Friday, March 7, 2014
Can Congress Pass Energy-Efficiency?
Howard A. Learner • March 4, 2014
In the overheated Capitol Hill politics, even energy efficiency is controversial. The bipartisan team of Senators Shaheen and Portman unfortunately face considerable hurdles in their common sense efforts to advance focused energy efficiency legislation.
By contrast, back in the Midwest Heartland, there is a quiet revolution as game changing energy efficiency is moving forward. Midwest electricity demand is declining on a weather-normalized basis. This is due:
1. In part to the energy efficiency programs that utilities, environmental organizations and consumer groups are working together to design and effectively implement in several Midwest states.
2. In part to federal appliance efficiency standards taking hold as people and business purchase new products and equipment.
3. In part to the technological improvements in lighting, air conditioners, refrigerators and chillers, a wide range of appliances, furnaces, computers, big-screen TVs and pumps and motors that people are installing in their homes and businesses.
All of this is occurring at a time of overall Midwest regional economic growth. To sum up, electricity use and demand is truly disconnected from GNP growth. Our economy is growing, but more efficiently. This is a very big deal.
Here are some key numbers:
1. After surveying utilities, the Midcontinent Independent System Operator (MISO) found that utilities in the Midwest portion of MISO are expecting a NEGATIVE 0.75% load growth through 2016. That translates into an overall regional 2.5% reduction in electricity demand over the next three years. This data is based on individual utilities’ statements of their project electricity demand, which sometimes tend to be overstated.
Moreover, this is in stark contrast to the POSITIVE 0.8% business-as-usual load growth that MISO has been using for planning purposes. That’s a 1.55% difference for each of the next three years.
2. Xcel Energy in Minnesota had NEGATIVE 0.8% demand, on a weather-adjusted basis, in 2013.
3. Commonwealth Edison is now forecasting NEGATIVE 0.2% demand in 2014 due in part to the impact of “on-going energy efficiency programs”. ComEd is also forecasting POSITIVE 2.3% Chicago GMP for 2014 while it is expecting the -0.2% annual electricity demand reduction. In other words, economic growth is occurring without a corresponding increase in electricity demand. De-linkage.
Policy advances and technology innovation are working together to advance energy efficiency. Just as federal clean car standards and technological innovations are driving the old clunkers off our highways to be replaced by more fuel efficient cars, much more efficient lighting and appliances are now in our homes. Good energy efficiency policies are a win-win-win for business growth, consumer savings and environmental pollution reduction.
Thursday, March 6, 2014
FOR IMMEDIATE RELEASE
Friday, March 7, 2014
NORMAL, Ill. – Ninety-one communities in Illinois have achieved 100 percent renewable electricity for their residents, says a new report released today by the Environmental Law & Policy Center, Sierra Club, World Wildlife Fund, LEAN Energy US, the Illinois Solar Energy Association, and George Washington University Solar Institute. Each of the 91 communities chose to purchase electricity through renewable energy credits, leveraging their group buying power to receive renewable electricity while also reducing overall electricity cost.
Illinois has far more towns and cities supplying 100 percent renewable electricity than any other state in the union; Ohio follows with two cities.
“Normal is showing how communities can help move our country toward a more sustainable future from the local level,” Sen. Dick Durbin said. “Along with other communities up and down Illinois, this city is cutting down both its utility bills and its environmental footprint by pursuing renewable electricity. I hope other states take notice of the good work being done here in Normal and all across Illinois.”
“We look at community aggregation as a way to get our City a great price on electricity, and we see it as a way to advance our sustainability goals,” said Normal Mayor Chris Koos, “We are proud that Normal and almost 100 other Illinois cities and towns are model for the nation in having those two goals go hand-in-hand.”
The 91 communities that have transitioned to 100 percent renewable electricity represent more than 1.7 million individuals. Demand for renewable energy from the state is more than six terawatt hours, a reduction in greenhouse gas comparable to taking more than one million cars off the road.
“We are seeing the power of letting communities choose their electricity supply,” said Sarah Wochos, senior policy advocate at the Environmental Law & Policy Center. “Across Illinois, cities and towns are asking for clean, renewable energy, and we encourage them to use that power to bring new renewable energy projects to their communities.”
“Across much of Illinois we have seen the impact that clean energy projects can have in boosting local development,” said Lisa Medearis, clean energy advocate with the Sierra Club, “This report honors communities across Illinois for their sustainability leadership, and urges them to continue innovating in 2014 by supporting even more local clean energy projects in Illinois.”
“Without fanfare, 91 local governments in Illinois have decided that renewable electricity is the best option,” said Keya Chatterjee, director of renewable energy and footprint outreach at WWF. “No one knew this was happening, and I doubt anyone would have guessed. America’s green energy revolution is here; and it starts in Illinois.”
To download a copy of the report, visit www.gocleangolocal.org/IllinoisReport.
Wednesday, March 5, 2014
Congress reached a milestone yesterday with the passage of its first wilderness bill in nearly five years.
The House passed by voice vote S. 23, which would designate about 30,000 acres at the Sleeping Bear Dunes National Lakeshore along the northwest coast of Michigan’s Lower Peninsula. The measure, which passed the Senate last year, now heads to President Obama for his signature.
More than 1 million people visit the seashore each year, said Rep. Dan Benishek (R-Mich.), sponsor of the House version of the legislation.
After the public registered opposition to a draft management plan for the lakeshore, the National Park Service agreed to work with residents and interest groups, he said. That effort led to the legislation first introduced in 2009 to protect land, keep county roads in local control, and allow public access to beaches and other sites.
Thursday, February 27, 2014
Howard Learner joined EETV’s Monica Trauzzi to discuss improving the Midwest’s electricity grid. Howard explores a range of energy market topics including proposed lines to support mines in Michigan’s Upper Peninsula, lines that would carry wind power from the Great Plains to the Midwest, MISO’s recent peak demand forecast, and the role of distributed generation solar in creating an affordable, reliable grid.
Take a look!
Wednesday, February 26, 2014
President Obama Renews Commitment to Modern Passenger Rail
Chicago-hubbed Rail Network Closer to Realization
STATEMENT BY HOWARD A. LEARNER
Executive Director, Environmental Law & Policy Center
CHICAGO – Howard A. Learner, Executive Director of the Environmental Law & Policy Center, issued the following statement in response to the President Obama’s call for advancing modern passenger rail in America:
“Today, President Obama renewed his call to modernize America’s passenger rail system. The President chose the historic Union Depot train station in St. Paul for this important announcement, which provided a beautiful backdrop for what we already know: Modern, faster, comfortable rail is good for economic development and good for communities,” said Howard A. Learner, Executive Director of the Environmental Law & Policy Center. “We commend the President for his commitment and urge Congress to get onboard with this important jobs initiative. We will soon see a Chicago-hubbed, Midwest higher-speed rail network that connects the great cities of our heartland.”
Monday, February 24, 2014
A tiny product is causing big environmental concerns in the Great Lakes.
Plastic exfoliating microbeads—pinhead-sized spheres suspended in hundreds of facial scrubs, toothpastes and shaving creams—are silting fresh-water lakes, biologists say. And there’s some evidence that they’re flowing into the Chicago River.
Though they’re deemed safe for health and beauty products, microbeads can be an environmental danger because they’re roughly the size and shape of fish eggs, which other fish eat. Bigger fish then eat the small fry, the plastic gets incorporated into their flesh and then can end up in our fish dinners. Also, the beads are not biodegradable, and the petroleum in the plastic serves as a magnet for toxins such as motor oil and insecticides.
“The premise is that the bigger fish are then caught by Fred and Wilma over at Montrose Harbor, and when they eat them the plastic beads work their way into people’s bodies,” says Howard Learner, executive director of the Environmental Law and Policy Center in Chicago. “It’s analogous to mercury contamination.”
Saturday, February 22, 2014
Illiana Expressway paved with costly consequences
February 24, 2014
By now, everyone agrees that Illinois is broke. Everyone, that is, except Gov. Pat Quinn, who continues to throw good money after bad with the Illiana Expressway.
As if we didn’t have enough doubts about that $1.3 billion road to nowhere—or, more precisely, from Interstate 55 near Wilmington to Interstate 65 near Lowell, Ind.—now comes word that tolls on it would likely be up to four times more than those charged on other Illinois tollways. That would make it even less attractive to truckers and commuters and more likely that it never would pay for itself, leaving taxpayers to foot the bill.
Mr. Quinn should put down his shovel.
Illiana was sold as a model public-private partnership that would spread the risk equally between the public and an outside contractor. But Illinois Department of Transportation studies showed lower-than-expected use of the road—an estimated 19,800 cars a day—by 2040. (Compare that with the Dan Ryan, which 300,000 cars use every day.) Private-industry interest waned. Instead of dropping the project, however, IDOT sweetened the pot: Reneging on a vow not to hit up taxpayers for Illiana, it promised contractors a set amount no matter how much is collected in tolls.
Further, both IDOT and the Indiana Department of Transportation now say that up to $610 million in upfront state financing could be needed to build the road. Interested in developing a bid? IDOT will pay you $1.5 million for that (see the RFQ’s PDF), adding to the $40 million it already has spent and the more than $80 million it is authorized to spend for more engineering work and land purchases.
Others see Illiana for the folly it is. The Chicago Metropolitan Agency for Planning has stated the highway “could create a $1 billion hole in the state’s budget and drain funds needed for higher-priority transportation jobs in Cook County and the inner part of the metropolitan area.” Chicago Mayor Rahm Emanuel, Cook County Board President Toni Preckwinkle, open-lands and environmental activists, and others say Mr. Quinn should put down his shovel.
Even IDOT admits it will fall $39.5 billion short of its needs over the next five years.
It’s past time to put a stop to what Howard Learner, executive director of the Environmental Law and Policy Center in Chicago, calls “IDOT’s parking meter deal.”
Saturday, February 22, 2014
Gas tax revenues are declining as people drive less and more fuel-efficient new cars require filling up less at the pump. That saves people money, reduces pollution and lessens America’s imports of foreign oil.
However, it also produces less funding for transportation infrastructure improvements vital to Illinois’ economic growth, public health and safety. Potholed streets everywhere, aging public transit and commuter rail equipment, and deteriorating bridges are frustrating, dangerous and embarrassing.
Many politicians oppose raising motor fuels taxes. Oregon is piloting a different approach for 5,000 volunteer car owners beginning July 1, 2015, shifting from gas taxes to vehicle miles traveled taxes, which charge motorists based on how many miles they travel on the roads. An onboard vehicle device, using GPS or other technology, records the distance driven, assigns it to the appropriate taxing jurisdiction and calculates the tax amount owed.
Illinois is exploring types of VMT taxes for trucks. There are obvious differences between applying this system to cars versus trucks. Many truck fleets have the technology installed, which operates on an interstate basis, and there are fewer concerns about privacy. For car owners, however, it requires installing potentially costly new technology, and many people have serious privacy concerns about their daily driving patterns and locations being tracked and provided to governmental agencies and private-sector vendors.
For cars, the VMT tax approach doesn’t work well in states like Illinois, the nation’s crossroads, where highways are used by millions of out-of-state drivers.
Changing to VMT taxes here would mean out-of-state drivers who now pay Illinois gas taxes on fuel purchases would instead get a free ride as they travel through. Illinois drivers would shoulder the entire VMT tax burden. That shift is obviously disadvantageous and unfair to Illinois motorists and taxpayers.
The VMT tax also would penalize lighter fuel-efficient clean cars, which have less impact on highways than trucks and sport utility vehicles. Why should a gas-guzzling Hummer, which causes more wear and tear, pay the same road tax as a lighter, fuel-sipping Toyota Prius or Chevy Volt?
Moreover, will heavy trucks pay their larger fair share?
The Congressional Budget Office’s March 2011 report, in comparing the relative merits of gas taxes and VMT taxes, emphasized the disproportionately high road wear from cargo trucks compared to what’s recouped by current gas tax levels.
“Heavy trucks travel less than 10 percent of all vehicle miles, but their costs per mile are far higher than are those for passenger vehicles, and they are responsible for most pavement damage,” according to the report.
CBO suggested VMT taxes, if adopted, should be adjusted to recognize weight-per-axle in properly allocating highway wear and tear to the cost causers, which are disproportionately heavy trucks and larger commercial vehicles.
Thursday, February 20, 2014
Wall Street Journal
By MARK PETERS
Feb. 19, 2014 8:18 p.m. ET
NEW MADISON, Ohio— Kevin Hollinger planted radishes and oats last fall in his corn and soybean fields, but he isn’t planning to harvest them. Instead, he is letting the crops die over the winter to improve the soil and keep fertilizer and other nutrients from running into nearby waterways.
“I could hardly go to town without someone asking: ‘What’s that in your field?’ ” said Mr. Hollinger, a fourth-generation farmer.
Helping to foot the bill for his experiment is a pilot program set to launch fully next month. Farmers in the Ohio River basin are being paid to make changes—from what they plant to how they handle manure—in an effort to minimize runoff that can cause hypoxia, or low oxygen levels, in waterways.
Nutrient runoff plays a role, nearly 1,000 miles downstream from Mr. Hollinger’s farm, in the formation of the so-called dead zone in the Gulf of Mexico—an area where fish and other aquatic life can’t survive and which is considered one of the nation’s biggest water-pollution problems,
Shrinking the dead zone—which was most recently the size of Connecticut—has challenged regulators. Nutrients that flow down in the Mississippi River and end up in the Gulf come from hundreds of thousands of sources across more than a dozen states.
“It takes a long time to address such a large watershed and such a significant problem,” said Nancy Stoner, acting assistant administrator for water at the U.S. Environmental Protection Agency.
The agency doesn’t have the power to regulate most farms, and leaves controlling nutrient levels in lakes, rivers and streams largely to the states. Environmental groups, who argue the states have taken little action, have sued the EPA to force it to set acceptable levels for nitrogen and phosphorous in the Mississippi basin.
Increasingly, several government and nonprofit groups, including the Electric Power Research Institute, the research arm of the U.S. utility industry, are trying an approach outside of traditional regulation. The institute is setting up a trading system, starting with about 30 farms across Indiana, Ohio, and Kentucky.
Those farms create credits by keeping nitrogen and phosphorous from reaching the Ohio River. The credits can be sold to power plants, sewage plants and other facilities that release nutrients into local waterways.
“Our project is trying to set the table,” said Jessica Fox, manager of the program, which is designed to work on a larger scale.
The goal isn’t just to develop a new market. The projects also hope to persuade farmers that certain changes in the field can help the environment and boost their operations. Crop covers, for example, are sowed to improve soil quality for future plantings and reduce runoff by holding the soil in place and making it better able to absorb and retain water.
Last fall, Mr. Hollinger planted radishes and oats on 200 acres of his farm after harvesting his corn and soybean crop. The seed cost about $5,000. Offsetting the expense was $2,000 from the institute, which will sell the credits the project produces. When Mr. Hollinger plants corn and soybeans in the spring, the harsh winter should have killed the radishes and oats and he can sow his fields as usual.
“I feel like if we do a good job now, we can certainly head off the need for regulation,” Mr. Hollinger said, though he says he will need to see better production or a reduction in costs to stick with it.
In total, the pilot projects are expected to keep about 66,000 pounds of nitrogen and 30,000 pounds of phosphorus out of the Ohio River. Credits for some of those reductions will be sold next month to utilities, including American Electric Power<http://quotes.wsj.com/AEP> based in Columbus, Ohio. It plans to spend $50,000 on credits as seed money for a market that it believes will demonstrate a low-cost way to reduce a variety of pollutants, a company spokeswoman said.
Several environmental groups support the development of such markets, but say they only will work if regulators set an overall cap on nutrient levels. A limit creates demand since sewage treatment plants and other facilities will need to buy credits to meet it, drawing in more farmers. The lack of a strict cap is one of several issues that has stunted similar environmental markets tried elsewhere in the country, according to a 2011 study by U.S. Department of Agriculture economists.
Now, “there is no regulatory backstop to the voluntary plans and ideas being worked on. You’ve got the speed limit sign without a number on it,” said Brad Klein, a senior attorney at the Environmental Law & Policy Center.
For now, Allan Kirkpatrick is taking voluntary steps with the help of the pilot program to control manure on his cattle farm in southern Indiana. He transformed an area for his cows and calves from a messy mix of mud and manure to a more solid surface topped with crushed limestone. That enables him to scoop up manure and spread it on nearby fields where it is unlikely to become runoff. The program paid most of the $6,000 cost for materials and equipment, allowing him to complete the work in one year rather than several years.
“I knew the benefit was there, I just didn’t have the funds to do it all,” Mr. Kirkpatrick said. In the area, “there are more people seeing [the project] and seeing the advantages of it.”
Write to Mark Peters at firstname.lastname@example.org<mailto:email@example.com>
Thursday, February 20, 2014
The Coal Plant an Illinois Town Couldn’t Give Away
By Mark Drajem
Photographer: Daniel Acker/Bloomberg
The Dynegy Inc. E.D. Edwards Power Station stands on the banks of the Illinois River in Bartonville, Illinois, on Feb. 19, 2014.
How much is an old coal power plant worth? With natural gas production booming and environmental rules looming, in Illinois the answer is clear: It can be hard to even give one away.
For evidence, look to the E.D. Edwards power plant, built in 1960 close to the coal mines south of Peoria. While it pumped out electricity for once-booming steel mills and distilleries, the plant cruised along and avoided spending the millions of dollars to install a scrubber on its smokestack.
And so Edwards, confronting a need to meet state and federal rules to clean up and mounting competition from cheaper natural gas, was part of an unusual transaction last year. Owner Ameren Corp. paid Dynegy Inc. to take Edwards and four other Illinois coal plants off its hands, a transaction that perplexed some analysts.
“This was an exercise in kicking the can down the road,” said David Johnson, an analyst at ACM Partners, a financial advisory firm that reviewed the sale for environmentalists trying to scuttle it. “To throw money at someone to take something off your hands is a bit atypical.”
Ameren’s move is among a series of closures, bankruptcies or fire sales by companies desperate to get out of investments in aging U.S. coal plants. Owners are reacting to abundant electricity from natural gas and wind, flat or declining demand and a slew of new environmental rules meant to clean up the country’s top source of pollution. Also in the mix: efforts by environmentalists targeting individual coal facilities.
For workers at the Edwards plant and nearby residents, closure is a threat they live with every day. The plant’s 503-foot high smokestack towers over the industrial community of Pekin, near fencing and ethanol plants. Train tracks bring in the coal from Wyoming, and from a perch nearby bulldozers can be seen working on mounds taller than a home, pushing the fuel onto belts that carry it into the steam furnace.
Local workers say they wonder if Dynegy plans to invest in keeping the plant running. Neighbors worry about pollution from the smokestack today, and what will happen to the site and the toxic waste or sludge abandoned near the Illinois River if it’s shuttered.
Dynegy already announced plans to shut one of the units.
“My biggest fear is that they just desert it,” said Robin Garlish, a local activist worried about air pollution. “It’s very scary because the clock is just ticking on it right now.”
That same clock is reverberating for the U.S. coal industry more broadly.
Coal accounted for 39 percent of total U.S. electricity generation last year, down from about 50 percent from 2003-2008 and a rebound from a record low 37 percent in 2012. (Coal use is forecast to regain some of its luster and provide more than 40 percent of the nation’s electricity in the next three years.)
In 2011 and 2012, 14 gigawatts of coal-fired generation was shut, and another 63 gigawatts may disappear by 2017 under existing regulations, according to an analysis by Meredith Annex of Bloomberg New Energy Finance.
Electric utilities have announced the closure of more than 150 coal boilers; another 263 units could follow. Combined, the units account for a quarter of the nation’s coal-fired capacity, Annex said. With rules in development to govern everything from coal ash to water effluent, even more plants could be forced out of business, too.
By 2030, less than a third of U.S. power will come from burning coal, as natural gas supplants it as the top source for electricity generation, according to a research report by ICF International.
Owners of coal plants “were printing money during the mid-2000s, but it’s a very different future,” Sue Tierney, managing principal of the Analysis Group in Boston, said in an interview. “Demand is flat, natural gas is much more flexible, and coal is taking the squeeze.”
To be sure, that overall trend is not consistent. The run- up in electricity prices during a prolonged cold snap this year has pushed coal plants to run at their peak, as supplies of natural gas were constrained and prices soared. Industry lobbyists say this shows coal is a crucial part of keeping electricity cheap and reliable.
“The alarms sounding from this winter’s arctic weather conditions may foreshadow what lies ahead as looming regulatory deadlines threaten a growing portion of the coal-based power plant fleet,” Hal Quinn, the president of the National Mining Association, which represents coal producers such as Peabody Energy Corp. and Alpha Natural Resources Inc., wrote Feb. 18.
More generally, low gas and electricity prices mean coal-plant owners have been unable to get the same pricing premium. And, utility oversight boards are questioning whether it makes sense for customers to finance the hundreds of millions of dollars to clean up aging plants.
Construction of coal plants has stalled, and most of today’s existing plants were built before 1980. Now, after years of delay, rules are about to kick in requiring all plants to cut mercury emissions in their smokestacks. That means plant owners who avoided installing equipment for years in the absence of universal mandates must now decide to invest, sell or close.
Still to come: the first-ever rules for greenhouse-gas emissions that the Environmental Protection Agency are scheduled to be issued in June.
Coal when burned to produce power generates twice the carbon dioxide as natural gas for each unit of electricity, and so the rules on climate change create hurdles for the fuel that’s predominated since the Industrial Revolution. Already, an EPA proposal would outlaw the construction of coal plants that lack expensive carbon-capture technology.
“It was clear that there were a number of coal facilities that were hanging on, uncontrolled” for pollution, EPA chief Gina McCarthy said on Dec. 2 in Washington. The EPA rules “provided a decision point that will provide much more reductions than we were requiring.”
Howard Learner, the head of the Chicago-based Environmental Law and Policy Center, offers a contrast more common among used-car dealers: “Most of the owners of these power plants were running them like old Chevy beaters.”
And while rules and local opposition to coal pile up, the industry confronts a boom from cleaner competitors. Natural gas prices, buoyed by accelerating production from hydraulic fracturing, fell to decade lows in 2012. Even with a weather-related jump this year, the cost of gas is less than half the $13.57 per million British thermal units reached before the global financial markets slumped in late 2008.
Taking into account the cost of construction, fuel and running the equipment, a modern natural gas plant is cheaper than a coal plant, and in some places onshore wind can be cheaper than coal, too, according to Bloomberg New Energy Finance.
The signs of change are already evident among companies that are coal’s chief customers. Southern Co., which runs one of the nation’s biggest fossil-fueled plants, said coal produces 35 percent of its power, half the total historically. By 2020, Southern expects 35 percent to 55 percent of its power will come from natural gas, likely exceeding coal’s share.
American Electric Power Co., which buys 55 million tons of coal a year, sees the fuel accounting for less than 50 percent of its capacity in 2016, down from 65 percent in recent years. The company abandoned plans for a $940 million upgrade at its Big Sandy plant in Kentucky, where coal is a powerful economic and political force, and will instead convert one unit to natural gas.
The Tennessee Valley Authority said on Nov. 14 that it would shutter eight coal-burning units, and move to pare its use of coal to 20 percent of total generation from 52 percent in 2011. “Our generating fleet has to look different than it has in the past,” Bill Johnson, TVA’s chief executive officer, said at a board meeting to decide the change.
The situation in Illinois is especially acute, with each of the state’s top three coal-power suppliers struggling through financial pressures or creditor protection in recent years. Ameren decided to exit the power generation business in the state, and said a year ago it wanted to find a buyer for its five Illinois coal plants.
Houston-based Dynegy set up a subsidiary, separate from its main business to run the 4,119 megawatts of generation and Ameren’s related businesses. In exchange for taking the plants and $825 million in debt, Ameren agreed to pay more than $200 million for a number of items and to provide two years of collateral support.
While Ameren got out of the business, Dynegy said it was taking a bet that as other coal plants closed, prices for both electricity and natural gas would rise — and with it, profits.
“This transaction, requiring minimal to no capital from Dynegy, dramatically magnifies our upside leverage,” Bob Flexon, Dynegy’s chief executive, said on a call with investors last March, when the sale was first announced. last March, when the sale was first announced. The company set-up an independent unit to run the plants, because, “Dynegy cannot and will not put its balance sheet at risk.”
Without limited cash at risk, workers are left wondering whether Edwards and other plants can survive.
“It’s a very old system, and it needs upgrading,” said Anthony Roberston, who has been working as a driver in the plant for nine years. “We are very uncertain about what our future will hold.”
Dynegy said it’s committed to the plants, and the synergies of its joined fleet of 10 plants in Illinois can help them thrive, especially with the recent run-up in electricity prices.
“This allows us to operate the plants in a more economic manner which preserves the competitiveness,” Katy Sullivan, a Dynegy spokeswoman, said in an e-mail. “Dynegy continues to forecast an improving market over the next few years. The synergies and liquidity build a bridge for these facilities to operate while the market recovers.”
For Johnson, the analyst for the Sierra Club and other environmental groups opposing the sale, Dynegy’s assumption of the upside benefits without the downside risks is a sign that even it doesn’t believe in the sale.
The independent unit created by Dynegy is “likely to fail absent an unexpected change in market conditions,” Johnson wrote in a report submitted to the Illinois Pollution Control Board in opposing the transaction. The company is taking a “highly leveraged ‘gamble’ on the future of energy prices.”
One wild card is pressure from local activists such as Garlish and groups such as the Sierra Club, which are doing all they can to shut plants like Edwards. Michael Bloomberg, the founder of Bloomberg LP, pledged $50 million over four years to the Sierra Club’s Beyond Coal campaign in 2011.
Without any specialized equipment to scrub it, the Edwards plant belched 11,803 tons of sulfur dioxide in 2012, making it a major source of such pollution in the state. Last July, Pekin was designated one of the two areas in Illinois that had high concentrations of the pollutant, which can worsen asthma or respiratory disease. The state must now come up with a plan to clean up that pollution, with the plant one of two large emitters nearby.
And air quality isn’t the only worry. An 89-acre pond of contaminated water sits across a levee not far from the Illinois River, and a state-issued water permit sets no limits on the mercury, cadmium and other minerals that can be discharged into the river, according to a report issued by the Waterkeeper Alliance and Environmental Integrity Project.
Both the state and federal governments are writing new rules to govern those toxic coal-ash ponds.
As a condition for buying the plants, Dynegy appealed to the Illinois Pollution Control Board for a delay in a requirement to install a scrubber to largely eliminate sulfur-dioxide emissions on a separate plant in Newtown. The Sierra Club mobilized to fight the request, and even after the board approved the extension, it hasn’t surrendered. It filed an appeal to the courts to try to overturn the board’s action.
“They are allowing air quality to be a chip on the table” to help clear the way for a sale, said Emily Rosenwasser, a spokeswoman for the San Francisco-based Sierra Club. The structure of the sale “speaks a lot about the value of Illinois coal plants in this day and age.”