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'We're going to have to adapt'

Posted May 06, 2016 11:00 pm

Pete Spitler Staff Writer

The hits just keep on coming for Randolph County.

After the county found out it will have to pay back the state nearly $100,000 in personal property replacement tax funds due to a calculation error by the Illinois Department of Revenue, Dynegy Midwest Generation announced in a May 3 news release that it was shutting down multiple central and Southern Illinois coal-fueled power units.

Units 1 and 3 at the Baldwin Energy Complex would be mothballed, as well as Unit 2 of the Newton Power Station.

The three coal-fired units at Baldwin - Nos. 1, 2 and 3 - went online in the early-to-mid 1970s and the plant has the capacity to generate up to 1,895 megawatts of electricity.

"I don't really know at this point in time how much it will effect the county," said Randolph County Commissioner and Budget Director David Holder in a phone interview with the Herald Tribune on May 4. "Obviously, you have a job loss point of view, and I'm thinking about it from the sales tax point of view.

"We've been analyzing the sales tax records and one of the major changes has been the coal used by the power plant."

The situation was further discussed during Friday's meeting of the Randolph County Board, with the commissioners appearing to be at a loss over how to potentially replace between $1.5 million and $2 million in sales tax revenue.

The coal used at the plant comes via rail on an eight-day loop from Wyoming and is taxed at Baldwin as the point of sale.

"We're looking at a heck of a hole in our budget we'll have to deal with," said Board Chairman Dr. Marc Kiehna on Friday.

Dynegy also announced that its Wood River Power Station will retire in June. In total, 2,800 megawatts of power generation in the state will be lost - 30 percent of the capacity in Southern Illinois.

In terms of job loss at Baldwin, State Rep. Jerry Costello II (D-Smithton) said in a May 5 statement that 122 jobs could be eliminated. The plant is estimated to employ between 230 and 240 people.

"Unfortunately, as coal is being squeezed out of the energy market because of overly-stringent environmental regulations, determining energy rates that are fair to both consumers and producers of energy in Southern Illinois has become increasingly difficult," Costello said in his statement. "Dynegy's announced mothballing of units 1 and 3 at the Baldwin Power Station is in direct response to this difficulty and will devastate not only the 122 individuals facing job loss but also our communities that benefit from the tax revenues produced by this plant."

"This is a difficult decision, and we don't take it lightly," said Robert C. Flexon, chief executive officer of Dynegy, in a news release announcing the company's decision. "For 40 years, the employees of the Baldwin and Newton Power Stations have generated reliable and affordable power for the people of Illinois.

"The men and women of these stations, just like the Wood River employees, have proudly and professionally served and safely operated these facilities for decades while contributing greatly to their communities."

In the release, Dynegy said the decision to shut down the units at Baldwin and Newton units was made "after they once again failed to recover their basic operating costs in the most recent (Midcontinent Independent System Operator) capacity auction."

In the release, Dynegy pointed to out-of-state utilities, and the non-regulation of power generation in Southern Illinois opposed to northern Illinois, as contributors to the company's problems.

"This is a losing model that exports southern and central Illinois jobs and economic base to the surrounding states resulting in a catastrophic economic outcome for downstate Illinois," Flexon said in the release. "As has been demonstrated repeatedly, there is a large disparity between how central and southern Illinois competitive generating stations are treated compared to generating stations in northern Illinois and MISO participants outside of Illinois.

"Central and southern Illinois competitive units in MISO Zone 4 are wrongly grouped with out-of-state utilities rather than the competitive power producers in northern Illinois and PJM. This must change."

As part of the shutdown process, a notice filed with MISO for each unit triggers a reliability review by MISO.

If MISO determines the units aren't needed for reliability, Dynegy expects to shut down operations at Newton Unit 2 in September of this year, Baldwin Unit 1 in October and Baldwin Unit 3 in March 2017.

The news also comes on the heels of the county's fiscal year 2015 financial audit, compiled by CPA Jim Schmersahl.

In that audit, which Schmersahl presented during the board's April 22 meeting, showed a drop of $350,000 in sales tax revenue from the year before.

"We're paying down whatever reserves we can just to operate government," Holder said Friday.

Holder noted that the county may have to start asking itself what services it can provide or should provide if further downsizing of the government is necessary.

"The question is what can we do?" he asked. "Where can we go to get it down?"

The commissioners agreed a further study of the sales tax issue is needed.

"We going to have to adapt," Holder said.

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