Quinn signs bill for South Side gasification plant

2011-07-13T16:45:00Z 2011-07-14T14:20:10Z Quinn signs bill for South Side gasification plantBy Keith Benman keith.benman@nwi.com, (219) 933-3326 nwitimes.com

CHICAGO | Illinois Gov. Pat Quinn on Wednesday signed a bill amid the wreckage of the old LTV steel works on the South Side that will create 1,000 construction jobs and likely result in higher natural gas bills for the state's utility customers.

With a flourish, Quinn signed Senate Bill 1533, which provides a guaranteed revenue stream for a new Chicago Clean Energy coal gasification plant by requiring the state's utilities to buy its synthetic natural gas output. The plant will be built at the LTV site, which hasn't produced steel since the mid-1990s.

"We have to win the future," Quinn said, with a crowd of union construction workers and politicians standing behind him. "We have to make these decisions to ensure a good supply of natural gas as we go through the 21st century."

Leucadia Corp., of New York, the plant's builder, currently is seeking Indiana Utility Regulatory Commission approval for a similar plant in Rockport, Ind. Leucadia Energy President Tom Mara said the company remains hopeful the plant in Indiana will win approval.

Both plants have created controversy, because bills passed in both states would in effect have state utility consumers subsidizing them if the plants' synthetic gas cannot be sold at a profit.

Quinn said he was able to sign the bill after vetoing a previous one because it now includes important protections for the state's consumers.

"We want to make sure that (gas) supply is available and affordable," Quinn said. "So there are many protections written into the bill, including rate caps, to protect consumers."

Neither Quinn nor Leucadia Corp. could say when construction might start. Before construction can start, an extensive environmental study must be completed and regulatory permits approved. Construction will take about four years.

The bill authorizing the Chicago plant places a cap of $7.95 per million British thermal units on the price utilities will have to pay for synthetic gas from the plant when it starts up. That price is 83 percent higher than the current wholesale price of natural gas, according to U.S. Energy Information Agency price tabulations.

Quinn won an important victory in Illinois when he lobbied for changes to the original bill that were demanded by groups such as the Environmental Law and Policy Center, the Citizens Utility Board and local organizations. In Indiana, prominent consumer organizations, environmental groups and one major utility still oppose plans for the Rockport plant.

The governor and legislative sponsors of the bill on Wednesday kept repeating the jobs count for the plant, which in addition to the construction jobs will include 200 permanent jobs at the plant and 165 more coal mining jobs.

"We have to understand that a balance of energy is extremely important to Illinois and our nation," Quinn said. "So this is a natural gas opportunity for the next generation. We have to do it right, we have to do it affordable, in a clean way, and create jobs."

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