Mattoon gets FutureGen nod, but hurdles remain

Bruce Rushton

FutureGen, an environmentally friendly coal-fueled energy plant, is coming to Mattoon, a consortium of power companies announced Tuesday.

Not so fast, says the U.S. Department of Energy.

While Illinois officials and business leaders celebrated Tuesday’s announcement by the FutureGen Alliance, a consortium of energy companies, DOE noted that it hasn’t finished environmental reviews.

Furthermore, the plant must be redesigned to address cost overruns that have ballooned the estimated construction bill from $950 million to $1.5 billion in the space of four years, a top DOE official said in a written statement issued hours after the alliance’s announcement.

“DOE believes that the public interest mandates that FutureGen deliver the greatest possible technological benefits in the most cost-efficient manner,” said James Slutz, DOE acting principal deputy assistant secretary for fossil energy. “This will require restructuring FutureGen to maximize the role of private sector innovation, facilitate the most productive public-private partnership, and prevent further cost escalation.”

Translation: DOE, which is supposed to pay 74 percent of the costs, is getting sticker shock and wants to re-negotiate the deal that has taxpayers on the hook for more than $1 billion.

Joe Shoemaker, spokesman for U.S. Sen. Dick Durbin, dismissed Slutz’s statement as posturing. He acknowledged that DOE holds a big bargaining chip: Final sign-off on environmental review of the site, which the alliance picked over Tuscola and two sites in Texas. Unless DOE issues a final ruling, the project can’t go forward.

“This was a priority for the previous secretary of energy,” Shoemaker said. “He was willing to go along with some increase in the cost without making much fuss. Now, his successor has inherited it. The secretary of energy is now saying ‘Whoa, whoa, whoa-I’ve got a problem on my hands. I’ve budgeted ‘X’ and I’m going to be paying out ‘Y.’”

Julie Ruggiero, DOE spokeswoman, declined to say whether the department would withhold final environmental approval unless the alliance agrees to take on a greater share of the cost.

“I would, again, refer you to Mr. Slutz’s statement,” Ruggiero said.

Congress has already balked at FutureGen costs, appropriating $75 million for the project in fiscal year 2008. That’s $33 million less than the Bush administration requested.

“We are disappointed that we did not get the full request,” said Michael Mudd, FutureGen Alliance chief executive officer, at a Washington D.C. press conference called to announce that Illinois had won out over Texas.

Uncertainty in Washington, D.C. wasn’t enough to stifle partying in Mattoon, where politicians and business leaders gathered at an old theater to watch the announcement.

“Everyone was jumping up and down and yelling and screaming and patting each other on the back,” said Phil Gonet, president of the Illinois Coal Association.

The FutureGen Alliance alerted state officials shortly before the official announcement, which took place at 9 a.m. Gonet was just outside Tuscola, about 20 miles from Mattoon, when he got a call about 15 minutes before the press conference.

“I think this is an important milestone,” Gonet said. “I don’t think anything is ever a done deal. We celebrate one day. And then we go to work tomorrow.”

Cost estimates for the project have fluctuated.

The Associated Press has pegged the cost at $1.8 billion. Mudd said construction will cost $1.5 billion. The difference apparently is because, while construction will cost $1.8 billion, developers believe they will take in $300 million through sales of electricity.

The state of Illinois has offered about $80 million in financial incentives, including $17 million in cash, low-interest loans and tax breaks. At the press conference, FutureGen Alliance officials mentioned a property-tax exemption in Mattoon as a factor in the final decision.

The state has also agreed to buy an insurance policy for the plant, indemnify it against lawsuits and take title to the carbon dioxide gas the plant produces. If all works as planned, the CO2 – which otherwise would contribute to global warming -- will be injected permanently into a geologic formation 8,000 feet beneath the surface of the earth.

The alliance hopes to begin generating electricity by 2012. The plant will produce enough power to serve 150,000 homes.

According to a study released in June by Southern Illinois University-Carbondale, the project will create more than 2,500 construction jobs and 510 permanent jobs if the plant begins operation in 2012 as planned. Promoters say it will revitalize the state’s coal industry while teaching the world how to use coal for energy without releasing greenhouse gases.

“I’m the designated environmentalist,” said Howard Learner, executive director of the Environmental Law and Policy Center based in Chicago, who sits on a state task force organized to promote FutureGen. “FutureGen holds the promise. It’s the holy grail when it comes to Illinois’ economy and the environment. It’s an experiment. We’re going to see if this works.”

Learner called Tuesday’s announcement a “watershed.” He acknowledged that FutureGen is not a done deal.

“There are going to be financial questions -- there always are on a project of this scale,” Learner said. “There will be additional environmental questions. And safety questions. And technology questions.

“I think we have to take this one step at a time.”

Bruce Rushton can be reached at (217) 788-1542 or bruce.rushton@sj-r.com.