Tuesday, July 13, 2010

Midwest communities question investment in Peabody coal plant as its price tag soars

Dozens of communities in eight Midwest states are questioning the cost of Peabody Energy's Prairie State coal-fired power plant in Southern Illinois, as projected electricity rates continue to rise far beyond Peabody's initial promises. The price tag of the facility, which will be the largest new source of carbon dioxide in the United States in a quarter-century, has doubled to $4.4 billion, Michael Hawthorne of the Chicago Tribune reports. Peabody touts the plant as environmentally friendly because it will be build next to a coal mine, eliminating emissions from coal trucks and trains.

"Prairie State will be a major source of air pollution, but for the amount of electricity it generates, it will be cleaner than most of the nation's existing coal plants, some of which date to the 1940s and '50s," Hawthorne writes. Costs from possible climate regulation by Congress or EPA, which weren't accounted for in the initial plan, could further increase the cost. "Communities are locked into 28-year contracts that will require higher electricity rates to cover the construction overruns, documents and interviews show," Hawthorne writes. "Municipal officials told the Tribune they expect costs to soar even higher before the plant begins operating next year."

"We don't know yet if we've been sold a bill of goods," Ray Pawlak, a Geneva alderman who was one of the few Chicago-area officials to vote against the project, told Hawthorne. "But why should we take a risk like this?" Phillip "Doc" Mueller, the Illinois Municipal Electric Agency's vice president for government affairs and management services, qualified projects of massive rate increases by noting the Prairie State facility will be just part of the IMEA's energy portfolio. "We still feel good about our decision," Krieger told Hawthorne.  (Read more)

No comments: