State of the State

STATE OF THE STATE

The growing need for energy has sparked a demand for peaker plants
by Burney Simpson

Over the past few years, most complaints about suburban growth have centered on traffic congestion and other consequences of building a slew of three-story homes with four-car garages on quarter-acre plots. These fights over the impact of sprawl have been strictly local. City officials and their constituents have been on their own as they wrestled with questions that could affect the quality of life in their communities: Should, for instance, a new subdivision be approved? Does the area need another strip mall?

But growth also means a need for more energy to service new homes and retail businesses. And that makes for more complex questions. Should we permit a power plant to generate that energy? If so, a utility plant can affect air quality for hundreds, even thousands of miles. And it gulps plenty of water, sometimes millions of gallons. Thus, the impact can reach beyond a town's boundaries, and even affect an entire region. So who should make such decisions?

Since Illinois deregulated its power industry in 1997, the state has left decisions about locating such plants to local officials. But some communities have raised enough heat that Gov. George Ryan and several legislators want to take another look at the issue.

For now, whether to build the plants, and where they'll go, remains a local decision. But local activists have shown they can raise enough questions about peaker sprawl to make that a state issue.

Illinois' utility deregulation law, a result of negotiations among several interests, was designed to allow for consumer choice. Presumably a free-market industry would keep prices down. At the same time, the law gave utilities more freedom from regulatory authority. The Illinois Commerce Commission, for instance, lost the authority to decide where utility plants can be built.

Of course, the reality is that the shakeout period may take some time. In the near term, utility companies have begun an economic restructuring. Before dereg, the power industry, "used to be a monopoly where a company controlled the generation, transmission and distribution of energy. Traditionally, that was [a company like] Commonwealth Edison," says James Monk, president of the Illinois Energy Association, a trade group representing investor-owned utilities. "But we're going to a system where three different companies may supply each need."

Meanwhile, demand for energy is growing. Total annual megawatt hours of power sold in Illinois rose from about 110 million in 1993 to 131 million in 1998, according to the U.S. Department of Energy. One result has been a rash of applications to build and operate so-called "peaker" power plants, which are designed to pump out energy during periods of high demand. Typically this has been during the hot summer months when air conditioners are going full blast.

Peakers were developed in the 1940s and use a modified jet turbine engine to burn natural gas. It costs utilities more to operate the peakers than the "base" nuclear or fossil fuel burning plants that supply the bulk of the state's energy needs. But some energy analysts believe those base plants may not be built anymore due to regulatory requirements and construction costs.

"A major plant can take five to seven years between design and completion. A peaker can go up in 12 to 18 months," says Monk.

Further, some clean air advocates are cautiously optimistic about peakers. They emit a small percentage of the smog and ozone-producing nitrogen oxides that coal plants do.

That's the upside, says Ron Burke, deputy executive director of the Chicago branch of the American Lung Association. But that positive would be moot if utilities continue to rely on coal. "The big picture is whether [peakers] will supplement or substitute for the ultra-dirty coal plants. If they simply add more pollution, they are not a help."

As of this fall, the state had received more than 50 applications to build the plants. The best site for such plants is where natural gas pipelines and large capacity power lines intersect. In Illinois, that means areas

6 November 2000 Illinois Issues www.uis.edu/~ilissues

near Chicago. And many of those sites, until the past decade, were rural. McHenry and Lake counties, to the north and west of Chicago, have been prime territory for the peakers. But developers have applied to build plants in the central portion of the state, too, including several in the counties surrounding Effingham.

Wherever they've been proposed, though, peakers have generated local debate. Those who oppose the peakers worry that not enough is known about the long-term effects of the plants. One peaker may emit less pollution, but what happens when half a dozen are built close to each other? they ask. And the turbines operate most efficiently when cooled by water and run at lower temperatures. That means the larger peakers need lots of water to cool their jets. The plants also raise opposition on aesthetic grounds. The power may be a necessity, but peaker sprawl can mean 100-foot-tall steam towers right next to a forest preserve.

Susan Zingle is at ground zero in the battle. The recent retiree lives within five miles of two proposed plants in Zion in Lake County, the northeast tip of the state. Zion is home to a shuttered nuclear plant, and Zingle is realistic about the need for cheap, reliable power. "We don't want to re-regulate the industry. They can generate as much power as they like. But they can't use up our groundwater and pollute our air," says Zingle, who is executive director of the Lake County Conservation Alliance. "We have no siting procedures. You have an ill-equipped village board without technical knowledge making these decisions."

And there are questions about what a plant adds to the local economy, says Zingle. Once it's built, most of a plant's maintenance can be done off site, so there are few permanent jobs created. And Illinois law may keep some communities from garnering much in property taxes from the plants. Counties have leeway in determining how to classify the plants because the turbines technically are not permanently fixed. If an assessor determines the equipment is personal property, the county's tax income is minimal.

After local hearings, McHenry County put a four-month moratorium on peakers in its unincorporated areas.

Zingle and others say that even with growth, Illinois will not soak up all the power that can be produced by the proposed plants. That means the energy will be shipped on to the country's electrical grid and sold out of state.

"There is simply not that much demand in Illinois. Unless the plan is to turn Illinois into pollution central and export the power across the Midwest," says Howard Learner, executive director of the Environmental Law and Policy Center in Chicago. "The state has approximately 33,000 megawatt peak demand [capability]. Now people want to build another 20,000 megawatts."

The questions about peakers have caught the ear of state Sen. Terry Link, a Democrat from Vernon Hills. During a special legislative session last summer that cut state taxes on gasoline, Link brought together a bipartisan group of legislators from the northeast region to ask for a statewide moratorium on building the plants. That didn't get anywhere in the rushed session, but Link plans to raise the issue again during the veto session of the legislature, which begins this month.

"Basically there are no regulations on these plants. The governor says he doesn't have the power to place a moratorium on the plant approvals. But he put a moratorium on the death penalty," says Link.

Still, Ryan asked the Illinois Pollution Control Board to conduct hearings on the peakers and report back by year's end. And Tom Skinner, director of the Illinois Environmental Protection Agency, ordered hearings for every proposed plant. But current rules tie the state's hands. The proposed plants won't be dumping filthy water into streams. And because they will only operate about three months of the year, their annual emissions won't exceed tougher federal clean air standards.

Others in the Statehouse believe a moratorium is unnecessary. Let the energy marketplace take care of itself, says state Rep. John Philip Novak, a Democrat from Bradley, who chaired the House Energy Committee that worked on deregulation. Those negotiations tried to address air quality while ensuring a competitive market for the power industry. "No more behemoth plants will be built here. The coal plants are old and dirty, and we want to clean them up without breaking the utilities' backs," he says.

Novak reasons that if all the new peakers mean an oversupply of energy, then prices will go down. If they go too low, some plants will close. And that's a problem for business, not individual consumers.

He also notes Illinois did not suffer the energy crisis that occurred this summer in California, another early leader in deregulation. In the last decade, Californians fought building new energy sources and relied on out-of-state plants for much of their power. Some of those plants are in Arizona and Nevada, states that have seen great population growth. When the hot days hit this year, the plants focused on serving their own areas and deregulation allowed them to charge what the market could bear in some parts of California. Around San Diego, prices spiked 200 percent to 300 percent. California got slammed because of a Nimby, or a not in my back yard, attitude, says Novak.

Still, he's concerned about water usage at a proposed plant in his district and plans to call committee hearings on the topic this month. "A 600-megawatt plant [near Kankakee] wants to use eight and a half million gallons of water [a day] and return one and a half million. That's seven million up in steam to cool the turbines."

For now, whether to build the plants, and where they'll go, remains a local decision. But local activists have shown they can raise enough questions about peaker sprawl to make that a state issue.

Burney Simpson has resigned to take a position with the Daily Southtown.