Why all eyes on Marissa coal plant? Its closure could leave customers billions in debt
For the last nine years, the coal-fired Prairie State Energy Campus in Marissa has produced reliable energy for much of the Midwest and Mid-Atlantic regions.
But in 2019, it emitted the same amount of carbon dioxide created by 3 million cars, according to the U.S. Environmental Protection Agency.
Environmentalists pressing for clean, renewable energy in Illinois see the metro-east plant as a prime candidate for closure by 2030 under one bill pending in the state legislature. But lawmakers worry such energy reform will leave communities with Prairie State contracts in ruinous debt.
More than 200 municipalities throughout Illinois and the Midwest are locked into long-term contracts to not only buy energy from Prairie State but to pay off the $5 billion it took to built the plant, which first came online in 2012.
If Prairie State closes, customers would be left to retire the remaining construction debt and would have to buy more costly energy from out of state, said Prairie State spokeswoman Alyssa Harre.
“A premature forced closure would force member-owners to double pay. Essentially, they would continue to pay for their ownership of Prairie State, a resource they would be unable to use, while simultaneously ensuring that the lights stay on, thus being forced to purchase replacement power,” Harre said.
Any municipality still in debt if the plant were to close in 2035 could see a 15 to 20% rate increase, including Batavia, Geneva and Rochelle in northern Illinois, according to the Illinois Municipal Utilities Association, a trade group for municipalities with their own electric systems. Downstate communities could see a similar increase.
Prairie State’s future hinges on the debate underway in Springfield. Senate President Don Harmon, D-Oak Park, held up an energy bill after a marathon session in Springfield over Memorial Day weekend because of concerns about the impact of phasing out coal power, Politico reported Wednesday.
State lawmakers shouldn’t make decisions based on what “polluters” want, said Jack Darin, director of Sierra Club Illinois, an environmental organization.
“We call on legislative leaders to listen to communities, not polluters, in passing a bold plan for a generation of new jobs building our clean energy future,” Darin said in a statement.
Three bills circulated among lawmakers this spring session. Under the Clean Energy Jobs Act, or CEJA, Prairie State and all other coal-fired plants would be forced to close within 10 years. There was also the Downstate Clean Energy Act and the Climate Unions Job Act. Environmental groups helped craft CEJA. Ameren Illinois had a hand in the Downstate bill and union workers supported the third.
None of the three has enough support for passage.
“It was widely known that none of those three bills was going to be the one that passed,” said state Rep. Amy Elik, R-Fosterburg, a member of the House energy committee.
Instead, intense negotiations went on behind the scenes prior to and over Memorial Day weekend to come up with another energy package until meetings reached “a fever pitch,” Elik said. But lawmakers didn’t manage to come to an agreement.
Negotiations will continue between lawmakers, environmentalists, utility and energy companies, labor unions and Gov. J.B. Pritzker’s office until lawmakers return to Springfield in a few weeks, Elik said.
How do Prairie State contracts work?
Eight municipalities in southwestern Illinois of 36 total statewide own part of and buy power from Prairie State. Twenty electric cooperatives in Illinois are also partial owners.
Carlyle, Highland, Mascoutah, Freeburg, Breese, Red Bud and Waterloo and the other municipalities across Illinois are locked into long-term contracts with Prairie State.
Jean Korte, a Highland resident and clean energy advocate, said the Prairie State plan sounded like an appealing way to ensure electricity for a growing community when coal power was cheap. But as natural gas and renewable energy costs declined, coal became less economical.
Korte feels her town and others got a bad deal. Prairie State’s initial developer, Peabody Energy, eventually decided it didn’t want a part in the plant’s future. The company sold its share of ownership to an Indianapolis-based wholesale energy provider in 2016 for $57 million.
“Town council members who voted and mayors who signed on the dotted line? Their day job wasn’t in the power industry. These were people from all walks of life serving their small towns out of the goodness of their hearts, and they were sold a deal that would be uneconomic before even half the debt was paid for,” Korte said earlier this year during a virtual town hall hosted by the Union for Concerned Scientists, a nonprofit science advocacy organization.
But closing the plant would put customers at risk of more frequent outages and higher energy costs, Harre said. If Prairie State went offline prematurely, Illinois would have to import power from elsewhere at a higher cost, possibly from less efficient coal plants — a prospect that concerns environmentalists.
For regular customers in municipalities that own a share of Prairie State, costs for electricity are almost on par with energy from other markets, according to an analysis of federal filings and financial reports by the Rocky Mountain Institute, an energy efficiency research and consulting firm.
It’s the debt payments that could send customer costs higher, the institute found in its study, which was commissioned by the Natural Resources Defense Council, an environmental advocacy group. The institute estimates the outstanding debt may be even greater than when the plant first opened because of capital projects and how rates were set.
The council says now is the time to pass a bill like CEJA that would put renewables into place before coal plants shutter. Prairie State calls the institute’s report flawed and says the council’s favored legislation would cost Illinois taxpayers in subsidies and rate increases.
Korte acknowledges her electric bills aren’t noticeably higher under Highland’s Prairie State contract than neighboring communities served by the utility Ameren Illinois. But she also believes rates could stay the same with energy from another source, one she hopes will be more reliant on renewables. She also hopes state lawmakers will develop ideas for restructuring Prairie State’s debt statewide.
“The debt has to be paid one way or the other,” Korte said. “We could move forward paying the debt and buy energy off capacity markets and not be worse off.”
Freeburg village administrator Tony Funderburg said he’s not concerned about the village’s contract with Prairie State because they’re “close to the end of paying that off.” The village’s payments are built into residents’ rate structure through the Illinois Municipal Electric Agency, an umbrella group of municipal and cooperative electric systems that owns part of Prairie State.
Funderburg does worry about the potential economic impact of Prairie State closing and about generating enough energy to keep the lights on in Freeburg.
“We are not against clean energy, but it’s going to take a long time,” Funderburg said.
Prairie State employs more than 650 workers, Harre said.
But the company recognizes a shift to renewable energy and battery storage are inevitable. Harre pointed to a partnership with the University of Illinois to find ways to reduce carbon emissions as an example of its commitment to reducing greenhouse gases.
“We support an ‘all of the above’ energy strategy for Illinois that includes a combination of various resources to efficiently meet energy needs,” Harre said.
This story was originally published June 3, 2021 at 5:00 AM.
