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Taylorville Energy Center, IL

STATUS: In progress with opposition; Litigation

TYPE:  Coal

OPPOSITION: Sierra Club; other utilities; industry and consumer groups

PROSPECTS: Likely

BACKGROUND: Christian County Generation, LLC, submitted an application for a permit to construct the Taylorville Energy Center (TEC), a 602 mega-watt electric power plant. The plant would use Integrated Gasification Combined Cycle (IGCC) technology to burn Illinois Basin coal.  The developer estimates construction costs at $3.5 billion; the Illinois Commerce Commission estimate is $3 – 4.2 billion.

The Illinois EPA issued an Air Construction Permit in June 2007.  The Illinois Sierra Club appealed the permit to the U.S. EPA Environmental Appeals Board, arguing that the state did not require pollution controls on the plant's global warming emissions. In January 2008, the Board rejected the Sierra Club's appeal of the air permit

In November 2008, Illinois State Senate passed SB 1987, enabling the development of coal gasification with carbon capture and storage projects in Illinois, including the Taylorville Energy Center. Governor Blagojevich signed SB 1987 into law in January 2009. To qualify as a clean coal facility under the new legislation, a plant must capture at least 50 percent of its total CO2 emissions, as well as limit regulated pollutants, including sulfur dioxide, nitrogen oxides, carbon monoxide, particulates and mercury, to levels that are no higher than those of natural gas-fired plants.

On July 13, 2009, TEC was selected by the U.S. Department of Energy (DOE) to proceed into the term sheet negotiation phase under the DOE Loan Guarantee Program.  The amount of the guarantee will be up to $2.579 billion, depending on the final project costs and capital structure. In July 2010, the project was awarded a $417 million government tax credit, which the company said was the largest such grant for a single project and a significant step toward final approval. The money comes from federal stimulus funds approved in 2009, and was awarded by the Department of Energy and the Treasury Department.  Therefore, total federal support for the project is now $3 billion. Notably, the DOE certified that the Taylorville project could capture at least 65 percent of its carbon dioxide emissions, more than the company had planned.

On September 1, 2010, the Illinois Commerce Commission issued its report on TEC. It concluded: (1) The cost associated with electricity generated by the TEC is substantially higher than that which is associated with other types of generation facilities – the TEC‘s expected base case electricity cost of $212.73 per MWh (or over 21 cents per kWh) would cost significantly more than wind ($88.80 to $121.97), nuclear ($101.45 to $128.03), traditional coal ($141.08 to $153.03), or combined cycle combustion turbine ($154.05 to $160.78) facilities.  (2) The rate impacts on residential and small business customers will likely approach or meet the full statutory cap, meaning that rate increases due to TEC would be disproportionately borne by other electrical power suppliers and their largely commercial and industrial customer base.  (3) It is unclear if the plant could be commercially operable by 2016 is uncertain due to missing elements and details from the proposed construction schedule, and the fact that construction is contingent on whether and when the Illinois General Assembly passes authorizing legislation. If commencement of construction is delayed beyond August 2011, then TEC might not commence commercial operation before 2016.

The ICC concluded: “After careful review of the FCR, the Commission concludes that the TEC facility features high costs to ratepayers with uncertain future benefits, and uncertainties that potentially add to already-significant costs.”

A vote on this project by the Illinois General Assembly is anticipated in the coming legislative session.  Opposition is primarily from other utilities, industry, and consumer groups concerned about the cost of power from TEC.

SOURCES: http://www.reuters.com/article/pressRelease/idUS230346+31-Jan-2008+BW20080131 
http://www.cleancoalillinois.com/tec.html
http://www.bizjournals.com/stlouis/stories/2009/01/12/daily21.html 
http://www.icc.illinois.gov/electricity/tenaska.aspx
http://www.sj-r.com/opinions/x1594963830/Phil-OConnor-Tenaska-is-pushing-a-jobs-program-that-kills-jobs
http://www.stltoday.com/business/article_f748b47c-c707-53c9-b3f0-9a53cd6632b2.html
http://www.reuters.com/article/idUSTRE56A15820090711

LAST UPDATED: November 15, 2010