* 3:36 pm - Gov. Pat Quinn is expected to veto two bills that were touted as “jobs generators” by their sponsors. Both would require use of Illinois coal to manufacture synthetic natural gas, which would then be sold to Illinois consumers. One of the bills would’ve jump-started the Leucadia plant in Chicago, which backers say would generator 1,100 construction jobs, 203 permanent jobs and 165 coal industry jobs, plus all the ancillary jobs that come with new industry. The Illinois AFL-CIO backed both projects, although the union leaders also wanted another plant in Downstate Taylorville which would’ve produced synthetic natural gas to generate electricity (Exelon was a big “No” on that one, though, so it failed in the Senate).

This is from an e-mail from IL AFL-CIO President Mike Carrigan…

The Governor Office called. The Governor will veto both bills within the next 45 minutes.

Two reasons for the vetoes were given;

1…The Governor wants to discuss these bills as part of a comprehensive energy plan and

2…Not enough consumer protections.

The Governor wants to meet soon and re do the bills.

CUB opposed the bills and the Tribune editorialized against both…

The plan for a Leucadia National Corp. plant on Chicago’s South Side would turn Illinois coal and refinery waste into a synthetic form of natural gas. The plant would rise on the brownfield site of an old steel mill. That’s where its positive attributes stop.

Under legislation sent to the governor, the gas from this plant would be allocated in a grossly unfair manner to four major utilities. The customers of North Shore Gas would be stuck with buying by far the largest share. The law would require utilities to enter 30-year contracts, locking in the anticipated high prices. Large customers, including most state agencies, would be free to buy their gas on the competitive market, potentially at a much cheaper price. You — the consumer — wouldn’t get that option.

Just as bad, this deal lacks any rate cap or other reliable cost-overrun protections. Consumer advocates see rates for this gas soaring, oblivious to market forces. The plant’s developer says its gas would be a good deal for customers over time. But who is protected by this proposed law? The developer, that’s who.

The General Assembly’s approval of a second plan, from Aurora-based Power Holdings LLC, presents similar problems. The entrepreneurs behind this project would build it in southern Illinois’ Jefferson County, though its economic impact would weigh on the entire state. It, too, won approval without protection from rate spikes and cost overruns. It, too, allows large customers to buy their gas on the market, but locks in small consumers. The bill mandates 10-year contracts requiring utilities to take the gas — even if they could find it cheaper somewhere else.

* Meanwhile, ComEd was caught talking out of both sides of its corporate mouth…

On Tuesday, Commonwealth Edison Co. President Anne Pramaggiore testified in Springfield in favor of a bill that would allow ComEd to automatically hike electricity rates annually in part to recover the $1.5 billion it will cost to install so-called smart meters in Chicago-area homes and businesses.

That same day her boss, Exelon Corp. CEO John Rowe, responding to a question after giving a speech in Washington, D.C., on federal environmental policy, expressed skepticism that such an investment would be worth it to consumers. “Smart grid we are reluctant to embrace, because it costs too much and we’re not sure what good it will do,” he said.

Mr. Rowe’s off-the-cuff response before the American Enterprise Institute, a pro-free-market think tank, isn’t the first time Exelon has sent conflicting messages to its many constituencies, based on the audience it’s talking to.

But his remarks are sure to provide fodder to opponents fighting ComEd’s bill, which would largely sideline the Illinois Commerce Commission, the regulatory body that scrutinizes and decides on such requests, in favor of an automated system that permits the utility to increase prices annually based on a formula. The ICC then would be allowed an after-the-fact review that consumer advocates say would substantially reduce the agency’s oversight.

*** UPDATE *** And here’s the veto statement….

Though I do not approve of the bill before me, I do acknowledge the hard work of Senator Donne Trotter and Representative Marlow Colvin. They have worked hard to move our State forward and I am appreciative of their efforts.

Our State is in the midst of an impressive recovery from the worst financial crisis since the Great Depression. We have witnessed twelve straight months of declining unemployment and, in 2010, added more jobs than any other state in the Midwest. Throughout Illinois, many hard-working men and women have returned to the work force and been able to provide for their families. Still, there is more to do, and I remain committed to seeing our State through to a full recovery.

During these difficult times, it is tempting to pursue short-term solutions. But, as Governor, it is my job to ensure that the decisions we make today benefit Illinoisans for years to come. Higher energy prices for consumers and additional burdens for businesses will not help our State achieve long-term economic success.

To ensure a prosperous Illinois for today and tomorrow, we must utilize strategic and appropriate incentives for the development of affordable and sustainable forms of energy. We must marshal every resource at our disposal to create an Illinois where businesses have the opportunity to harness the power of wind, solar, and biomass, while exploring cleaner options for utilizing coal to benefit the citizens of our State. Our economy will not continue to grow unless the sustainability of our environment and our economy are inextricably linked.

In the coming weeks, the General Assembly will consider measures that deal with our State’s energy infrastructure. These measures must promote a diverse energy portfolio for the State. Our priorities must be economic growth, consumer protection, environmental quality and a comprehensive approach to energy generation and efficiency.

The bill before me today does not fully achieve these goals.

This bill exposes citizens throughout Illinois to the long-term risks of fluctuating energy prices. To ensure greater consumer protection, consumers should be given full priority to access any reserve account and a more substantial financial commitment to the account should be made.

By requiring utilities to enter substantially equal sourcing agreements, this bill also places the burden of higher energy costs on a small group of residential consumers.

Inadequate consumer protections and high energy costs will not create jobs in Illinois. Until I am satisfied that consumers are protected, burdens are shared, and jobs are created, I will not affix my signature to this bill.

There will be no easy answer that solves all our energy needs. The energy of the past must be developed cleaner and more efficiently, while we invest in the energy of the future.

Therefore, pursuant to Article IV, Section 9(b) of the Illinois Constitution of 1970, I hereby return Senate Bill 3388, entitled “AN ACT concerning regulation” vetoed in its entirety with this statement of objections.

The attorney general also opposed the bills.