FUTUREGEN CEO: PROJECT MOVING FORWARD DESPITE LEGAL CHALLENGES

Tamar Hallerman
GHG Monitor
3/15/13

The CEO of the FutureGen Alliance said that the industry consortium will not let recent legal challenges get in the way of its plans to move forward with its $1.65 billion carbon capture and storage project. In a letter to U.S. Sen. Dick Durbin (D-Ill.) dated late last week, Alliance CEO Ken Humphreys said the group was “disappointed” with Commonwealth Edison’s (ComEd) decision to challenge FutureGen’s 20-year power purchase agreement with the state of Illinois. “We believe that the Illinois Commerce Commission’s order lies on firm legal ground, and do not believe that the appeals will be successful,” the letter stated. Humphreys emphasized that the project is still moving forward despite the challenges. “In no way does the Alliance intend to slow its efforts to develop FutureGen 2.0 while the appeal is pending,” he said.

ComEd shocked many, including Durbin, when it filed notice with the Illinois Appellate Court—along with the Competitive Energy Association, a group of alternative retail electric suppliers in Illinois—to legally challenge FutureGen’s sourcing agreement with the state. The utility, whose parent company Exelon recently said it plans on ending its involvement with the FutureGen Alliance, said that it is primarily troubled with the project’s potential rate impact on its customers. “We are concerned about the negative impact on our customers from a requirement that would force utilities to buy subsidized generation at above-market prices,” ComEd spokesman David O’Dowd told GHG Monitor late last month. Durbin called the move a “heavy-handed corporate betrayal” in a subsequent press release.

In his letter to Durbin this week, Humphreys said the project’s power purchase agreement—which requires the state’s utilities, as well as its competitive electricity suppliers, to buy all 166 MW of gross electricity generated annually from the FutureGen facility beginning in 2017 regardless of cost—will not be a large burden on electricity consumers in the state. He estimated that the project would likely have a rate impact of 1.3 percent, below the 2 percent cap set by state law. “The bottom line is that both project costs and ratepayer impacts have been reduced since January 2010. Any assertions to the contrary are not rooted in fact,” Humphreys said.

Caterpillar Joins Legal Fight

The legal challenges have been the latest roadblock for the $1.65 billion CCS project, which has faced several dust-ups over the last 18 months regarding project cost, internal politics and timing concerns. FutureGen was in the headlines again late last week after it was reported that heavy machine manufacturer Caterpillar Inc.—an Illinois-based company that once flirted with the idea of joining the Alliance in 2010—is a member of another group challenging FutureGen’s sourcing agreement in court.  Crain’s Chicago Business initially reported that Caterpillar is part of the Illinois Industrial Energy Consumers, an ad hoc group of large Illinois industrial companies that is separately challenging the project’s power purchase agreement.

Proposed Pipeline Route Released

Despite the legal and regulatory skirmish, the Alliance said the project is quickly moving ahead. The Department of Energy recently approved a 16-month, $130 million front-end engineering and design phase for the project and partner Babcock & Wilcox Power Generation Group said it reached an agreement with the industry consortium to begin preliminary FEED work soon. Meanwhile, a second phase of hearings with the ICC continues as state regulators hash out details related to the oxyfuel retrofit project’s sourcing agreement.

On the transport end, the Alliance recently unveiled a detailed proposed CO2 pipeline route to local landowners in Morgan County late last month. The pipeline is 30 miles long, taking a largely a horizontal route east from the Meredosia Energy Station, crossing two highways to a permanent sequestration site near Ashland in Morgan County. On its website, the Alliance said that construction on the 10- to 12-inch pipeline is expected to begin in fall 2014. “The pipeline design will meet or exceed all federal regulatory requirements and will be regulated by the U.S. Department of Transportation, Office of Pipeline Safety,” the Alliance’s website states. The Alliance will also soon apply for a pipeline construction and operation permit from the Illinois Commerce Commission, as well as a CO2 underground injection control permit from the regional Environmental Protection Agency office.