Friday, February 26, 2010

Cash Creek Clean-coal project pushing for help from lawmakers

FRANKFORT -- Backers of the proposed $2 billion Cash Creek coal-gasification project in western Kentucky asked lawmakers Thursday to pass legislation that would force utilities to purchase the higher-priced electricity it would generate.

Reluctant lawmakers said they fear the proposal would lead to electric rate increases for Kentucky residents and businesses.

"That's what gives me heartburn," said state Rep. Keith Hall, D-Phelps, vice chairman of the House Committee on Natural Resources and Environment, who was briefed on the project Thursday.

The proposed Cash Creek plant, which has received nearly all necessary environmental permits to begin construction, would convert coal into synthetic natural gas that would then be burned to generate electricity or sold through a gas pipeline. The plant at Henderson would be adjacent to a mine that would provide about 2.8 million tons of coal a year.

While state officials have embraced proposed clean-coal projects to maintain the market for the Kentucky's most abundant natural resource, Henderson officials are eyeing the jobs Cash Creek could create -- some 1,500 jobs during construction and 150 to 300 once the plant is up and running.

Cash Creek managing director Michael McInnis warned lawmakers on Thursday that if legislation isn't enacted, no coal-gasification plants will be built in Kentucky, perhaps opting instead to go into rival states like Illinois to set up shop.

Lawmakers boosted financial incentives last year to lure such projects to Kentucky. And they're working on legislation this year that would extend eminent domain rights to pipeline companies that would dispose of carbon dioxide, one of the chief byproducts of converting coal to cleaner burning fuels.

That measure passed the House last week and is pending in the Senate.

Lawmakers have boasted that passing the pipeline measure would help put Kentucky out front in converting coal to cleaner-burning fuels and could help the state if federal regulators impose additional restrictions on carbon dioxide emissions.

Kentucky already allows the use of eminent domain for natural gas, oil and similar pipelines. The expansion would allow the proposed plants to pipe carbon dioxide to Texas to be injected underground.

Cash Creek and the ConocoPhillip's NewGas coal gasification project in Muhlenberg County both have lobbied for the pipeline legislation.

State Rep. Jim Gooch, D-Providence, said McInnis is asking for legislation that would include coal gasification as part of "a renewable portfolio standard," which essentially would require utilities to purchase a portion of their electricity clean-coal plants.

The Kentucky Association of Electric Cooperatives and utility companies have already begun lobbying to defeat the legislation, even though it hasn't yet been filed.

Utilities want to purchase affordable electricity so that rates can remain low for Kentuckians, said Dennis Cannon, spokesman for the state's rural electric co-ops.

"The issue we look at is what's best for our customers," he said. "It appears that from what we have heard, electricity would be more costly than from other sources available to us."