Sunday, December 18, 2005

Cover story on power plants in Chicago in the Reader

Mick Dumke has a cover story in the Chicago Reader here on the lack of any progress on a Chicago ordinance to force the two coal-burning power plants in Chicago (Fisk and Crawford, both owned by Midwest Generation, itself a subsidiary of Edison International out of California) to install modern pollution control equipment.

The issue is that these two southwest side plants emit a lot of pollution and the federal government is, under the Bush Administration, not moving to cut pollution anywhere. Thus, it is up to the State or the City to figure out how to cut pollution from these power plants. The same issue extends to just about every Illinois town with a coal-burning power plant, but Chicago's plants are the most residential (I believe).

So far, neither government has done much.

The Blagojevich Administration decided about a year ago to punt on this one, choosing not to impose tough pollution control requirements and instead work on a regional plan with other Midwest state legislatures and governors to come up with a Midwest standard. No word on whether there's been any progress on that front.

On the city side, as the article details, the ordinance has been stuck in committee for four years. Some argue that a city can't impose stricter emissions standards than what federal law allows. I confess I haven't studied the extent to which federal law pre-empts states or cities from setting their own standards, but I can't imagine that a city or a state couldn't choose to set tougher standards to protect the public health of their own people.

That leaves us with figuring out what to do about these plants that employ about 200 people, provide power to about a million homes (a good thing in the event of another breakdown in the electric grid) and make hundreds or thousands of people sick every year.

I've wondered why we can't figure out how to tax pollution to give Midwest Generation a financial incentive to invest in pollution control technology. Currently, the incentives are backward. Each generator sells their power on an open market, and there's no price differential based on pollution generated. In fact, if a generator invests in pollution control, that makes the price of the power more expensive, since the generator needs to include the millions that any modern equipment to control pollution costs into the price of the power that they sell. So the less a power plant invests in pollution control, the cheaper they can produce power and the fatter the profit margin.

One way to deal with this problem is to have the government set a standard for how much pollution power plants can generate. That works best if the federal government sets the standard, because then every generator faces the same constraints. It doesn't work so well if only Chicago has the standard, because then Chicago-generated power is more expensive to sell than power generated elsewhere, and the incentive then is to shut the plant down altogether.

It seems to me that a state tax on pollution would make some sense, since it would affect each plant equally and it lines up the incentives to cut pollution in order to make more money.

Of course, there is no correct answer as to how much to tax one ton of NOx or one pound of mercury or how to calculate the tax for a pound of radioactive waste from a nuclear plant, but that shouldn't stop us from coming up with our best guess (or let the ICC come up with a good guess) to keep Illinois plants profitable but give them a strong reason to invest the millions in pollution control equipment.

After all, as ComEd moves ever closer to its long-awaited retail rate hike in 2006, there ought to be a way that the public gets something out of the deal too in terms of fewer cancer deaths.

3 comments:

Dave Fako said...

You raise some good points here.

dorian said...

Dan,

I agree that some sort of tax on pollution (and figuring out one for nuclear waste too...) would be good because it would deincentivize Midwest Generation and other Illinois coal-fired power plant owners from maintaining old, polluting plants.

Also, we have to be careful with other solutions being considered, prominently the pollution trading solutions that I believe are most being looked-at in Springfield because that would not necessarily lower the emissions from the coal plants nearest to Chicago (and in Chicago) and therefore effect the plants most hurting the health of the most people. The reason for this is that a state-wide cap-and-trade system of pollution credits for companies would likely mean that companies like Midwest Generation would buy credits to cover the extra pollution from the oldest plants they have, those in Chicago and near Joliet opting instead to clean up and get extra credit for cleaning up their larger plants such as those near Peoria.

It is, I am told, cheaper to reduce emissions from larger and newer plants than it is to achieve the same level of emissions reductions at smaller and older plants.

enviro zealot said...

Good idea, but I'm afraid the economists and public health experts would argue endlessly over how the tax should be computed. Then the legislature would artificially cap the tax to make sure it doesn't go too high. Nothing would significantly change. Another approach would be to limit the existing state subsidies for new power plants to only those that utilize coal gasification and other inherently cleaner combustion processes.