The Prairie State Energy Campus under construction in November, 2010. (Photo by Eco-Justice Collaborative, used with permission)
You can see how it might have seemed like a good idea at the time.
When 60 towns and cities in Ohio committed to buy power from a new 1600 MW coal plant about five years ago, demand for electricity was high, growing municipalities were worried about securing affordable power for the future and coal was still seen as the bedrock of the nation’s energy mix.
A lot has changed since then.
Now construction costs for power plants have skyrocketed, cheap and abundant natural gas has made coal-fired power uncompetitive, and the recession has meant energy demand is not what had been projected.
So municipalities that committed to take-or-pay contracts to buy power from and finance construction of the massive Prairie State Energy Campus and adjacent coal mine in southern Illinois are realizing that instead of securing a stable and relatively clean energy supply, they are saddled with paying above-market amounts for power they don’t need from a project plagued by cost overruns and other troubles.
At least that’s the way Prairie State critics see it — and there are many, including consumer and environmental groups in Ohio, Indiana and other states. Non-profit public utilities covering eight states — Ohio, Kentucky, Missouri, Illinois, Indiana, Michigan, West Virginia and Virginia — signed contracts to buy power from Prairie State.
“The project was presented as a way for communities to own a generation unit and have more control, predictability, and stability for meeting the power and capacity needs of ratepayers,” said Lisa Anne Hamilton, a financial regulatory consultant advising Ohio Citizen Action. “By owning the unit they could hedge against volatility in wholesale market power and variability in coal supplies and with the mine right next door, eliminate the (coal) transportation costs that in many projects represent 60 percent of the cost. So there were all these very attractive incentives presented to the public power entities as a way to lock in low-cost stable power by participating in this project.”