L e t t e r s

KILnGAS financing OK; what went right with synfuels

EDITOR: In the article "Synfuels from coal: What went wrong?" by James Krohe Jr. [Illinois Issues, May 1982], there are erroneous statements. In the last two paragraphs on page 23, Mr. Krohe discusses the Allis Chalmers KILnGAS plant which is "to be built next to Illinois Power Company's Wood River generating station near East Alton." He states: "Financing was not complete as of early 1982."

Ground was broken for construction October 31, 1980. One condition which occurs in all funding agreements is that full funding of the project must be contractually committed prior to commencing construction. Therefore, financing was complete as of October 31, 1980 and remains complete.

With design of the plant essentially complete, with most of the gasifier in place, with overall construction nearing 25% complete, and with funding complete, I cannot understand how "state officials familiar with the project described it as 'still shaky'."

The KILnGAS project is important to Illinois as a potential synfuel program which "went right." In addition to the present program, the plant is designed to facilitate further research, development, and demonstration. The next such program, which would require its own funding, may well be the addition of a combustion turbine, fueled by KILnGAS, to demonstrate the practicability of future gasification — combined cycle plants.

  P. J. Womeldorff, Chairman
      KILnGAS Steering Committee
Illinois Power Company    

We certainly had no intention of misleading our readers on this subject. Just before the article went to press this winter, state officials told author James Krohe, as quoted in your letter, that financing of the KILnGAS Wood River plant was still incomplete. We are pleased to know that this is no longer the case. In addition to Mr. Womeldorff's letter, we received a letter from Gerald T. Petersen, vice president and general manager of Allis-Chalmers Coal Gas Corporation in Milwaukee. Giving a further update on the status of the KILnGAS plant, Mr. Petersen wrote: "Our KILnGAS Commercial Demonstration Program was fully funded at the approved budget level of $135 million in October 1980 and it remains fully funded. In fact, since then, the Electric Power Research Institute has joined the team with a pledge of $5.75 million. The project is proceeding on plan for a startup of the plant early in 1983. The participation of twelve electric utilities along with the State of Illinois has and is providing assurance that we are on track to serve a real need and one that is viable near-term without subsidy." — Editors

Cutback Amendment

EDITOR: I found the special report on the "Cutback" most interesting, and I agree with most of what you presented. I think you will find though over the years that most of the stated fears of the opponents of the Cutback will actually come to fruition. I think this would be true particularly in the loss of independent thinkers as well as the increased cost of additional staff. I believe the extra legislative staff will be "justified" in the future on the basis that the remaining members have to work that much harder and therefore, need more help.

Actually, I believe it was unfortunate that this report wasn't developed and circulated prior to the vote by the people. It might have been very useful in informing the public of the actual issues.

I sincerely regret the loss of cumulative voting in Illinois. In spite of some of the abuses, I do feel that it was a most useful mechanism for assuring representation of minorities and independent thinkers.

It will be interesting to check back in several years and see how the article stacks up with reality. Hope you will do a follow-up.

Robert E. Cook, CAE   
Executive Vice President
        Illinois Association of Realtors

New Federalism and Illinois

EDITOR: Illinois Issues has done it again. Recently, you published the environmental series and now the New Federalism series which represents the finest coverage on these topics one could find anywhere in our country. Anton's article in the March issue is a model of clarity and is accompanied by excellent tables and graphics. Indeed, his article demonstrates that the workings of our government are comprehensible. The essay makes all too clear the pain that the New Federalism will inflict on Illinois, both in terms of receiving major reductions in federal grants for the poor and elderly and in terms of receiving very little of the sharply expanded defense spending. Other articles describe these changes in general terms; Anton does so in specifics. He shows that we get back in federal spending in Illinois only 76 cents of every dollar we send to Washington in taxes, while the western states get back an average of $1.20 and the southern states get back $1.50. He describes how Illinois will lose $3.2 billion in federal expenditures between the last and the present fiscal year because of New Federalism budgets, amounting to average cuts of well over $200 per capita for each of us who live in Illinois.

I look forward to his next article which will give a heretofore unavailable picture of the county-by-county impact of New Federalism in Illinois using the latest budget figures (assuming that there is a budget for next year).

Roy Wehrle                  
Professor of Economics
    Sangamon State University

June 1982 | Illinois Issues | 5