Developers Keep Eye on Rising construction Cost of FutureGen

Sep 21 - Pantagraph

The cost of building a prototype non-polluting coal power plant has risen, and leaders say those rising prices could eventually be an issue in the project's future.

The $1.5 billion FutureGen project would burn coal and pump pollutants underground. Its developers are working to decide whether to build in Mattoon or Tuscola in east-central Illinois or one of two towns in Texas.

But before construction begins, the developers will have to deal with the rising price of construction materials, and therefore new power plants, said Mike Mudd, chief executive officer of the FutureGen Alliance.

"We have to recognize that power plants, any power plant, is more expensive now than it was five years ago," Mudd said. Money for the project will come partly from the alliance of 12 private energy companies from around the world.

The initial estimated cost of FutureGen in 2004 was $975 million, Mudd said. Now, the plant is billed as a $1.5 billion project.

That's a cost increase of more than 50 percent.

Mudd said the scope of FutureGen hasn't expanded, but inflation has contributed to the rising cost. He said that while he didn't want to sound a concerned tone about the future of the project, he said the alliance members keep careful track of that cost.

"Everyone has a tolerance," Mudd said.

The alliance counts North America's largest coal consumer among its members <\ American Electric Power of Columbus, Ohio. Company spokesman Pat Hemlepp said the company owns power plants across the country, so they are familiar with increased costs.

"We are not surprised by the run-up in cost," he said.

Hemlepp said that as a major coal user, AEP is supportive of FutureGen as a potential model for what the electricity generation industry might one day become.

But would the company support the project at any cost?

"We're watching the prices," Hemlepp said. "But the value of the project is significant."

The communities vying to become the FutureGen site appear to realize that. State lawmakers in Texas and Illinois both put significant effort into developing incentive packages aimed at luring the plant.

The experimental project promises to create hundreds of jobs, and as a result, stimulate business growth nearby.

State Rep. Chapin Rose, R-Mahomet, said he hadn't heard concerns over FutureGen's cost and trusts the developers' ability to keep the project rolling.

According to published reports, financial problems are dogging similar clean-coal projects around the world.

But Mudd said FutureGen is different because of its significant financial backing. Also, he said, planning on the U.S. project is much further along.

Construction on FutureGen is hoped to begin in 2009, with a planned opening in 2012. Mudd said a site for the plant could be picked by the end of the year.

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