Bankruptcy Could Shutter 13.5% of Illinois’ Power Generating Capacity

Three months ago executives at Midwest Generation, operator of six coal fired electric power generating plants in Illinois, announced they were closing two of the plants in Chicago, as part of an environmental deal to avoid expensive stack gas cleaning installations at the creaky old facilities at the Fisk and Crawford plants. Earlier this week the same executives said they may not be able to keep their other four Illinois coal fired plants open, as low natural gas prices and resulting low rates for electricity threaten the company with bankruptcy.

Closing of the Fisk and Crawford plants as the company has agreed to do will put about 180 employees out of work. The six Midwest Generation plants provide electricity to power 5 million homes in the state, but the grid operator is obligated to keep supplying electricity to those customers even if all six plants are shuttered. Nevertheless, closing all six plants would throw 1,000 people out of work, and shut down 13.55 of the total power generation capacity in Illinois.

Midwest Generation’s parent Edison International says it will not provide financial support for Midwest. If Midwest filed for bankruptcy, as it is threatening to do, its bondholders would have to decide whether to keep the remaining plants in Romeoville, Joliet, Waukegan and Pekin open for business, by funding environmental upgrades Midwest does not have the cash to pay for, sell them, if a buyer could be found, or shut them down and abandon them. In any event, Midwest predicts it will default on a half billion dollar debt repayment due next June.

Company officials are in negotiations to restructure $3.7 billion in unsecured debt in order to avoid bankruptcy. Analysts predict Midwest’s cash flows will remain negative until at least 2016 without a sharp upturn in utility rates. Parent Edison International’s profits are down 46% from a year ago.

Marissa Power Plant Costs And Delays Are Frustrating Municipal Participants

The Prairie State Energy high tech coal fired power plant at 4190 County Highway 12 in Marissa, Illinois was supposed to go on line last January, and provide economically priced electricity to 150 municipal not for profit power utilities across 9 states, annually burning 7 million tons of Illinois coal from the Lively Grove underground mine across the highway, delivered by a continuously operating conveyor elevated above the road. Instead, construction of the plant, designed to power 2.5 million homes with 1,600 megawatts, 95% of which is sold to the participating utilities on a 30 year fixed price, take or pay basis, is six months behind schedule, and 25% over budget. Tri County Electric Coop in southern Illinois is raising customer rates 15% to cover the overruns. Batavia in the Chicago Suburbs has increased electric bills $8.00 to $21.00 a month to pay for its share of the problem.

Kirkwood, Missouri, in suburban St. Louis, has been sending checks to Prairie State Energy for $296,000.00 per month, each of the last six months, and getting no electric power at all in return to sell to Kirkwood families. Mark Twain’s Hannibal, Missouri is in the same bad position. “We’re in almost a million and a half bucks, and we don’t have a dime of revenue. All I can say is, I had other plans for that money,” says Hannibal Board of Public Works Director Bob Stevenson. The cash hemorrhage of these two towns, along with the other municipal participants in Prairie State, will double in August, when the second unit, also six months behind in construction, was originally scheduled to go on line.

Even with the Lively Grove underground coal mine across the road spilling out 7 million tons of coal annually from its 6 foot 8 inch high seams onto three storage piles feeding the conveyor belt above the highway, municipal aggregators which are part owners of Prairie State will continue losing piles of cash once both units are fully operational. That picturesque riverfront town of Hannibal is committed to paying $54 per megawatt hour for electricity from Prairie State, while in today’s market it can sell the electricity for only $40 per megawatt hour or a little less. Hannibal ratepayers’ wallets will continue getting thinner every day for a long time, while the ghosts of Tom Sawyer and Becky Thatcher stand by watching Hannibal’s citizens painting that white picket fence around Tom’s house.