Capitol Fax.com - Your Illinois News Radar

General Assembly: Coal gasification is great, except when used to make electricity

Posted in:

Illinois

* Taxes aren’t the only thing about to go up…

The state Senate narrowly passed legislation early Wednesday easing the way for construction of a second large coal gasification plant in Illinois that could force residents to purchase roughly a quarter of their heating gas from these expensive facilities and likely will raise home heating rates beginning in 2015. […]

An analysis by the Chicago-based Environmental Law and Policy Center, an opponent of the bills, indicates gas rates in Chicago, where Peoples Gas is the provider, and the northern suburbs served by North Shore Gas will be 5% above where they otherwise would be beginning in 2015 if Power Holdings’ plant is built on schedule. For North Shore Gas, that percentage jumps to 14% in 2016 and stays at roughly that level through 2020 as the South Side plant comes on line and its effects are felt.

The plants were opposed by the Citizens Utility Board and Peoples Gas, but the state’s other gas utilities were neutral. A spokeswoman for Illinois Attorney General Lisa Madigan, the state’s chief consumer advocate, said she couldn’t support the bills without rate caps protecting utility customers. But she never formally filed a position with the Legislature opposing the bills, which were backed by her father, House Speaker Michael Madigan.

* The justification for the two new plants is that Illinois coal would be used to make the synthetic gas. But a plant that would’ve used an Illinois coal gasification process to generate electricity (supplanting dirty coal plants, unlike clean burning natural gas) was voted down and now the developer is looking at his options…

The Illinois Senate on Wednesday rejected Tenaska’s proposed $3.5 billion Taylorville coal-to-gas-fired power plant, a spokesman for Tenaska told Reuters Wednesday.

Tenaska said the lack of legislative support would stall development of the 602-megawatt gasification plant which had been selected for a $2.6 billion federal loan guarantee and a tax credits exceeding $400 million. The plant had been seen in operation in mid-2015.

“We are evaluating our next course of action,” said Bart Ford, Tenaska vice president.

The Taylorville project required state approval because Tenaska of Omaha, Nebraska, was seeking to recover costs for building and operating the plant from power ratepayers.

* So, to review: Coal gasification to supplant natural gas is OK. Coal gasification to make electricity is not OK. Why? The State Journal-Register has the answer…

We would not be bringing this all up again today if we believed the Taylorville plan had died a natural death in the legislature. In this case, though, it was death by lobbying and hysteria, as the state’s biggest electricity producer went all out to ensure competition didn’t enter its market. Exelon, which produces and sells electricity, mounted a lobbying blitz that had legislators and the public believing that minor assistance to the Tenaska project would lead to the loss of millions — millions! — of jobs in Illinois in the coming years. Being the nation’s largest producer of nuclear energy, Exelon has no interest in keeping coal plants going or seeing new ones built. […]

So why did the Chicago plant win approval while Tenaska (apparently) was killed? The Capitol Fax newsletter provided the most succinct explanation: “The Chicago plant will produce synthetic natural gas to be burned in homes, so Exelon and ComEd didn’t care about it.” Without an army of lobbyists spreading tales of terror, senators saw the gasification plant as a much-needed economic opportunity for an economically depressed area.

Remember those statements by the STOP Coalition’s Phil O’Connor about how the rate increase caused by the Tenaska plant would kill all those jobs? Here’s one…

Philip O’Connor, chairman of the STOP Coalition (Stop Tenaska’s Overpriced Power), said in a statement the Senate made the right choice.

“It would have been damaging to the state’s job-creation climate,” said O’Connor.

Well, earlier this week, O’Connor was arguing for a $396 million ComEd rate increase before the ICC, saying it would create jobs.

Sheesh.

posted by Rich Miller
Thursday, Jan 13, 11 @ 12:31 pm

Comments

Fortunately for ComEd, it’s cognitive dissonance brings a happy feeling of mo’ money.

Comment by wordslinger Thursday, Jan 13, 11 @ 12:48 pm
Tenaska would have provided more competition thus preventing them from all the rate increases. The next move will be to lobby to close the older power plants thus making Excellon and COM-ED the only power produceers in the state. More Money to them.

In the mean time much needed jobs are lost.

Comment by He Makes Ryan Look Like a Saint Thursday, Jan 13, 11 @ 12:49 pm
Tenaska is also looking for a 30 year guarantee that resident and commercial power users would pay a premium rate for the juice they generated via this coal gassification plant that would send vast quantities of CO2 underground…I am no fan of ComEd or Ameren, but why should they support a competitor that would get preferential rates?

Comment by Loop Lady Thursday, Jan 13, 11 @ 1:04 pm
What were the votes from the Chicago pols on the Tenaska deal compared with downstate pols? Any possible links with Axelrod and Emanuel? Reminds me when Obama tried for some right to know legislation in Congress, requiring the nuke industry to inform citizens of any leaks from nuclear plants. Didn’t Exelon get that bill watered down pretty much?

Comment by vole Thursday, Jan 13, 11 @ 1:05 pm
vole, I think both of those guys are too busy with other things right now. What’s with jumping immediately to that conclusion?

Comment by Rich Miller Thursday, Jan 13, 11 @ 1:06 pm
Does this one fall into the category of “no more deals, just ideals?”

Comment by Louis G. Atsaves Thursday, Jan 13, 11 @ 1:11 pm
“What’s with jumping immediately to that conclusion?”

I just asked the questions. Didn’t Axelrod or his firm do some lobbying for Exelon? I just wonder what connections might be made among the powers in the Chicago area, the Exelon lobbying, and those with past ties to Exelon. Just wondering and not jumping to any conclusions.

Comment by vole Thursday, Jan 13, 11 @ 1:17 pm
- I am no fan of ComEd or Ameren, but why should they support a competitor that would get preferential rates? -

Well, supposedly the distribution portions of both of these companies are completely separate from the generation. And since these two pretty much have all of the distribution infrastructure, since it’s kind of hard to have competing distribution companies (where are you going to put all of those poles?), it doesn’t quite seem fair that they should be able to have a monopoly on the generation as well. But, since the ICC allowed these companies to maintain ownership of the generation, they’ve been able to maintain that monopoly to a large extent, and no one else can compete without an agreement for a guaranteed market. So while I don’t think true competitors should be forced to support eachother, the electric utility business doesn’t really call into that category.

Comment by Small Town Liberal Thursday, Jan 13, 11 @ 1:23 pm
Everyone knows that a $286 million rate increase COSTS 15,000 jobs while a $396 million rate increase CREATES jobs. It’s a complicated inverse ratio. Trust me on this.

Comment by Hyperbolic Chamber Thursday, Jan 13, 11 @ 1:31 pm
Tenaska just got a very expensive lesson in Illinois politics, courtesy of Exelon. Those in the know understand that certain legislators are wholly-owned subsidiaries of Illinois’ largest electricity provider.

It’s part of what makes Illinois politics so dispicable. Nothing is ever decided on the merits. There are always other angles at work. The truth doesn’t matter and consumers and taxpayers are the chumps.

And everybody who is screaming bloody murder about the tax increase should take a long hard look at their electric bills. Please direct your outrage to Phil O’Connor and his employer(s).

Comment by 47th Ward Thursday, Jan 13, 11 @ 1:39 pm
47th–The Black Caucus schooled them in Illinois Governmental Accounting.

Comment by He Makes Ryan Look Like a Saint Thursday, Jan 13, 11 @ 1:59 pm
Vole, Since you asked… Energy politics this session turned into a non-partisan, non-geographic bloodsport. The Tenaska bill was about the coal industry going up against the utilities for the first time in the state’s history. Downstate R’s were split. Go find the transcripts from the Senate debate and look at Senator McCarter’s comments and contrast them with Senator Righter’s comments. Northern IL D’s were split. Look at Senator Harmon’s comments and contrast them with Senator Lightford’s comments. Please keep the silly Rahm conspiricy stuff out of here.

The two gasification bills that passed, and will sell gas at 20-40% higher costs than the market, put all the burden for that additional cost, and all the risk for cost over-runs, on residential customers. The sponsors were Senators Trotter (the Chicago plant, SB3388) and Clayborne (the Jefferson County plant, SB1927).

Comment by Green Lantern Thursday, Jan 13, 11 @ 2:29 pm
Phil O’Connor knows where his bread is buttered and it’s at the ComEd/Exelon trough. He and ComEd have one agenda - protecting ComEd (Exelon)$$$.

Comment by Tired of ComEd BS Thursday, Jan 13, 11 @ 2:45 pm
To 47th and Green: Amen fellow bloggers…

Comment by Loop Lady Thursday, Jan 13, 11 @ 2:53 pm
First the gov and GA stick it to us w/unfunded programs (RB, et al), then the new gov/old GA (PQ, et al) stick us with more taxes to pay for the previous 30 years mess and now we get kicked in the rear end with this by the pols from Springfield. Nice.

Comment by dupage dan Thursday, Jan 13, 11 @ 3:18 pm
As Senator Koehler said from the floor, it was the strangest roll call seen around this place in a long time. As for Senator McCarter, he doesn’t need to debate Senator Righter, he simply needs to debate himself. During a debate with his opponent in October, he said:

“November of last year I signed a letter of support for Tenaska. And I pretty much picked the ball up where Senator Waston left off. And I’ve been a supporter of that ever since. So I hope there’s no more questions about that. I mean that Tenaska brings jobs to our community, helps the Decatur Water District, and it will be nothing but a positive impact for our community.”

In justifying his flip flop vote against the project, McCarter said he was for it until he found out the costs. Tenaska costs were revealed and written about in March, throughout the summer and especially in September, 2010. That unequivocal statement of support in a debate was in late October, 2010.

Gosh, he couldn’t have intentionally misled the voters in his district for political purposes before the election, could he.

Oh, and Brady (who also campaigned in favor), Dillard and Lauzen all voted against Tenaska, but they voted for Leucadia which had no protection for residential customers.

Strange politics indeed.

Comment by Chicago Cynic Thursday, Jan 13, 11 @ 3:23 pm
the energy business is in for some very interesting times in this state in the forseeable future…no one ever hands over power or money without a fight, and this is all about power (no pun intended) and money…fasten your seat belts, it’s gonna be a bumpy, but fascinating ride…

Comment by Loop Lady Thursday, Jan 13, 11 @ 3:59 pm
Chicago Cynic - The Leucadia bill contains a $150 million consumer protection fund and guarantees consumer savings of $100 million over the course of the contract. How can you say there are no consumer protections?

Comment by Anon Thursday, Jan 13, 11 @ 4:06 pm
Anon,

Ask anyone who has actually analyzed the bill and they’ll tell you because the gas price is expected to be so far above market, that fund will likely be depleted by year two. It’s why CUB and the AG opposed the bill.

Comment by Chicago Cynic Thursday, Jan 13, 11 @ 4:10 pm
Well said, Chicago Cynic.

Let me get this straight, Illinois is all about jobs, jobs, jobs, but in a single day they voted against the Taylorville Energy Center and voted in favor of a huge tax increase. If companies wouldn’t be able to survive a rate increase why in the world would they stick around for a tax increase.

Comment by Anonymous Thursday, Jan 13, 11 @ 4:23 pm
I think the GA acted in haste in approving legislation for the two coal-to-syngas projects. They involve technologies that I don’t believe have been adequately demonstrated on a large commercial scale in the U.S. In addition to their high capital costs, I expect there will be quite a few start-up and other ongoing operational problems. They seem like two pretty big technological risks to me.

Comment by Going nuclear Thursday, Jan 13, 11 @ 4:41 pm
I just did some “back of the envelope” calculations for the Jefferson County (Power Holdings) natural gas plant.

If the Jefferson cost is double the market price of natural gas, EACH of the 250 jobs created will cost natural gas customers about $1,000,000 per year.

Comment by NWSuburbs Scott Thursday, Jan 13, 11 @ 5:49 pm
In December, General Motors sold 70 Chevy Volts, half of which were bought by the US Government. Taxpayers bailed out GM, Volts are heavily subsidized with taxpayer dollars, and taxpayers pay for the one half of the Volts produced.

Taxpayers on on the hook for the coal gasification plant loans, taxpayers will subsidize the production of the gas, and will be forced to pay higher gas and electric prices as a result of this plan.

Both these examples have a common thread: Government is picking winners and losers in the market. Neither “plan” will succeed in the market, and both will cost taxpayer dollars that they could spend or invest on other better endeavors. Geesh, will these politicians ever learn…

Comment by Cincinnatus Thursday, Jan 13, 11 @ 9:55 pm
–In December, General Motors sold 70 Chevy Volts, half of which were bought by the US Government. Taxpayers bailed out GM, Volts are heavily subsidized with taxpayer dollars, and taxpayers pay for the one half of the Volts produced.==

According to the wonder of google, Chevy sold 326 Volts in December, it’s first month on the market with very limited availability.

Get a horse, Cincy. What’s your point, anyway?

I did advertising in Chicago for what was then called Cellular One in the early 90s. We were charged with selling people on the idea that these clunky bag and brick phones were a cool supplement to land-line phones.

One of these days, those cell phones might actually find a market.

Comment by wordslinger Thursday, Jan 13, 11 @ 10:15 pm
Word,

Were the cellphones taxpayer subsidized?

Comment by Cincinnatus Friday, Jan 14, 11 @ 7:49 am
Cincy, they were dependent on the public airwaves.

Comment by wordslinger Friday, Jan 14, 11 @ 8:46 am
just like power transmission is dependant on utility owned infrastructure…kind of a closed circle, huh?

Comment by Loop Lady Friday, Jan 14, 11 @ 10:23 am