Plant Needs Legislative Help To Survive In Future

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Randy O'Keefe, managing director of the Dynegy, Inc., power plant just west of Coffeen, and Jeffrey Ferry, Dynegy's Senior Director of State Government Affairs, both addressed the Hillsboro Planning Commission, the leadership of the Montgomery County Economic Development Corporation, county board chairman Evan Young and finance commissioner Megan Beeler, several other county board members, and local media representatives at the August meeting of the planning commission Thursday afternoon, Aug. 17.

Commission chairman Tom Gooding also welcomed Hillsboro mayor Brian Sullivan to the one-agenda-item meeting; the mayor in turn introduced State Senator Andy Manar and State Representative Avery Bourne. Both proclaimed they were present to hear Dynegy's story as rumors of the plant's closing have floated through the area for at least the past two years. Both offered support to keep the plant open.

O'Keefe began the presentation with a brief history of the plant which came on line in 1965 as a 920 megawatt facility operated by CIPS (Central Illinois Power). Ameren later gained control; Dynegy is the third power company at the site, which has won awards for its low sulfur emissions since scrubbers were installed in the first decade of this century.

An economic impact study cited by O'Keefe said the plant provides 101 direct jobs in the Montgomery, Macoupin, Bond, Madison and Sangamon County areas; that in turn leads to 1,511 indirect jobs as the facility's impact is 380 million dollars. He commented, "There is no doubt it is one of the economic engines driving this area."

He also said the plant has been in dire straits economically for several reasons, none of which are the fault of the plant nor of its work force. One of the major factors happened when the Illinois legislature voted to deregulate electrical rates–to move to an open competitive market. That move came as most states across the nation considered it; perhaps because neighboring states saw what happened to power generators in Illinois under deregulation, none of the neighboring states went without price controls by their power commission regulators.

As a result, a plant in Indiana, for example, knows what it will receive per power unit there, so anything they sell in Illinois will be profit. Because we are deregulated, other states can enter the Illinois marketplace and underbid  Illinois producers.

O'Keefe said another major factor is the "historically low natural gas prices." The Coffeen plant is coal fired in a political climate that until very  recently frowned upon carbon producing coal fired plants; that had caused the expensive move to scrubber technology a decade ago or so.

O'Keefe introduced Ferry to lead the meeting attendees through possible legislative solutions after O'Keefe touched briefly on Dynegy's hopes to have a solar site at the Coffeen station. The plans, which called for a 15 megawatt output,  were ruled to be a non-conforming bid because Dynegy wouldn't accept a "The state can cancel the contract at any time" clause.

Ferry works with the legislatures and the governor's office on Dynegy's behalf. Ferry explained bidding that's done to ensure power for years to come–the capacity side of the equation–to the rapt audience.

The full capacity to produce power is seldom used, but it has to be there when the demand (for either cool air in the summer or hot air in the winter) is highest. A plant must commit capacity to the area's distribution group-in their case MISO-independent supplies organization. In this part of Illinois (basically south of I-80), "The market construct was primarily designed to manage short-term, transient and relatively small surpluses or shortages of resources." (MISO handout; keeping the lights on; Ensuring Energy Adequacy)

How serious is the need? Two years ago the bid was $250 per megawatt; this spring it was $1.50 per megawatt. As Ferry said, plants can't operate at that rate.

Ferry also said Dynegy is still working with state governmental branches to produce legislation that "will level the playing field."

"We need help. The longer this goes on, the worse the situation becomes. In the last two years, we've shut down 20 percent of our capacity (one unit at Newton and the plant at Wood River.)"

Gooding asked planning commission member and Hillsboro School Superintendent David Powell about the impact shuttering the Coffeen plant would have on the local school district. Powell said it was a difficult question, given the intricacy of school funding (usually if a major hit occurs to a school district's funding, the state absorbs some of the blow, but nothing is usual about school funding in Illinois at this time), but the assessed evaluation for the district now depends on the power plant for 31 percent of the total.

O'Keefe finished the presentation by responding directly to suppositions flying around the area on a positive note, "I know of no plans to retire the plant; no date of closing has been mentioned."

The meeting adjourned at 1:30; the planning commission meets the third Thursday of every month at 12:30. The next meeting is set for Sept. 21, and the public is welcome to attend.

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