Power deal hotly debated - CWLP-Sierra Club pact sent to full council

A national model for how to burn coal in an environmentally responsible way, or an extortion scheme hatched behind closed doors.

How to view the deal struck between City Water, Light and Power and the Sierra Club was hotly debated Wednesday night before Springfield City Council utilities committee, which sent the agreement to the full council for a Tuesday vote.

The deal would avert a potentially costly delay caused by an appeal by the environmental group of the city's construction permit for its new $500 million power plant.

As part of the pact, CWLP would spend $37 million on wind-generated power and other environmentally friendly approaches to generating electricity.

About $15 million would come from a $43 million contingency fund in the plant's construction budget that is supposed to be used for unexpected expenses. The rest of the costs would come from the sale of wholesale energy once the new plant is operational.

CWLP chief engineer Jay Bartlett said there would be no rate increase to pay for the deal, but he told aldermen customers could face additional fuel-adjustment charges, which are tacked onto bills when the utility has to buy outside power.

Besides purchasing wind-generated power, CWLP is agreeing to bolster existing conservation programs and create new ones and to further reduce emissions of carbon dioxide, nitric oxide and sulfur dioxide from the plant. Most aspects of the deal would expire in 2015.

Bartlett estimated the cost of not signing the deal and fighting the Sierra Club before the U.S. Environmental Protection Agency to be $137 million - about $100 million from an increase in material expenses, $28 million from lost wholesale energy profits and $9 million from the cost of continuing the operation of Lakeside Power Station, which is to be shut down.

The Sierra Club deal requires the city to solicit proposals for 120 megawatts of wind capacity after CWLP gets a permit for construction, with the administration of Gov. Rod Blagojevich agreeing to buy half of that for state buildings in Springfield.

If CWLP cannot acquire wind power at a reasonable price, it "shall enter into a contract to build a minimum of 120 megawatts of wind capacity or have purchased 120 megawatts of wind turbines no later than Dec. 1, 2008, and shall be receiving wind power from at least 120 megawatts of installed wind capacity no later than June 1, 2010," according to the agreement.

Bartlett said it was unlikely the utility would have to resort to building wind-generation units in addition to the 200-megawatt coal-fired plant. If that were happen, borrowed money likely would be needed, he said.

CWLP general manager Todd Renfrow conceded that purchasing wind power will be an added expense but said "it's good for the environment."

State, CWLP and Sierra Club officials heralded the agreement as a good business deal.

"This is like a dream," Roger Ricketts, head of the Sangamon Valley Sierra Club, said at a news conference before Wednesday's committee meeting. "We're going to become leaders in the country."

Graphs distributed by CWLP showed drastic reductions in the new plant's emissions of carbon dioxide - the primary cause of global warming - nitric oxide and sulfur dioxide under the deal.

The utility would have to operate its nitric oxide scrubber 12 months a year, which it currently does not do, and would have to comply with tougher mercury standards proposed by Blagojevich, which have not yet been approved.

Most aldermen were silent about whether they'd vote for the deal, but Ward 1 Ald. Frank Edwards and Ward 5 Joe Bartolomucci called it "extortion."

"We're doing exactly what we said we didn't want to do, which is let somebody else control our destiny," Edwards said.

Ward 3 Ald. Frank Kunz also criticized the agreement.

"I think the people of Springfield are going to pay for what less than 1 percent of the population wants," he said. "A small group of people have gotten their way."

Sierra Club officials chafed at such characterizations.

"We are challenging every new coal plant being proposed," said Becki Clayborn, the Midwest regional representative. "It's not like we'll get financial gain. We get environmental protection for your children and grandchildren. This is the opportunity of a lifetime. I'm really disappointed to hear 'extortion' ... and such negative things about such a good thing."

Springfield will have cleaner, healthier air, asthmatics will suffer fewer attacks and there will be less carbon dioxide to contribute to global warming, added Jack Darin, executive director of the Illinois Sierra Club.

"It's the gift that keeps on giving," Darin said.

Kunz, however, decried the secrecy of the negotiations and the fact that no one from the Sierra Club approached aldermen. He said he felt slightly better about the deal Wednesday because it will be voided if another environmental group appeals the permit.

Renfrow said he regretted not telling aldermen sooner about the Sierra Club negotiations, but CWLP officials and their legal adviser said secrecy was necessary because both parties were revealing things they did not want in the public arena.

A confidentiality agreement was in effect between the Sierra Club and CWLP during the talks, which started in February.

Kunz said he isn't buying that argument, because "the people of Springfield have put up a half billion dollars."

"This is a far cry from a regular contract," he said, urging residents to call their aldermen and the mayor to give their opinions of the deal. He declined to say how he would vote Tuesday.

Kunz, Edwards and Bartlett sparred over whether the utility had ever indicated to aldermen or the public that the city council would have to cut a deal with the Sierra Club.

"Why weren't we warned of this before we put this kind of money out?" Kunz said, referring to the $120 million the utility has already spent on pre-construction and purchase of materials without acquiring a permit from the Illinois Environmental Protection Agency.

"I believe that you were told this," Bartlett said. "I think we did express all the risks. I think we went through in general terms all the things that could happen with construction and environmental delays."

"I'll tell you what we'll do. I will have (City Clerk) Cecilia (Tumulty) pull audiotapes of all the meetings we had," Kunz responded. "And I'll be damned if you guys ever told me."

Chris Wetterich can be reached at 788-1523 or chris.wetterich@sj-r.com.