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Federal Pollution Laws Drive Chicago-Area Coal Plant Out of Business

Dominion Resources, the plant's owner, says it is planning to generate new power in Indiana through a 750-MW wind farm now under construction

May 11, 2011
The State Line Power Station near Chicago

An 85-year-old coal plant near Chicago is going out of business after new federal air quality rules ultimately made the facility too costly to be worth operating.

The 515-megawatt State Line Power Station in Hammond, Ind., will join some 17,000 megawatts of coal-fired electricity scheduled for retirement in the next few years, in light of rising coal prices and tighter mercury and air toxics standards proposed by the U.S. EPA.

Richmond, Va.-based Dominion Resources told financial analysts this month that it had opted not to bid State Line's power capacity in an upcoming auction for the 2014 to 2015 planning period.

"It is really a two-fold response," Dominion spokesperson Dan Genest told SolveClimate News. "The price of natural gas is coming way down, and so the State Line Power Station ... really can't compete in the unregulated energy market against natural gas. So it is not getting run as much as it used to, and we're not making any money on it.

"Given those conditions, it just doesn't make sense for us to invest all of this money in environmental controls for a station that is not operating very much."

He added: "We have said all along that we would operate State Line in full compliance of all environmental regulations safely and economically. So as long as there is an opportunity for us to stay in compliance and do it safely — and make money — then we could continue to operate."

Dominion expects that opportunity to burn out by mid-2014, when EPA's proposed Transport Rule would require the power company to install scrubbers and other pollution control equipment at the plant just 13 miles from downtown Chicago.

Under the rule, sulfur dioxide and nitrogen oxide emissions that cross state lines would be required to drop to 71 percent and 52 percent below 2005 levels, respectively, in the next three years.

EPA also recently proposed the first national standard for emissions of mercury, arsenic and other toxins from coal plants, which would take effect in 2015.

According to a 2010 study by the Washington-based National Research Council (NRC), the State Line facility emitted more nitrogen oxide in 2005 than nearly three-fourths of the 406 coal plants surveyed, in relation to the amount of electricity it generated.

State Line allegedly violated its air permit limit for soot and smoke thickness more than 900 times over a six-year period, according to a notice of intent to sue Dominion from the Environmental Law & Policy Center (ELPC) and Respiratory Health Association, both from Chicago, and the Washington-based National Resources Defense Council.

The organizations' September 2010 effort came a year and a half after EPA initiated an enforcement action against the coal plant, citing 4,470 minutes of soot and smoke opacity violations from 2004 to 2008.

Closure 'Long Past Due'

Plans to shutter the coal plant elicited praise from the environmental groups, who in recent years have fought to force the State Line plant to reign in its excessive levels of soot and smoke that cause acid rain and health complications.

A typical coal plant the size of State Line annually releases around 3 million tons of heat-trapping carbon dioxide emissions and 170 pounds of mercury.

"This is good news for better public health and a cleaner environment," Howard Learner, ELPC's executive director, said in an email.

"It was long past due for Dominion to either invest in modern pollution control equipment to clean up its pollution or shut down the old State Line coal plant."

He added that the plant's closure means "less air pollution and improved public health in Chicago and Northwest Indiana. It means less water pollution and a cleaner, more ecologically safe Lake Michigan."

Learner pointed to the NRC report that determined that State Line cost the public more than $77 million per year in health and environmental damages. The total costs since 2002 range from $540 million to $720 million.

About 78,000 people live within three miles of State Line's toxic fumes, and more than 11 million live within 100 miles of the plant.

In response to the accusations that State Line has caused environmental problems, Dominion's Genest said "the station has always operated in full compliance of state and federal regulations."

Exempted from Clean Air Rules

Indeed, for decades State Line has legally evaded the air toxins restrictions required of newer coal plants under the federal Clean Air Act of 1970.

Commonwealth Edison (or 'ComEd'), the largest electric utility in Illinois, originally built the coal plant in 1926 and 1929, and later added a 197-megawatt coal-fired generating unit in 1955. A 318-megawatt unit came online in 1962, bringing the plant's total capacity to 515 megawatts.

In 1977, Congress exempted older plants from Clean Air Act amendments that imposed tighter emissions limits and stricter standards for new coal plants. The idea was that older plants would soon be retired and thus pollution control retrofits could not be economically justified.

Twenty-five years after the ruling, however, Dominion took over the still-operating State Line station. The power company paid about $182 million in 2002 to acquire all of Mirant State Line Ventures assets, which included the coal plant.

A few years earlier, Dominion acquired the 1,158-megawatt Kincaid Power Station in Springfield, Ill., from ComEd's parent company, Exelon Corp. The coal plant's generating units are nearly 45 years old.

Dominion operates four other coal-fired non-utility generation stations and 12 more utility generation stations in Virginia and West Virginia. The coal plants comprise 40 percent of the company's 27,600-megawatt capacity of electric power; the rest comes from natural gas, hydropower, oil and gas, nuclear power, biomass and wind energy.

Spokesperson Genest said that Dominion is not required by the regional transmission organization to make up the 515 megawatts to be lost from the plant, which is enough electricity to power 128,000 households.

Wind on the Horizon, but Coal Fight Not Over

Although it would not necessarily replace State Line's output, Dominion is planning to generate new power in Indiana by partnering with BP Wind Energy to build the 750-megawatt Fowler Ridge Wind Farm under construction in Benton County.

The two firms are also partnering to develop wind projects near the Kincaid coal plant in Illinois.

ELPC's Learner said that his center and fellow green groups would continue to challenge the operation of other aging coal plants in the area.

The 374-megawatt Fisk Generating Station in Chicago's Southwest Side, for example, began generating electricity in 1903, and ComEd rebuilt the facility in 1959. The latest turbines at the nearby 597-megawatt Crawford Generating Station were installed in 1958 and 1961.

The 803-megawatt Waukegan Generating Station in northern Illinois still uses operating equipment from 1958 and 1963.

ELPC estimates that pollution from the Fisk and Crawford plants together costs neighboring communities $127 million per year in health and environmental damages, and the Waukegan station creates about $86 million in annual damages.

Midwest Generation, which operates all three plants, said it found the ELPC studies to have "serious flaws" and reiterated that its coal-fired power stations meet requirements set by the Clean Air Act.

Learner, however, insisted: "ELPC believes that enough is enough — it is time for the Midwest coal plants owners to either clean up their old coal plants by investing in modern pollution control equipment or shut down their highly-polluting coal plants that are harming our health."

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