. Edwards coal plant and is a member of the Central Illinois Healthy Community Alliance.
The Sierra Club said the financial hardship claimed by Dynegy in order to secure the cost-saving break for itself that had previously gone to Ameren is “arbitrary and self-imposed as the Texas energy giant purposefully unfunded its local subsidiary to get a free pass to pollute and pad shareholder profits. The IPCB voted three to one in favor of granting the variance, with the dissenting opinion of IPCB Chair Deanna Glosser doubting Dynegy’s claims of financial hardship.”
“Putting outdated, dangerous coal plants on life support to benefit an out-of-state corporation like Dynegy while leaving Illinois communities on the hook for pollution and no plan for the future is the wrong decision for Illinois,” said Kady McFadden, Sierra Club Beyond Coal campaign organizer in Illinois.
With the pollution variance granted, Dynegy is expected to follow through with the purchase of the coal plants for no cash, instead taking on $825m of Ameren’s debt, the club noted.
The Illinois Pollution Control Board is appointed by Illinois Gov. Pat Quinn, and is comprised of appointed Chair Deanna Glosser and Members Carrie Zalewski, Jennifer Burke and Jerome O’Leary.
The board extensively addressed the financial hardship aspects of this matter as related to Illinois Power Holdings LLC (IPH), the Dynegy subsidiary that will make this buy. It noted that due to lower power prices in the region and other factors, these plants are distressed, and that Dynegy has moved to effectively separate its finances from those of its IPH affiliate. The board said that Dynegy was able to argue that IPH would not have the money in the near term, like Ameren before it, to complete a slowed scrubber construction project at the Newton plant.
“Moreover, petitioners present evidence that Dynegy cannot integrate IPH into its capital structure or provide financial support to IPH without jeopardizing Dynegy’s own credit rating, and thus, Dynegy ‘s balance sheet and access to capital,” the board wrote. “Petitioners add that given the ‘currently challenging commodity price environment,’ Dynegy must maintain ‘strong credit metrics to support its current credit rating and preserve its access to affordable capital.’ The Board finds that IPH’s choice to proceed with the proposed transaction despite a lack of additional financial support from Dynegy does not disqualify IPH from obtaining a variance to the extent one is otherwise warranted.”