The price of natural gas is so low that synthetic natural gas just can't compete. | Getty Images
Updated: August 9, 2012 6:27AM
Sending heating bills through the roof in the suburbs and Downstate for the next 30 years is not a good idea.
Taking one of Illinois’ advantages in competing for manufacturing jobs and turning it into a liability is not a good idea.
Giving Chicago a potential new environmental headache is not a good idea. Neither is discouraging energy conservation.
But all those bad ideas are part of a bill that quietly passed in the closing hours of the spring legislative session. It can only be stopped if Gov. Pat Quinn vetoes it. He should do so.
The bill would pave the way for the Leucadia National Corp. to build a $3 billion synthetic gas plant on the Southeast Side. The idea for such a plant has been kicking around Springfield for years, but now natural gas is so plentiful and prices are so low that synthetic gas just can’t compete.
But if Quinn signs this bill into law, it won’t have to. Nicor, which serves much of the suburbs, and Ameren, which covers most of Downstate, would be required to pay for building the plant and to buy the gas it produces — at three to four times the market price. The utilities say that will cost their customers $285 million a year for 30 years. For the average household, that would come to $170 a year. (Two other utilities — Peoples Gas and North Shore Gas — dropped out of an earlier plan, effectively killing it.)
Supporters of the bill, which is backed by building trade unions, say it would create an estimated 1,000 construction jobs to build the plant over three years and 150 to 200 a year to run it. At current prices it would be far cheaper to pay all those workers to do nothing.
Supporters say the plant would give Illinois an alternate source of fuel in the future if natural gas prices rise significantly. But that’s not a reason to build the plant now. If there’s a big, sustained increase in prices in a decade or two, we can get the blueprints out and start construction then. Or, if Leucadia wants to bet on rising prices, it could build the plant itself today.
Supporters also say the plant would create a market for Illinois coal. But Leucadia is not committed to burning only coal, or even mostly coal. To keep prices down, the primary fuel might well turn out to be a refinery byproduct that other power plants in the region already burn.
State Sen. Kirk Dillard (R-Hinsdale), who at one point co-sponsored the bill, said he changed his mind as the price of natural gas went through the floor. “These gas prices are at record lows.” Dillard said. “The abundance of natural gas is plentiful, and this project is too costly and not economically viable.”
Environmentalists say the plant has no workable plan to prevent carbon-dioxide pollution. The agriculture industry says fuel-dependent grain drying and storage could cost farmers an extra $10 million a year. A broad coalition of environmentalists, business interests and consumer advocates is calling on Quinn to put the kibosh on this plan.
He should listen to them and get his veto pen out.