THE real reason Illinois coal is being threatened by imports of western coal may have nothing to do with sulfur dioxide (SO2) emissions or federal regulations, according to the United Mine Workers Union(UMW), the Illinois attorney general and many environmental
groups. The fuel adjustment clause and utility profits may be at least equally to blame, despite well-publicized
complaints about restrictive environmental regulations.
"It appears there is a bias against Illinois coal in the fuel adjustment clause. When you can buy coal at $9 or $10 or $12 a ton in Wyoming and pass through [to consumers] $12 more on the cost of transporting it, that hurts Illinois coal," says Rich Cosby, first assistant attorney general under Illinois Atty. Gen. William J. Scott.
At present the highest cost factor for using western coal in Illinois is the transportation cost from western mines. This cost is automatically passed on to Illinois consumers under various fuel adjustment clauses. A uniform fuel adjustment clause, to replace the 20 or more now in existence, has been proposed by the General Assembly (P.A. 80-1158) and is being considered by the Illinois Commerce Commission (I11CC).
Some would like to see the automatic fuel adjustment repealed or, at least, extended to antipollution "scrubbers," so that Illinois coal can compete more fairly with western coal. With scrubbers, utilities can burn Illinois coal without exceeding present standards of the federal Environmental Protection Agency (EPA). But scrubber costs can't presently be passed on to consumers without rate hearings that may last up to a year, and the construction of scrubbers requires up to three years and tens of millions of dollars.
Atty. Gen. Scott has intervened in the fuel adjustment case now before the I11CC. Scott is asking that power companies no longer be allowed to automatically pass on fuel transportation costs. These costs amount to about two-thirds of the cost of delivered western coal, according to the Illinois Coal Association. (The association represents the state's largest mine operators, mostly mine companies that are subsidiaries of the nation's largest oil companies.)
Others who have intervened in the fuel adjustment clause case before the I11CC, and who would like to see the transport costs reviewed are: the UMW, former Chicago Rep. Ellis B. Levin (a Democrat who headed the subcommittee in the House which first proposed changes in the clause), Citizens for a Better Environment, Illinois Public Action Council and a number of low-income individual utility consumers.
Lined up against these interests are attorneys for General Motors, Marathon Oil Company, Commonwealth Edison and most other large utilities in Illinois.
Commonwealth Edison, the state's biggest utility, has purchased coal rights to land in Carbon County, Wyo., and has applied for a federal coal lease which would allow the company to mine federal land. In addition, Commonwealth Edison has signed a contract or contracts for delivery of 243 million tons of western coal in the next 26 years. This deal came to light during the governor's hearings on Commonwealth Edison's announced plans to switch from Illinois coal to western coal at its Powerton energy plant near Pekin. Powerton is the state's largest coal-burning generating plant.
2 / May 1979 / Illinois Issues
Gov. James R. Thompson called for hearings on the Powerton decision well over a year ago. The hearings ended July 1, 1978, but he did not use his legal authority to issue an order directing the utility to burn local coal. That authority was granted under Section 125 of the federal Clean Air Act (42 U.S.C., par. 7425); it was taken away in November 1978 by a new federal law.
"The governor had public hearings. But nothing came of them. I don't know why. I don't know whether the governor was in bed with Edison or not. He could have issued a local coal-burning order last summer, but for some reason he didn't do very much, and he sat on the decision for nine months," says George Wolff, chief of the environmental control division under Atty. Gen. Scott.
The governor says he didn't issue an order because the new federal law was passed while the hearings were going on.
"Technically that's true, but they [the new statutes] did not take effect until November," says Gerry Hawkins, UMW legislative liaison, "But the new law also gave him the power to petition the president for a local coal order at Powerton. We asked him to do that [when more than 2,000 Illinois miners came to Springfield March 21], but he refused to. He wouldn't have done anything if we hadn't demonstrated," Hawkins says.
The governor asked the president for federal hearings March 26. In a letter to President Jimmy Carter, Gov. Thompson said, "I have received the evidence and arguments presented at the hearings. I concur in ... finding that the evidence did not show that significant unemployment will occur .... We had little choice [in not asking for a local coal order] when spokesmen for the two mines supplying Edison with its Illinois coal testified that the cancellation of their contracts with Edison would not be a problem for them and would cause no unemployment at their mines."
The two spokesmen were employed by Monterrey Coal Company and Southwestern Illinois Coal Company. Southwestern is owned by Arch Mineral of St. Louis, which also owns Medicine Bow Mine in Hanna, Wyo. Monterrey Coal Company is owned by Carter Oil, a wholly owned subsidiary of Exxon.
Federal EPA regulations restricting SO2 emissions have been blamed by Illinois utilities, some coal miners, the governor and others for the decline in the use of Illinois coal. The EPA SO2 standards may be a factor; they are presently under review and new ones will soon be adopted. If SO2 emissions are limited further, it would discourage the burning of Illinois coal. Likewise, a lowering of SO2 standards would be good for Illinois coal. But that is less likely: health and agricultural studies tend to support the contention that even a little sulfur dioxide is very dangerous to people with heart and respiratory ailments, and to soybean yields.
"The real issue on the . . . standards is: will the utilities use a more efficient scrubber system? The thing that's going to make a difference is if they let utilities buying and burning low sulfur western coal use less scrubbing than those using high sulfur coal -- will there be a percentage reduction requirement for SO2?" asks Kevin Greene of Citizens for a Better Environment.
Requiring a certain percentage of SO2 to be eliminated from emissions would end the advantage low sulfur western coal has over high sulfur Illinois coal. To comply with percentage limits, utilities burning western coal would have to do the same amount of scrubbing as Illinois coal users.
The federal EPA's new air standards, as well as its new surface mining regulations, will be important to the future of the Illinois coal industry — as will the uniform fuel adjustment clause soon to be adopted by the I11CC. At stake are 16,000 miners' jobs supporting local economies in central and southern Illinois, and the second largest private cash flow industry in the state, the billion-dollar-a-year coal industry.
7 / May 1979 / Illinois Issues
Publisher's Note:
This month's magazine features a new column, entitled "The Rostrum." Governor Thompson has written the inaugural column (see page 35), a discussion of his gas tax proposal. In future months, "The Rostrum" will be a forum for commentary, opinion and speculation by state leaders in both the public and private sectors on a variety of important issues confronting the state. Illinois Issues, as you know, is a nonpartisan, nonprofit magazine and is not identified with any political party or ideology. But we have come to see the value of presenting the considered views of individuals representing the spectrum of thoughtful opinion in Illinois.
To this end, in 1977 we began to publish debates on controversial issues on a regular basis, and we added two new columns, "Politics" and "The Media.""The Rostrum" is a further attempt to open the rnagazine to the views of other opinion leaders, views which do not necessarily represent the positions of the magazine or the sponsoring universities. We would like to have your responses to this new column, as well as your thoughts on the articles and other columns in the magazine. We are pleased publish letters from our readers and will print as many as space permits. Please keep them to approximately 250 words.
We have received many favorable comments on the profiles of Jesse Jackson Studs Terkel and George Dunne by Chicagco writer Robert McClory, and the series of articles analyzing state voting patterns by Professors Peter W. Colby and Paul Michael Green of Governors State University. We are happy to say that will be publishing more of the work of these writers in future months.
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I would also like to thank all the readers who have recommended the magazine to their friends. We have received many new (and needed) subscriptions as a result of these endorsements. Finally, I wish to thank the individuals, corporations and foundations who have made financial contributions to the magazine. We greatly appreciate these endorsements and contributions and hope you will continue to make them.
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