State Senate Approves Second Coal Gasification Plant

By Kevin Robinson in News on Jan 13, 2011 2:45PM

Amid the hullabaloo over the state income tax hike, the state Senate approved a bill that will force Illinois residents to buy roughly a quarter of their heating gas from Power Holdings of Illinois LLC, which is planning a large coal gasification plant in downstate Jefferson County.

The bill, which passed 31-21, requires the state's largest gas utilities to to enter into 10-year contracts with the plant. This comes on the heels of a vote earlier this month to force state utilities into 30-year contracts with a coal gasification plant to be built on Chicago's South side. That plant, which will be owned and operated by New York-based Leucadia National Corp. will produce synthetic gas, made from a combination of refinery waste and Illinois coal.

Critics say the legislation will increase costs to consumers, as the two plants would sell their fuel at roughly double the current price of natural gas. The plants were opposed by the Citizens Utility Board and People's Gas, although other state utilities have remained neutral on the matter.

According to Crain's Chicago Business

An analysis by the Chicago-based Environmental Law and Policy Center, an opponent of the bills, indicates gas rates in Chicago, where Peoples Gas is the provider, and the northern suburbs served by North Shore Gas will be 5% above where they otherwise would be beginning in 2015 if Power Holdings’ plant is built on schedule. For North Shore Gas, that percentage jumps to 14% in 2016 and stays at roughly that level through 2020 as the South Side plant comes on line and its effects are felt.

State Attorney General Lisa Madigan said that she could not support the bills without rate caps in place to protect consumers. Her office never formally filed a position opposing the bills with the state legislature, however. Her father, Representative Mike Madigan, is Speaker of the Illinois House