Some Illinois coal plants looking to clean up

Jan 14 - Julie Wernau - Chicago Tribune

Nowhere is coal's effect more visible than here at Illinois' largest coal-fired power plant, where the train cars are flipped upside down, tracks and all, to feed boilers the size of skyscrapers.

Once reviled as one of the dirtiest coal plants in the U.S., today the Baldwin plant is a different kind of poster child.

Last month, Houston-based Dynegy Inc. completed $1 billion in environmental upgrades at Baldwin and its three sister Illinois plants, a calculated bet that it will emerge as one of the coal plant operators left standing as rivals are clobbered by a depressed electricity market that leaves little money to add federally mandated pollution controls.

Dynegy's move, together with the closures of several coal-fired plants in and around Chicago, should add up to cleaner air for Cook County, which has consistently failed to meet federal health standards for air quality.

The pollution spewing from three massive smokestacks at Baldwin, about a five-hour drive southwest of Chicago, had plagued the city and other downwind communities for decades, contributing to the smog and soot that trigger asthma and other ailments.

"Hundreds of people in the state have died in recent years and thousands have been sickened simply because they had no choice but to breathe the pollution being pumped out by huge coal power plants. What we are starting to see now are the real health benefits of legal enforcement actions taken years ago," said Brian Urbaszewski, director of environmental health programs for the Respiratory Health Association of Metropolitan Chicago.

The closures of the coal-burning Crawford and Fisk power plants in Chicago and the State Line plant just across the border in Indiana mirror a story playing out across the country. The abundance of natural gas, a cheaper fuel than coal, has cut into profits of coal plant operators just as states and the federal government have pressed for expensive pollution upgrades.

The Brattle Group, a financial consulting firm, predicts that one-fourth of the nation's coal-fired electricity will be wiped off the map by 2016; more than 100 coal-fired generating units have been mothballed since 2009. The state's other two major coal plant owners -- Ameren Corp.'s generating arm and Edison International's Midwest Generation -- largely have been cast off by their parent companies because of poor financial performance. And they have pleaded with regulators for more time to meet pollution standards.

As a result of upgrades, it is more costly to operate Baldwin and Dynegy's other Illinois coal plants in Wood River, Havana and Hennepin than those of competitors. But Dynegy doesn't expect that to be a burden long term. Fewer players making electricity means surviving power plant operators will receive higher payments from grid operators that pay reservation fees for power.

"There's short-term pain until you flush the noncompliers out of the game," said Robert Flexon, Dynegy's president and chief executive.

Longer term, if coal-fired plants keep closing as Dynegy anticipates, it expects to earn $100 million more per year beginning in 2016 in so-called capacity payments from grid operators.

Cleaning up

Dynegy's decision to upgrade its plants was not altogether altruistic. The improvements stem from a 2005 settlement with the Environmental Protection Agency and the Department of Justice that set deadlines for the company to clean up its plants or close them.

The Baldwin plant, an hour's drive from St. Louis, is massive; its white smokestack plumes can be seen for miles in this flat farming area. Its fuel comes in by rail.

The cars, brimming with 120 tons of coal every 2 1/2 minutes, are flipped over, rails and all, only to return full in an eight-day loop that begins in Wyoming. The amount of coal burned every two months is enough to fill Willis Tower.

It is just the start of a laborious process that strips the coal of toxic pollutants. Truckloads of lime are shipped to the plant each day to supply the sulfur dioxide scrubbers. After the coal is burned, the resulting coal gas is piped to the building-size scrubbers, each containing 20 nozzles that spray a mixture of limestone and ash to chemically remove the sulfur dioxide.

The pollutants bind to the slurry mixture, drop to the bottom and are recycled, while the coal gas pushes through to two smaller buildings called "bag houses," essentially giant filters that catch tiny particles that would otherwise enter the air.

To avoid nitrogen oxide emissions, the coal is burned at a lower temperature.

All told, improvements since 1998 have reduced 93 percent of sulfur dioxide emissions, 85 percent of nitrogen oxide emissions and 88 percent of particulate matter emissions, according to Dynegy.

"All that's really coming out that stack now is carbon dioxide and water vapor," Dave Glosecki, Baldwin's maintenance director, told a group during a recent plant tour.

Depending on the direction it is blowing, wind can carry pollutants from Baldwin or from any other number of coal plants to Chicago's front door.

"Meteorology matters, topography matters, stack height matters, drought conditions matter," said Laurel Kroack, chief of the Illinois EPA's Bureau of Air.

Scientific environmental modeling has shown that Illinois coal plants also contribute to pollution in New York, Georgia, Wisconsin, Michigan and Texas, Kroack said.

There are plenty of other culprits. Pollution from cars, trucks and buses remains one of the largest contributors to the ozone that leads to health problems. Asthma rates have increased even as air has gotten cleaner. The disease has many triggers, including air pollution.

Stumbling blocks

Dynegy's 2005 settlement set the stage for similar state-level agreements with other coal plant owners.

The next year, Edison International's Midwest Generation and St. Louis-based Ameren, which together own nine coal plants in Illinois that produce enough electricity to power 8.5 million homes, promised to invest about $1 billion each to clean up their respective Illinois plants.

Dynegy and Ameren agreed to reduce the rates of nitrogen oxide, mercury and sulfur dioxide emissions their coal fleets produce, which left them the option of closing plants that increase those averages. In 2011, Dynegy closed its Vermilion County plant, and Ameren mothballed its Meredosia and Hutsonville plants.

Midwest Generation's agreement required upgrades to all its plants, in addition to stringent reductions in overall pollution rates. Closing its Fisk and Crawford power plants in Chicago in 2012 didn't help it reduce the upgrades needed at its four other coal plants.

Last year, the parent companies of Ameren and Midwest Generation cut off financial support and set into motion plans to jettison these businesses. Edison International subsidiary Edison Mission Energy, parent of Midwest Generation, filed for bankruptcy protection late last year with a plan to emerge as an independent company.

Midwest Generation also has asked Illinois regulators for a "pause" in meeting yearly deadlines to gradually reduce sulfur dioxide emissions until 2019, saying it will miss targets for two years but catch up in the later years and meet its obligations.

"We come up to our biggest expense at a time when power prices are quite depressed," said Douglas McFarlan, spokesman for Midwest Generation. "We have to generate cash flow or go out and get financing to do this work, and this is obviously a difficult time to do that."

In September, Ameren won a reprieve from the Illinois Pollution Control Board to meet a 2015 deadline to reduce the amount of sulfur dioxide its power plants churn into the air, arguing that under current market conditions it couldn't afford the upgrades. The gas -- it's a consequence of burning coal, which contains sulfur -- has been linked to respiratory illnesses.

Even playing field?

Environmental advocates say Ameren and Midwest Generation's extensions are unwarranted, as does Dynegy.

"Both Ameren and Midwest Generation agreed to these standards in proceedings before the Pollution Control Board," said Howard Learner, executive director of the Chicago-based Environmental Law and Policy Center, who helped negotiate the various settlements governing pollution at the plants. "They're now trying to go back on the deal that they made. What's really happening is that Ameren's and Midwest Generation's projections on the economics of the competitive power market didn't work out as they planned."

Dynegy's CEO said that allowing extensions for his competitors is incentivizing the "wrong behavior."

"Either invest or retire," said Flexon, an intense businessman who cycles 100 miles a weekend. "They strictly are following a policy of hope for better times."

In practical terms, he said, the Pollution Control Board is giving those coal plants more time to pollute before the plants are, inevitably, shut down. Without help from their parent companies, Flexon said, the money simply isn't there under current market conditions to make the upgrades.

Midwest Generation intends to meet its obligations, McFarlan said, pointing to the $170 million the company has spent to meet nitrogen oxide and mercury emissions limits as part of the deal brokered with the state in 2006.

"We invested over $100 million in these plants just last year. (Those are) not the actions of a company that is just trying to string this along and then shut them down," he said.

To finish upgrades by a 2019 deadline to meet sulfur dioxide emissions limits, the company would need to spend an additional $800 million, assuming it doesn't choose to shut plants.

"We're not trying to avoid the investment or get a free pass here," McFarlan said. "We're just looking to defer $200 million for a couple of years to allow time for market recovery, to allow time for federal regulations to catch up and to allow for our financial restructuring."

If Midwest Generation does not receive the extension, he said, it increases the chance that plants will be shut down.

jwernau@tribune.com

Twitter @littlewern

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