Energy suppliers challenge the lawfulness of a 'clean coal' subsidy

February 28, 2013

A group of energy companies is challenging a likely increase in the price of electricity. They say energy from FutureGen, a proposed coal plant project in central Illinois, would cost more for consumers.

FutureGen is developing an ambitious coal plant and storage facility in Morgan County that would remove almost all of the carbon dioxide from emissions and transport it to a storage facility that would push the gas deep underground. The project’s proponents include Gov. Pat Quinn and Illinois U.S. Sen. Dick Durbin.

Carbon dioxide is a greenhouse gas that has been linked to climate change.

In December, the Illinois Commerce Commission approved a plan that would require energy suppliers to buy part of their power from FutureGen over a 20-year period. The estimated price increase to consumers would be less than 1.5 percent, below the 2 percent cap state law places on new costs for clean energy projects.

But a group of private suppliers is fighting the ICC decision through the Illinois Appellate Court. Commonwealth Edison also has filed a separate challenge to the order.

“Why should consumers be subsidizing power that is above today’s market price for electricity?” said Kevin Wright, president of the Illinois Competitive Energy Association. He represents a consortium of companies who provide electricity. He said requiring his clients to participate in what he called a "subsidy" for so-called clean coal is unlawful and works to undermine a competitive electricity market. He also argued Illinois does not need any new power sources.

Advocates say FutureGen will turn Meredosia power plant into a cutting-edge clean coal facility. But the project has run into many roadblocks since its inception in 2006, including a struggle to find a location in 2008, political drama in 2009 over misestimating the cost of the plant, and a loss of key funders that same year. 

In 2011, FutureGen was declared to be underway again, this time as FutureGen 2.0, and a $1 billion grant from the federal government gave the project new viability. A 2011 fact sheet from FutureGen puts the project cost at $1.3 billion, and says the plant will create 2,000 jobs.

On Wednesday Sen. Durbin released a statement putting ComEd’s parent company Exelon on the hot seat for withdrawing from the FutureGen Alliance and then mounting a court challenge to the funding plan. Last month Exelon announced it would pull out of the group of companies lending support to the plan, although Crain's reported Exelon said it was never officially a member of the Alliance.

“Exelon sent its smiling representatives to press conferences lauding the value of FutureGen,” said Durbin. “Then last month, Exelon abruptly resigned from the FutureGen Alliance without explanation and today we learned Exelon has filed an appeal challenging the ICC ruling which is critical part of our FutureGen strategy. This heavy-handed corporate betrayal has few parallels in Illinois history.”

Representatives of the FutureGen Alliance were not available to comment Wednesday, but a spokesperson said in an email that “appeals are a normal part of the process and will be resolve (sic) in due time. In parallel, FutureGen 2.0’s development activities will continue without disruption.”

A spokesperson for the ICC declined to comment until she’s seen the court filing, but said the commission stands by its December order.

Follow Lewis Wallace on Twitter.