Governor Signs $3.5 Billion Coal Incentive Legislation

VIRDEN/PINCKNEYVILLE -- Governor George H. Ryan today signed bi-partisan legislation that will help revive the Illinois coal industry and strengthen the state's ability to provide electricity to consumers. The legislation, which provides up to $3.5 billion in financing incentives, is the most comprehensive energy package in the country and the most sweeping in Illinois history.

"Below Illinois' soil sits a 250-year supply of coal that can be utilized to meet our state's long-term energy needs," Governor Ryan said. "This legislation provides targeted incentives designed to create well-paying jobs in coal mines and electric plants and provide a stable source of energy without compromising our environment."

The legislation (HB1599 and HB 2125) offers tax and financing incentives to builders of new coal-powered electric plants generating in excess of 400 megawatts that create Illinois coal mining jobs, new and expanding coal mines and natural gas-fired base-load plants with capacity of 1,000 megawatts. The legislation also establishes a process by the Illinois Environmental Protection Agency to explore the need for a State level multi-pollutant strategy to reduce emissions from older coal-fired electric generating plants.

Governor Ryan crafted the legislation after bringing together members of the General Assembly and finding common ground among wide-ranging legislative proposals introduced this spring in the wake of skyrocketing natural gas prices and a power crisis in California that has caused rolling blackouts.

"Working with the General Assembly in a spirit of bi-partisanship, we were able to develop a comprehensive strategy that addresses our state's energy needs while providing a long overdue boost to our coal industry. I also want to thank the Illinois Coal Association and United Mine Workers of America for their efforts in helping make this legislation a reality," added Governor Ryan.

Among the legislation's major provisions are:

• Designation of new electric plants and the coal mines that fuel them as High-Impact Businesses, providing those businesses with a number of tax incentives, including sales tax exemptions on building materials and equipment, utility tax exemptions and investment tax credits.

• Creation of a $500 million financial assistance program for coal-fired generating plants equal to the amount of general obligation bond-funding that can be repaid by coal sales tax revenues gained on new Illinois coal purchases.

• Up to $1.7 billion in revenue bond authorization to provide financing for electric plants generating Illinois coal mining jobs, including mine-mouth plants and plants that use clean coal technology, repayable by the developers.

• Up to $300 million in revenue bond authorization designed to spur upgrades to the electric transmission grid within Illinois, repayable by the owner of the transmission lines.

• Up to $500 million in revenue bond authorization to finance projects using renewable energy sources such as wind and solar power, and $500 million for existing coal-fired plants to add scrubbers to reduce air emissions, both repayable by the developer.

• Creation of additional local options for property tax abatement.

The Illinois Department of Commerce and Community Affairs (DCCA) will administer the tax incentives, while the Illinois Development Finance Authority (IDFA) will issue the bonds.

"Over $1 billion of Illinois coal is sold each year helping support 25,000 direct and indirect jobs. This legislation will help revitalize the state's coal industry and create new job opportunities, especially in southern Illinois," said DCCA Director Pam McDonough.

The legislation also requires a review by the Illinois Environmental Protection Agency of the need for new state regulations governing emissions by older coal-fired power stations not subject to much stricter air quality restrictions imposed on new generating units.

"The environmental protection provisions contained in this legislation will allow us to move toward measures to ensure improved air quality for our citizens," said Illinois EPA Director Tom Skinner.

Related to the coal package is an amendment to Ryan's earlier Executive Order creating a top-level Governor's Energy Cabinet. Under the revised order, the Cabinet will have the responsibilities in siting new electric generating facilities, overseeing the implementation of environmental regulations on new plant developers and streamlining the state permitting process for new generating plants.