Tax talk and FutureGen update

Income tax talk
By Bethany Jaeger
Senate Democrats are considering ways to trim the budget at the same time they’re considering revenue ideas to help alleviate the $9 billion to $11 billion budget deficit. At least one revenue idea includes an increase in the state income tax by as much as 2 percentage points, which would bring the rate to 5 percent for individuals.



Sen. Donne Trotter, budget negotiator for the Senate Democrats, said that for every percentage point increase, the state could collect an extra $3.3 billion, meaning 1 percentage point wouldn't plug the expanding budget gap. “If you’re going to do something as dramatic as raise the income tax, you might as well make it workable. Let’s not just do it and still have a hole and have to come back and do it next year.”

Trotter said early internal discussions about changing the tax structure include establishing a progressive system that would levy a higher tax rate on people who made more money and giving tax credits to families who made less money.

He said the idea to grant tax credits to lower-income families would allow the legislature to get around having to change the state Constitution, which established a flat income tax rate. Illinois lawmakers would have to propose a constitutional amendment to levy the tax on a sliding scale based on ability to pay.

FutureGen still being considered by the Feds
By Jamey Dunn
The U.S. Department of Energy has not taken the proposed FutureGen plant in Mattoon off the table, but the overall plan and the details of the bureaucratic process remain in flux.

According to the New York Times, Energy Secretary Steven Chu said yesterday that he still is considering the Mattoon plant as part of a “modified” project that could include international partners. “We are taking, certainly, a fresh look at FutureGen, how it would fit into this expanded portfolio,” Chu was quoted as saying.

Illinois lawmakers have focused on the record of decision, a statement that says the plan for the Mattoon site has met all environmental standards for construction. U.S. Sen. Dick Durbin recently called for Chu to sign the document so the project can move forward.

However, John Grasser, a spokesman for the Fossil Energy Division of the Department of Energy, said that being concerned with the record of decision at this point is “putting the cart before the horse.” Grasser said that the project must be resurrected before the record can be signed. He said that Chu is still open to the possibility of breathing new life into the project that was abandoned by former President George Bush's administration in January 2008. Grasser said that if the Mattoon site becomes part of a new plan, it could require a new record of decision and some administrative planning that will be worked out when, and if, the time comes.

Read more...

FutureGen confusion

By Jamey Dunn
With speculation running rampant about how federal stimulus funds will be spent, it seems that Illinois lawmakers and the U.S. Department of Energy may not be on the same page when it comes to FutureGen, a one-of-its kind project slated for Mattoon that got the kibosh at the last minute in late 2007.



Supporters of the near-zero-emission power plant that would use Illinois coal say they are waiting on Energy Secretary Steven Chu to sign the record of decision, a statement that says the plant has met all required environmental standards for construction. “I think this is the best project to move quickly in coal research, good for Illinois, good for the United States and the world,” said U.S. Sen. Dick Durbin, who appeared in Springfield last week. “And so what we’re looking for is [Secretary Chu’s] signature on something called a record of decision. And if he would sign that document, we’d be ready to move forward. And so I’m going to do everything I can to urge him to do so.”

Meanwhile, John Grasser, a spokesman for the department’s Fossil Energy Division, says the project has been restructured, so the record of decision no longer matters. “The original FutureGen does not exist right now as a federal project. The record of decision is moot.”

Regardless of the record of decision, FutureGen is eligible for the $1 billion in grants included in the stimulus package for fossil fuel research. The money could be given to one project or split up over several. Chu could hand it out as he sees fit, or several projects may be given the opportunity to compete for the money. According to a timeline on the federal stimulus Web site, agencies must start reporting on these competitive grants by May 20. Even if FutureGen got all the funding, it would not be enough to cover the plant’s estimated $1.8 billion dollar price tag.

Warren Ribley, new director of the Illinois Department of Commerce and Economic Opportunity, says that FutureGen has a good chance to receive funding, partially because the project has potential to stimulate the economy almost immediately.

Read more...

Ready for Super Tuesday

Super Bowl Sunday will lead into Super Tuesday, when more than 20 states including Illinois will hold primary elections. That invites this fun fact: U.S. Sen. Barack Obama collected enough donations in January alone to pay for 13 TV advertisements during the game. That's a lot, considering a 30-second ad goes for $2.4 million.

Obama's campaign officials reported that the Democratic presidential hopeful raised $32 million just in January. (We'll have more on Obama's campaign donations linked to the federally indicted Tony Rezko later.) Obama's camp also attracted 170,000 new donors, bringing his total to 650,000, according to David Plouffe, his national campaign manager. He said in a conference call that the strongest day was the day after the New Hampshire primary, when Obama came in second to U.S. Sen. Hillary Clinton of New York.

Clinton's campaign said it wasn't releasing its January donations yet. You can see older contribution summaries for all candidates here. Obama's campaign said it's now able to run advertisements in every state with a February 5 primary, as well as in states with later primary dates.

Kent Redfield, political scientist at the University of Illinois at Springfield, has a good point about moving up Illinois' primary to February 5 from its original date in March. “There's a certain irony in the fact that we moved our primary up so we could be a major player, and now states that didn't move actually may be more important than Illinois. If we'd have stuck to mid-March, we might have been this huge battleground all by ourselves instead of one of all of these other states.”

That's an indication the Democratic race has some legs. While Redfield predicts that the Republican race between U.S. Sen. John McCain and former Massachusetts Gov. Mitt Romney could be decided on Super Tuesday, he doesn't think the Democratic nominee will be as clear-cut. It is likely that Obama will win the majority of delegates in Illinois, he says, but it's still a really tight race because every delegate counts.

FutureGen factsAnd to keep FutureGen discussion going, the FutureGen Alliance released this fun fact sheet in response to the federal government's kibosh on the Mattoon project announced Wednesday.

Read more...

Feds recast FutureGen's future

FutureGen isn’t dead, yet. But it’s dead as we know it. The 13 energy companies that formed the FutureGen Alliance and selected Mattoon as the host of the groundbreaking project also isn’t dead, yet. In fact, Mattoon and the Alliance could land another version of the multibillion-dollar project with state-of-the art technology for cleaner energy production if they go through another long, detailed, competitive bidding process. And the Alliance would have to come up with a way to fund it other than borrowing, as it proposed in the original FutureGen deal with the federal government.

The U.S. Department of Energy announced in a conference call Wednesday that a new approach to FutureGen would be an “all around better deal for America” for less money and less risk. Energy Secretary Samuel Bodman said the department would start from scratch, seeking new bids for new projects that would a) allow for commercial operation of clean coal plants, b) use multiple locations and c) sequester “double the amount” of carbon dioxide emissions than proposed in 2003. (That’s when President George W. Bush unveiled the original FutureGen plan.) The restructured FutureGen also would aim to generate enough electricity to power 400,000 homes, more than the FutureGen projection, and faster.

New plants would be operational by 2015. Interested applicants have until March 3 to submit proposals.

The halt on federal funding for the original FutureGen site started to trickle down when the FutureGen Alliance announced Mattoon as the selected site in December. In fact, the Energy Department urged the Alliance not to continue with the announcement because of funding and feasibility concerns and didn’t attend the unveiling in Washington, D.C.

The concerns, according to DOE’s Deputy Secretary Clay Sell, focus on the cost estimates nearly doubling to $1.8 billion and drastic changes in clean-coal technology in the past five years. He said more than 33 companies are seeking permits to build plants that use similar technology that could do what made FutureGen so promising: generate electricity and hydrogen from coal and then sequester the carbon dioxide emissions underground rather than releasing them as air pollutants. The costs and the market changes underpinned the decision to take a different approach, Sell said.

It really didn’t help that the FutureGen Alliance proposed that its share of the costs would be financed by mortgage loans. “Quite simply, the financing approach advanced by the FutureGen Alliance would place interests of U.S. taxpayers at risk to that of private mortgage holders,” Sell said. “This would represent a substantial departure from DOE practice for projects which the government bears a majority of costs. And we think it would significantly and unduly increase taxpayer risk.” Ultimately, the feds and the Alliance couldn’t agree on a way to restructure FutureGen.

But what if costs escalate just as they did for the original project? “I can’t guarantee anything five years in the future, and neither can anyone in the Congress,” Sell said. Responding to the Illinois delegation’s harsh words that the feds put the kibosh on Mattoon’s version of the FutureGen, Sell added that the administration has much more confidence that the new approach wouldn’t suffer the same fate.

He also quashed skepticism that the administration pulled the plug on the Mattoon site as retribution for the project not landing in the president’s home state of Texas, as well as the notion that the DOE conveniently set a timeline that coincides with the end of Bush’s term. “Had I wanted to just wash my hands of this, I would have let it go. And the folks of Mattoon, Ill., could have continued to celebrate this for a year or maybe two years. And then when the thing went south, I could have blamed it on the next administration for failing to bring this great idea to fruition. But we recognized that we had a problem. We recognized that we needed to restructure it.”

So now the feds have to deal with the persistent Illinois Congressional delegation, as well as the state legislature and the governor, who all vow to fight for Mattoon and FutureGen.

Read more...

Energy bust

It very well could be too good to be true for Mattoon and the state, which lost federal support of the groundbreaking FutureGen coal power plant one month after winning the project. I thought something was peculiar when I listened to President George W. Bush’s last State of the Union speech Monday night. He mentioned the need “to build a future of energy security” and pioneering “a new generation of clean energy technology,” but he didn’t name FutureGen, an international project touted to do just that.

Mattoon was selected by the energy industry group, FutureGen Alliance, to host the $1.75 billion project capable of generating energy with much less pollution. It was to be an economic boon and an environmental breakthrough. The blow to Mattoon and the entire state came Tuesday after news of a meeting between the U.S. delegation of Sen. Dick Durbin and Rep. Tim Johnson and U.S. Energy Secretary Samuel Bodman, according to published reports.

Durbin said in a statement that the feds’ move was unmatched in “cruel deception.”

“After our meeting today it is clear that Secretary of Energy Sam Bodman has misled the people of Illinois, creating false hope in a FutureGen project which he has no intention of funding or supporting.”

Gov. Rod Blagojevich said in a statement that the state will not give up the fight to make FutureGen a reality in Illinois.

Even if Illinois were to fight and win a scaled-down version of FutureGen or another kind of clean coal technology project, it likely would cost a lot more than the original estimate. FutureGen Alliance’s Michael Mudd gave an online interview about the unknown reason the U.S. Department of Energy had yet to issue a decision by mid-January. But he also said the more delay, the higher the cost — as much as $10 million a month — because of inflation.

Editor’s note: The upcoming February issue of Illinois Issues has an article about FutureGen that was printed before it could be updated with today’s news. Watch the blog and our March issue for more updates.

Utility debate returns
Get ready for another round of energy debates involving natural gas and electricity rates for Commonwealth Edison and Ameren Illinois customers. A group of consumer advocates gathered Tuesday to say consumers have a voice and should get involved in the rate-setting debates before the Illinois Commerce Commission.

Ameren proposes collecting about $245 million from customers of all three subsidiaries to deliver natural gas and electricity. The utility also proposes something called “decoupling,” which would allow it to add a surcharge on natural gas delivery rates to make up for a decline in the average amount of therms used by customers. For instance, Beth Bosch of the Illinois Commerce Commission gave this example: If Illinois has a warm winter and Ameren Illinois customers use less heat, then the utility would lose money. There is a cost to deliver the natural gas no matter how much or little customers use, says Leigh Morris, Ameren Illinois spokesman. He adds the amount of the surcharge would be minimal. The proposal also could benefit customers in the opposite scenario: If Illinois had a colder than normal winter and the utility made more money, then customers could get a credit on their bills.

The Illinois attorney general opposes that billing scheme. Janice Dale, chief of the public utilities bureau in the AG’s office, says it’s “a plan to have customers pay for natural gas service that they won’t use.”

Dale joined AARP at a Statehouse news conference Tuesday. Along with the Citizens Utility Board, they want to organize opposition to proposed rate increases and ask customers to attend public hearings before the Illinois Commerce Commission accepts some, all or none of the rate increases. Any rate changes wouldn’t be effective until at least this fall, according to Bosch.

Morris says Ameren Illinois asks customers to participate with an open mind about the company’s proposal, considering those rates apply only to the cost of delivering the power, amounting to about 25 percent of customers’ bills. Last year’s political turmoil contributed to the company’s poor credit rating, which makes it more expensive to borrow money when other costs — equipment, operations, fuel — are increasing. The company also plans to spend $900 million on infrastructure through 2010. “A rate increase is essential to our ability to meet our mission,” he says.

Public hearings are scheduled for 7 p.m. throughout Ameren’s service area:
- February 4 at the Decatur Public Library
- February 6 at Marion’s Williamson County Pavilion
- February 13 at the Belleville City Council chambers
- February 19 at Peoria City Hall
- February 26 at the Quincy City Council chambers
- February 28 at the Champaign City Council chambers.

Read more...

Mattoon wins: Too good to be true?

The energy industry selected Mattoon in east Central Illinois to host the more than $1 billion project billed as the “world’s first near-zero-emissions coal-fired power plant,” but the feds have yet to sign on to the project that they’re supposed to fund.

FutureGen, as it’s called, is expected to receive international attention for the first-of-its-kind technology to research a cleaner source of energy while capturing harmful carbon dioxide emissions underground. The hundreds of jobs created would also be a huge economic boon for the region and the state. But the project’s future remained in question Tuesday because the U.S. Department of Energy hadn’t yet issued its final decision, which is necessary. And the department issued a statement saying the project already is over budget. More information won’t be available until next month.

Energy Department officials did not attend the press conference (seen live on the Internet) held in Washington, D.C., by the FutureGen Alliance, a nonprofit group of energy companies that’s in a public-private partnership with the feds. The Alliance announced Mattoon as the winner despite federal wishes to hold off on the announcement.

The Energy Department’s absence speaks volumes considering the government (a.k.a. taxpayers) is slated to foot most of the bill: 74 percent compared to the industry’s 26 percent. A November report includes a section about what would happen if the feds didn’t share the burden. “In the absence of DOE funding (the No-Action Alternative), the Alliance may still elect to construct and operate the proposed power plant if it can obtain the additional funding and required permits. However, in the absence of DOE participation, it is unlikely the FutureGen Project would be implemented.” The report later adds, “The No-Action Alternative is considered a ‘No-Build’ Alternative.” [Emphasis added]

FutureGen Alliance officials said during the press conference that politics did not come into play, but skeptics have wondered from the beginning whether President George W. Bush’s home state of Texas would win the bid. Texas is the other state with two cities on the short list for the FutureGen project. Tuscola in east central Illinois also was in the running but wasn’t selected by the Alliance.

The Alliance board unanimously selected Mattoon, population 18,000, after a rigorous process of comparing more than 100 criteria because the town “offered the best chance of success for this project,” said Lucy Swartz, head of the site selection process. “The site is move-in ready, and that was very important for the Alliance to reduce any risks that might be involved with acquiring the land.” It was also chosen for its secure and adequate water supply, its geology that would allow safe storage of carbon dioxide 8,000 feet underground and its location in 444 acres of rural land with a place to inject the gas emissions. The property tax benefits and community support also helped.

The problem is that costs have risen from an estimated $904 million in 2004 to $1.75 billion in 2007.

Construction on the plant would start in 2009, and it wouldn’t be operational until 2012, but the timeline has adjusted a few times. Once in full swing, the plant would be able to power about 150,000 average homes, according to the Alliance’s site.

Read more...