Southern Illinois Power Cooperative Update

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Clinton County Electric Cooperative’s wholesale power provider, Southern Illinois Power Cooperative (SIPC), plans to retire its largest coal-fired generator as early as this fall.  A move that is expected to save $125 million over a decade.

The tentative decision is the result of analysis and negotiations that have been ongoing since late 2019. The decision to close Unit 4, as it is known, was based on two primary factors: sustained low energy prices in the wholesale power market, and increasingly costly environmental regulations for coal-fired generators.

As a result, up to 26 of the plant’s 82 employees are expected to face layoffs. Those employees are to receive a severance package under the terms of an agreement ratified by the IBEW Local 702, which represents workers.

SIPC is a generation and transmission cooperative located on the shores of Lake of Egypt, south of Marion, IL, that provides wholesale electric power to seven member distribution cooperatives, and the city of McLeansboro. It is jointly owned and governed by the distribution cooperatives, which are: Egyptian Electric Cooperative Association; Clinton County Electric Cooperative, Inc.; Monroe County Electric Co-Operative, Inc.; SouthEastern Illinois Electric Cooperative, Inc.; Southern Illinois Electric Cooperative; Tri-County Electric Cooperative, Inc.; and Clay Electric Co-operative, Inc.

Those distribution cooperatives have a combined 80,000 metered customers across 29 counties — which are considered member-owners — throughout rural Southern Illinois.

The tentatively approved plan is awaiting final regulatory approvals, expected by late July. A formal board decision is to follow.

Though Unit 4 is likely to close, SIPC’s Marion Power Generating Station will remain open and continue to operate one smaller coal-fired unit and two natural gas units. The original coal-fired generator was built in the 1960s and has a capacity of about 100 megawatts, compared to the larger one slated to be decommissioned, which has a capacity of about 180 megawatts.

Unit 4 was constructed in the late 1970s. It would take an investment of about $20 million in order for it to meet federal and state environmental requirements for coal ash and wastewater disposal over the next three to five years. That financial requirement was a piece in the equation, but the primary driving factors behind the decision are the more competitive energy prices on the open market and a need to diversify SIPC’s energy sources. Currently, coal-fired generation accounts for more than 90% of its portfolio.

SIPC also owns 7.9% of the Prairie State Energy Campus, a mine-to-mouth, supercritical coal-fired generation station near Marissa. SIPC became a partial owner in that plant in 2007. Construction of the plant faced numerous delays and cost overruns, and when it came online five years later, it also suffered operational efficiency issues. However, many of those problems have been ironed out and the plant even set performance records in 2019.

Final decisions have not yet been made on how SIPC will replace the capacity lost with retiring Unit 4, but SIPC management does anticipate entering into several long-term contracts with renewable energy providers to help diversify its energy mix.

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