Closure of the Prairie State coal-fired power plant in Illinois would reduce pollution, but financially hit some Chicago suburbs with an interest in it
After more than a decade of controversy, a move to force the closure of a municipal utility-owned southern Illinois coal-fired power plant in Winnetka, Naperville, Batavia and dozens of other towns across the State is one of the last sticking points in Springfield on an energy bill.
If the prairie state power plant is forced to close by 2035, as Illinois lawmakers have proposed, it would open the final chapter in a saga that led to the construction of one of the the country’s latest new coal-fired power plants, one that has become a major source of air pollution.
“The prairie state alone accounts for a significant portion of the electricity sector emissions in our state,” says JC Kibbey, a clean energy advocate for the Natural Resources Defense Council of Illinois.
Besides being dirty, the plant has left operators of some local electric utilities in the Chicago area furious at broken promises of competitive pricing. In return for guaranteed reliable energy at predictable prices, utilities took possession of the massive power plant, committing decades of debt.
If the power plant is forced to shut down, they, as owners, will have to continue paying down debt even if they have to find and pay for alternative sources of electricity that could result in much higher utility bills.
Over the past week, the plant has emerged as a barrier to passing key energy legislation in Springfield, a bill that would include increased subsidies for nuclear power plants, more funding for nuclear power plants. renewable energy projects and an acceleration of climate targets that would include phasing out coal-fired electricity.
Beyond the May 31 deadline to complete their work, lawmakers are trying to find a way to address concerns about the financial ramifications of the Prairie State shutdown.
Conservationists say the state can’t afford to let the plant continue to operate if Illinois is to meet climate goals. Lawmakers backed by environmental groups are considering a state bailout of more than $ 600 million of three Exelon nuclear power plants.
Tensions are high as many participants believe that previous clean energy legislation has failed to deliver on its promises.
The prairie state was the largest source of carbon dioxide emissions in Illinois, 12.7 million metric tonnes of carbon dioxide equivalent in 2019, the most recent year for which federal data are available. The plant ranks ninth in the country for carbon dioxide emissions.
No other power plant in the state comes close to prairie state emissions. And most of the other coal-fired power plants are expected to close already, including the five plants owned by Vistra Corp, which has said it will shut them down by 2027.
“It’s not particularly surprising that this plant didn’t have a normal lifespan,” says Emily Grubert, energy systems researcher at Georgia Tech.
The combination of high emissions and high costs of the plant means that it is difficult to justify keeping it in operation, explains Grubert.
It cost about $ 5 billion to build, including about $ 1 billion in cost overruns.
The Prairie State, which began operating in 2012, was one of the last large coal-fired power plants built in the United States before market forces turned against coal, as other sources of Electricity – such as natural gas, wind and solar power – were becoming increasingly cheaper and due to the increasing likelihood that the state or federal government would pass more stringent emission limits.
Among this latest generation of coal-fired power plants, Prairie State is in a league of its own as it was originally developed by a coal company, Peabody Energy. The idea was to buy coal from an adjacent mine, with Peabody selling the electricity through long-term contracts with municipalities and rural electricity co-operatives that might have been less well equipped to assess risks than large energy companies.
The mill’s customers and co-owners include approximately 200 communities in a footprint stretching from Missouri to Virginia. In the Chicago area, they also include Geneva and Saint-Charles.
Conservationists warned from the start that Prairie State was almost certain to be an environmental and financial disaster.
The Illinois Municipal Utilities Association, a utility trade group that has signed with Prairie State, says the state still needs coal “until the technology can support fully renewable energy.”
Customers of the plant paid almost double the equivalent prices they would have paid in regional markets, according to analysis last year by the Institute for Energy Economics and Financial Analysis, which does research to advocate for a clean energy transition. Customers in the prairie state are repaying billions of dollars in principal and interest on the bonds used to buy their stocks.
“Electricity for the plant is far too expensive and is causing financial hardship for communities,” says Sandy Buchanan, executive director of the institute.
Buchanan was previously executive director of Ohio Citizen Action, a role in which she warned local government officials in the 2000s of the risks of investing in the plant.
Prairie State Generating Co. executives are committed to providing “reliable, environmentally friendly electrical power.”
“Prairie State and its owners have been in contact with lawmakers for years on how to ensure the best course forward,” company spokeswoman Alyssa Harre said in a written statement.
In 2007, Naperville signed an agreement with Prairie State for electricity that ends in 2035, which is also the bond repayment schedule. Closing the plant on that date would therefore have less impact than on, say, Batavia, which took one of the largest stakes in the coal-fired plant.
Batavia is obliged until 2042 to continue to repay the debt it incurred during the sale of bonds to buy from Prairie State. Batavia officials are unhappy with the deal reached years ago. But they say any legislative mandate to shut down the plant should also include provisions to help governments that would be affected.
Even if the plant is closed, local utilities have to pay millions of dollars a year in bond debt, says Laura Newman, city administrator of Batavia.
“We tried to get out,” Newman says, referring to past legal attempts to break free from the deal. “We’ve spared no effort to find out if we can reverse this.”
For the city of Rochelle, about 80 miles west of Chicago, the benefit of having a contract with Prairie State has been to keep electricity rates predictable, according to Jeff Fiegenschuh, the city’s general manager.
If the state forces the prairie state to shut down, Rochelle wants state compensation for her costs because she can’t spread her expenses over a large customer base like larger utilities can, according to Fiegenschuh.
“We are in favor of more renewable energy, there is no doubt,” he says of the transition to renewable energy sources. “But we participated in this project for the reliability of the electricity and the long term stability.”
Brett Chase’s reporting on the environment and public health is made possible by a grant from the Chicago Community Trust.