The first-year cost of power from the Prairie State Energy Campus, a massive new coal-fired power plant project in Illinois, is 40 percent to 100 percent more than the current cost of power in the Midwest wholesale market, and is expected to remain higher for the next 10 to 13 years, according to an Institute for Energy Economics and Financial Analysis report produced at the behest of anti-coal groups.
The report, The Prairie State Coal Plant: the Reality Versus the Promise, contends that developer Peabody Energy sold the project as a cheap source of power to public power entities representing 217 municipalities and 17 electric membership cooperatives in Illinois, Indiana, Kentucky, Michigan, Missouri, Ohio, Virginia and West Virginia. However, the PSEC project, a 1,600-megawatt, coal-fired electrical power station and coal mine, is now well over budget with construction costs ballooning from the projected $4 billion to an estimated $4.9 billion, the IEEFA says. Capital costs are included in the price of electricity from the project.
The IEEFA, a non-profit based in Belmont, Mass., estimates that the annual losses per community through 2025 will range from $3 million to $56 million. Communities that signed “take or pay” power purchase contracts with American Municipal Power, Kentucky Municipal Power Agency, Northern Illinois Municipal Power Agency and the Missouri Joint Municipal Electric Utility Commission are particularly at risk because they’re obligated to pay for their proportionate shares of PSEC’s fixed costs whether or not the plant generates any power, the report said.
The coal plant’s high production costs have been compounded by record-low natural gas prices, which are hovering just above $3 per million BTU. Thanks to low natural gas prices, a megawatt-hour of electricity in Ohio wholesales for about $40. Meanwhile, power from the first unit of the plant, which went began operating in June, costs about $60, the report said.
Natural gas prices were considerably higher back in 2007 when Peabody and the group of power agencies decided to build the plant.
The coal plant has elicited protests for years with critics saying the facility will emit an estimated 10 million tons of carbon dioxide and other pollutants each year. However, the plant’s owners have long argued the coal plant is more efficient and cleaner than other coal power stations and includes the best available environmental controls, including scrubbers that will remove most sulfur dioxide from the emissions.