New Power Plant Will Make Economic Sense
Springfield’s requirement for 200 MW of coal-fired capacity was initially identified as part of a long-term planning study conducted in 2001. One goal of the new project was to isolate Springfield from the volatile prices the city was encountering with market electricity purchases when its electricity production capacity couldn’t meet rising demand. Another business opportunity provided by the new plant was to sell surplus power into those same markets, creating a steady source of future revenue.
The target date for completing the new project was set for the end of 2009. Additional engineering studies confirmed the need for the project and refined the cost estimates.
In 2003, Burns & McDonnell was hired by CWLP to be its owner’s engineer and to start the preliminary engineering and permitting phases of the project. In September 2005, the Springfield City Council authorized construction of the project, which was financed through a bond issue and retail rate increases. However, there was one large obstacle looming that effectively stopped issuance of the final construction permits.
Landmark Agreement with Sierra Club
The Sierra Club believed that the air permit limits weren’t aggressive enough and that constructing the new coal-fired plant was only one element of what should be a much more comprehensive energy plan for Springfield. Therefore, it threatened to file suit in order to stall the project. In 2006, CWLP negotiated a landmark agreement with the Sierra Club that allowed Dallman 4 to proceed without any litigation over its air permit.
The original agreement between CWLP and the Sierra Club received national attention when it was announced because it was the first time that a U.S. utility had agreed to cut greenhouse gases and set emission reduction targets under standards of the Kyoto Protocol. Specifically, CWLP agreed to perform four tasks: close its oldest, least efficient coal plant (Lakeside); reduce NOx and SO2 emissions for the remaining plants; invest in renewable energy by purchasing 120 MW of wind power — 60 MW for the City of Springfield and 60 MW for the state government; and increase CWLP’s investment in energy efficiency and conservation projects. In return, the Sierra Club agreed to not contest the air emissions permit for Dallman 4. As part of that agreement, the city and state agreed to share the costs of adding wind power to CWLP’s generation mix by purchasing wind power for 100% of the state capital and about 140 other state government buildings.
CWLP, to its credit, immediately pursued contracts for wind power and entered into two 10-year contracts with NextEra Energy Resources LLC (formerly FPL Energy LLC) for the purchase of 120 MW of wind power. The initial purchase of 20 MW of wind-generated energy, from Hancock County, was made in July 2007; an agreement for 100 MW of wind energy from Crystal Lake was made in November 2008. Both wind generation facilities are located in northern Iowa. Utility officials estimate CWLP’s total wind power purchases over a full year will produce enough renewable energy to supply the equivalent of about 18% of CWLP’s electricity supply requirements. In 2008, wind purchases equaled 4.57% of net generation at an average price of $43.09/MWh.
"I’ve waited so long for this day," CWLP’s Renfrow told the city council utilities committee in early May of this year, noting that he had struggled to conclude an agreement with the state under former Governor Rod Blagojevich’s administration, but had been successful working with Governor Pat Quinn. The renewable energy purchase agreement is retroactive to July 1, 2008, and runs through June 30, 2018. The state will pay about $19.30/MWh as a surcharge on metered electricity for the wind power; the surcharge will increase 4% per year for the term of the contract. In return, Springfield will invest up to $1.86 million in energy conservation and efficiency programs in the same state buildings though 2015. This agreement with Illinois allowed the City of Springfield to tick off two of the four Sierra Club requirements.
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