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Taylorville’s Not Ready

Chicago Tribune

November 29, 2010

Dirty and dangerous, coal has a hard time making friends. The proposal for a Taylorville Energy Center in central Illinois isn't helping.

You might think the Taylorville plan would be winning popularity contests all around the state: This wouldn't be a typical coal plant, of the sort that provides roughly half of America's electricity today. This would be a "clean" operation, using cutting-edge technology to reduce hazardous emissions, while taking advantage of the state's abundant coal supplies. We have supported the idea of "clean coal," with the caveat that it has to provide power at a reasonable cost to ratepayers. That is, there has to be the prospect that it can genuinely compete in the marketplace.

Taylorville has not met that test. The General Assembly should not give its approval to the $3.52 billion project.

As currently envisioned, Taylorville amounts to an extremely expensive and speculative bet on a long-term payoff that may never materialize. The one guarantee: It will hike the cost of electricity in Illinois for a long time.

A proposal going to the legislature would cap the rate increases paid by residential customers at 2 percent. But that would leave business and government to pay the rest of the increased costs, without the protection of a rate cap. The impact: at least $286 million a year for 30 years — and more if the costs of the plant rise. That economic hit comes despite a $417 million federal tax credit supporting the project.

The Taylorville legislation would take us back toward the era of regulated power. Illinois has benefited from utility deregulation for more than a decade. Our vibrant retail energy markets reflect the virtues of competition, making the state more attractive to employers who can negotiate the rates they pay for power. The bill before the legislature would require the state's electric suppliers to buy the new plant's power at a surcharge, not at a negotiated rate.

The Taylorville project is billed as a pathfinder, exploring new technology that could make coal an appropriate fuel for the 21st century. By learning how to sequester carbon dioxide, and reduce other harmful pollutants, Taylorville and a handful of similar projects across the country could usher in a new era of coal-fired power plants with genuine "green" credentials.

Taylorville, though, would not be built if it had to compete in energy markets, even with the big federal assistance. The Illinois Commerce Commission issued a scathing report on the project in September. The power from this plant would cost "substantially" more than nuclear, wind or traditional coal-fired plants. The ICC cast doubt on just how "clean" its coal-burning generation would be, and warned that the project could undermine the state's competitive power market.

Manufacturers would pay more for this power than for alternate sources. Exelon would be required by law to buy power at above-market prices from a facility owned by a rival company. Those factors would place Illinois at a real disadvantage to other states competing for new jobs.

There has been movement on this project in the right direction. The project's parent, Tenaska, Inc. recently agreed to absorb cost overruns through a formula that would protect its commercial customers from their worst-case financial scenarios.

Keep moving, Tenaska. This page supports "clean coal" that has a chance to be economically viable. The downstate FutureGen project looked promising, until it became clear the costs were out of control. We were relieved to see it scaled back. The Taylorville project, as it stands, still imposes too much cost on employers.

If Tenaska can reduce the cost and clarify the economic payoff, it might still give the legislature a plan that would be worth approving.



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