Presently, the two main technologies capable of allowing coal-fired power plants to generate power on a commercial scale with near zero carbon emissions are Oxy-Coal Combustion (“Oxy-Coal”) and Integrated Gasification Combined Cycle (“IGCC”).[1]  Several commercial scale projects will use or are already using IGCC technology;[2] however, only one commercial scale project is planning to use Oxy-Coal technology,[3] and that project’s future is uncertain.[4]  That project is FutureGen 2.0.[5]  This is somewhat disconcerting considering the fact that several studies conducted by the U.S. Department of Energy (“DOE”) have shown that Oxy-Coal has the potential to be a cheaper form of clean-coal technology than its IGCC counter-part.[6]

On August 5, 2010, DOE announced the awarding of $1 billion in Recovery Act funding to build FutureGen 2.0, a clean coal repowering program and carbon dioxide storage network.[7]  The project partners are attempting to repower a 200-megawatt coal-fired power plant in Meredosia, Illinois with Oxy-Coal technology to capture more than 90 percent of the plant’s carbon emissions.[8]  Despite the significant monetary award already received from DOE, the project needs additional funds from Illinois ratepayers to ensure the project will go forward.[9]  The Illinois Commerce Commission (“ICC”) is the state agency that is responsible for such decisions and it must rule by December 27, 2012 on a proposed Illinois electricity procurement agreement for 2013-2018.[10]  The new electricity procurement agreement will ultimately decide whether the FutureGen project will acquire the necessary cash flow to continue.[11]

Fortunately, for FutureGen, section 1-75(d) of the Illinois Power Agency Act contains the legislative requirement that power-procurement plans shall include electricity generated using clean coal.[12]  Section 1-75(d) further sets out sourcing targets for the proportion of each utility’s portfolio to come from clean coal facilities, and describes two specific types of facilities to be included in the clean coal supply portfolio.[13]  These are (1) the “initial clean coal facility”; and (2) repowered/retrofitted coal-fired power plants previously owned by Illinois utilities.[14]  FutureGen falls into the second type of facility as the Meredosia plant’s previous owner was the Ameren Corporation, an Illinois utility.[15]

A noteworthy supporter of FutureGen is the Illinois Power Agency (“IPA”).[16]  In a draft of the electricity procurement plan issued on August 15, 2012, the IPA threw its support behind the FutureGen project by requesting the ICC to “[a]pprove the sourcing agreement between the FutureGen Alliance and the utilities . . . pursuant to Section 1-75(d)(5) of the Illinois Power Agency Act . . . .”[17]

Despite the support from the IPA, FutureGen has its detractors.  Many nearby landowners are worried about the millions of tons of carbon dioxide that will be stored under their property.[18]  Others do not want to pay higher electric bills to support an unproven technology.[19]  The most notable critic, however, is the ICC.  In its comments to the IPA Draft Electrical Procurement Plan, the ICC scolded the IPA recommendation that the ICC should approve the agreement between the FutureGen Alliance and other Illinois utilities.[20]  The ICC staff found this recommendation to be premature, “due to the lack of any cost and rate impact projections presented in the Draft Plan and due to the lack of a proposed sourcing agreement.”[21]  The ICC stated further that the IPA “presented no justification for the ICC to approve such an open-ended commitment on behalf of Illinois consumers.”[22]

Making matters worse, DOE will consider the aforementioned electricity procurement agreement when deciding whether FutureGen should proceed to the design and engineering phase.[23]  Thus, if the ICC does not pass more FutureGen costs onto Illinois ratepayers, the FutureGen project will most likely not go forward.

— John Neary, Associate