The Power Holdings’ bill—S.B. 2169—was the second coal gasification measure to undergo a Lazarus-like transformation this year. In March, Quinn, a Democrat, vetoed the Power Holdings’ bill along with similar legislation—S.B. 1533—for Leucadia National’s proposed $3.5 billion coal gasification plant on Chicago’s South Side. At the time, Quinn said the two bills did not adequately protect consumers who would be required to purchase much of the synthetic natural gas produced by the two plants.
Both bills were amended and passed by the General Assembly again in late May, shortly before lawmakers recessed for the summer.
Quinn, during a signing ceremony in Mount Vernon, only a few miles from the Power Holdings plant site, lauded S.B. 2169 as a “jobs” bill. The governor said the Power Holdings’ project “will revive the coal industry in southern Illinois while ensuring that Illinois remains a leader in the development of state-of-the-art, clean energy facilities.” The SNG project is expected to generate 1,600 jobs and cut carbon dioxide emissions by about 90%. It also will create a market for 4 million tons of high-sulfur Illinois coal annually, possibly from a new underground coal mine that might be operated by Knight Hawk.
Revised S.B. 2169 includes significant consumer protections, including a rate cap and a reconciliation account to pass savings back to consumers. Power Holdings also will have to demonstrate to state regulators its construction and carbon sequestration costs, as well as operating expenses, are reasonable through annual reports and plant reviews. SNG pricing based on those costs will be guaranteed for 10 years, and the state’s natural gas distributors will spread those costs evenly across their customer bases.
Power Holdings is expected to break ground for the plant before the end of this year, with commercial operation in 2014.
Knight Hawk, meanwhile, saw a bill it strongly supported—H.B. 390—also signed by the governor. It allows the company to surface mine privately owned land in the nearly 20,000-acre Pyramid State Park in the Pinckneyville area of southern Illinois. It is believed to be the first time in Illinois that mining has been approved for a state park.
Knight Hawk now will begin the lengthy permitting process for Golden Eagle, which is projected as an approximately 500,000 tpy operation. Mining could commence next summer. St. Louis-based Arch Coal owns a 42% stake in Knight Hawk.