CWLP Gets Specific On Coal Plant Closure, Urges Decision By January

Dec 11, 2019

Months after a report advising the City of Springfield to shutter three of its four coal-fired generators, utility officials urged city leaders to make a decision about the future of the plant by January.

Armed with more information about what the closures would look like as well as the risks if the city keeps the three units running, City Water Light and Power Chief Engineer Doug Brown and a consultant presented to city council members Wednesday night.

The proposal would see Dallman Units 31 and 32, the oldest, retired next fall. Then, Unit 33, which is currently down due to a recent fire, would close between 2021 and 2023. That would leave Springfield customers getting electricity from Unit 4, built in 2009, three fuel-oil generators, and yet-to-be-signed power purchasing agreements with outside utilities.

Decommissioning costs for all three would be about $2.7 million, with the bulk coming from Unit 3, according to documents presented at the meeting.

For the oldest plant closures, CWLP says 15 employees would need to move to other city jobs, be offered a severance or retire. If Unit 33 closed, about 50 employees would be affected, according to the utility.

Mayor Jim Langfelder said it’s a priority to retain employees whose jobs are eliminated due to the closures.

“That’s why we left vacancies open to transition individuals and wherever possible that’s what we intend to do, whether it’s with the utility or through some other department within the city,” he said.

Time is of the essence. If the city wants to keep any of the three units online, CWLP would need to immediately begin planning a series of costly upgrades to make sure the old generators meet new environmental regulations.

“The compliance dates are the reason we have to make a decision,” Brown said, ideally by January. “And our decision has to be based on what information we have at the time. And there is risk to invest in those units.”

Langfelder said there is consensus that the oldest units should be shuttered next year, but the debate will be over if and when to close Unit 33.

Debate Over Dallman 33

The report, from The Energy Authority, Inc., recommended Unit 33 be retired as soon as possible along with the other two because the plants are producing electricity at a higher cost than what the city would pay on the open market.

A slide from the presentation Wednesday shows considerations for retaining one generator. All materials can be found on the CWLP website.

Brown, however, said Unit 33 needs to continue providing power until 2021. That’s when transmission lines bringing electricity bought on the open market are expected to be upgraded to handle increased demand.

But he added closure should be scheduled before 2023 to avoid $29 million in improvements needed to meet environmental regulations.

Furthermore, CWLP’s own analysis of the unit found Springfield would lose between $13 million and $16 million per year by operating the plant versus buying electricity on the open market.

Ward 7 Ald. Joe McMenamin said it seemed the only argument for keeping the generator, which was built in 1978, would be to preserve the jobs.

“We have to be careful with our 50 to 80 employees that ultimately may be impacted, but we have to always think about our 60,000 retail and business customers that we are obligated to perform at a lowest, reasonable cost capacity,” he said, referring to the fact that commercial customers pay more for electricity in Springfield than they would in other communities.

A study of CWLP’s rates commissioned by the Greater Springfield Chamber of Commerce found that commercial customers paid 33% to 100% more for electricity than they would if they were served by Ameren. Residents paid around 7% more.

“The scale balances in one direction too strongly,” McMenamin said.

Renewables In The Future

The Energy Authority’s report, called the Integrated Resource Plan, recommended the city replace the lost capacity from plant closures with power purchasing agreements — bulk, long-term contracts to buy electricity at set prices. It recommended most of those be from renewable sources, such as wind and solar.

Brown said the city has not yet sent out requests for proposals for such agreements.

Phil Gonet, head of the Illinois Coal Association and a Springfield resident, said this part of the plan worries him.

“I think that’s a blackout plan for the city of Springfield,” he said. “These are unreliable energy sources.”

Ward 10 Ald. Ralph Hanauer said he understood the worry, but his main concern was price.

“If renewables come in and they’re part of the portfolio, great. But if they come in high, we’ll leave them out,” he said. “Most people here want what’s reliable and affordable and the least costly energy. Otherwise, keep the plants going and we’ll keep the status quo.”

After the meeting, Andy Knott, a senior campaigner with the Sierra Club, criticized the discussion of possible blackouts, saying it was a “scare tactic.”

“Springfield will not be removing itself from the [electricity] grid; there's still going to be connections, multiple connections,” he said. He added that CWLP would have to certify all generator closures with MISO, the grid operator tasked with ensuring there’s reliable electricity across the Midwest.

Utility officials also pointed out in their presentation that electricity from Unit 4, which is a coal-burning generator, covers most of the city’s baseline electricity needs, and that back-up would be needed only during peak times.

Next Steps

After a January decision on a decommissioning timeline, the next step for the city would be notifying affected employees of their options, according to consulting company ScottMadden, Inc. The firm was hired to help in developing a plan, which it presented Wednesday.

CWLP decided to base its plan around an “abandon in place” strategy, which means the utility would stop operations of the plants and ensure they meet all safety and environmental regulations, but not demolish them.

“No one is excited about this,” said Ward 6 Ald. Kristin DiCenso. “These are tough decisions to make. We are doing what’s right for the city – environmentally [and] as far as the rates go.”

Langfelder said another public meeting on decommissioning would be held in January.