Sierra Club-backed study says Illinois city losing money on coal-fired power

A financial analysis released Jan. 15 by Synapse Energy & Economics found that Springfield, Ill., City Water, Light & Power’s (CWLP) operation of Units 31 & 32 at its Dallman coal-fired power plant has drained at least $41m from Springfield’s city budget in recent years and will continue to hinder CWLP and the city’s financial future.

The Siera Club noted Jan. 15 that Synapse’s report came out in advance of CWLP’s budget presentation to the Springfield City Council that evening. The report’s findings stand in contrast to figures presented recently by CWLP Chief Utility Engineer Eric Hobbie to the Springfield City Council, the club said.

“Our financial analysis found that CWLP’s operation of Units 31 & 32 at its Dallman coal-fired power plant will continue to cost the city of Springfield money for at least the next decade,” said Tommy Vitolo, Energy Economics Expert and Report Author, Synapse Energy & Economics. “CWLP also failed to account for expected EPA safeguards in its projection for its future operations.”

“CWLP is in the red and ratepayers simply cannot afford to let CWLP drain more money from the city to continue operating these aging, costly coal units,” said Scott Gauvin, Vice Chair of the Illinois Sierra Club’s Sangamon Valley Group. “The City will save tens of millions of dollars by phasing out the oldest units at the Dallman coal plant. The City Council needs to make smart choices, beginning with the proposed CWLP budget.  If CWLP defaults again, it will threaten the bond rating for the city and jeopardize public services in Springfield.”

The Sierra Club retained Synapse Energy & Economics to conduct a financial review of CWLP’s operations of Units 31 & 32.  In conducting this analysis, Synapse reviewed CWLP’s financial documents and a December 2013 Environmental Compliance Study by consulting firm Burns & McDonnell that was commissioned by CWLP.

The Dallman Power Station was built in 1968, the CWLP website noted. It contains three coal-fired units. The Dallman 4 Power Station, which was built to the west of the original Dallman Station, was completed in 2009. The first Dallman generator placed on line was Dallman 1, with a maximum nameplate capacity of 86 MW (most recently tested at 63 MW). It was followed by Dallman 2, with a nameplate rating of 87 MW (most recently tested at 57 MW), in 1972. In 1978, the completion of Dallman 3, which has a maximum nameplate capacity of 199 MW (most recently tested at 191 MW), more than doubled the power station’s total generating capacity. Dallman 4 has a maximum capacity of 200 MW (most recently tested at 208 MW) and provides the most cost-efficient energy of all of CWLP’s generating units. In 2013, the four Dallman generators used 1,272,859 tons of coal.

CWLP’s presentation for the Jan. 15 budget hearing notes that a primary benefit of its operations is the 300+ people employed at Arch Coal‘s nearby Viper deep mine, a prime coal supplier to CWLP. The presentation said an upcoming project is a natural gas start-up system Dallman needs for EPA compliance, with $4m budgeted for FY2016. This project will allow selective catalytic reduction (SCR) and SO2 scrubber operation during startup, which is a time when coal-fired emissions spike above normal levels.

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.