Gaining a better understanding of the closure of EEI was the main goal as the Joppa-Maple Grove school board held a special meeting with a Vistra representative Monday night.
Tom Atherton is an outside counsel for Vistra. A tax attorney from Indianapolis, he’s dealt with property taxes in Illinois for many years. He has also represented power plants for 40 years, including Ameren and Dynegy, which owned EEI prior to merging with Vistra in 2018.
The meeting provided the board the opportunity to ask questions to better understand the foreseeable timeline of the plant’s closure. Also present was Eugene Hanses, the school board’s attorney with Guin Mundorf, LLC, Attorneys at Law. The lone citizen in attendance was Joppa Mayor Sue Sandusky. Board member Kevin Castleman was absent.
EEI (Electric Energy, Inc.) began operating in the summer of 1953, coming into full operation on Aug. 5, 1955. The private industry was initially built to provide half of the power requirements for the new Atomic Energy Commission plant west of Paducah, with the other half from TVA’s Shawnee Steam Plant, which was already under construction. EEI generates 1002 MW of electric capacity plus 239 MW of gas-fueled combustion turbines at its coal-fired plant. Vistra announced plans in October 2020 of the plant’s closure by 2025 or sooner. In April, Vistra officially announced that shutdown will be Sept. 1, 2022.
Property taxes from the plant largely benefit the JMG school district. The two parties are working out a proposal concerning a possible payment in lieu of taxes (PILOT) plan and the extension of funds through 2025.
Board member Chris McGinness asked why the Joppa plant was chosen for closure and what closure means. Atherton explained Joppa, which is one of Vistra’s older and smaller plants, was specifically mentioned in a lawsuit issued by the Sierra Club in 2018 before the Illinois Pollution Control Board. Part of the settlement agreement between Vistra and the Sierra Club was the closure of EEI.
“Closure means decommissioned. As a coal-fired power plant, it will not be reopened, and it will not be converted to a gas power plant,” Atherton said. “But the company has said it wants to put a battery storage plant here and would like to spend about $59 million (to do that). Battery storage is all new money; if that comes in, it will be assessed and be new money for the school and all other taxing bodies.”
That future possibility, however, hinges on the passage of Gov. JB Pritzker’s environmental bill by the state’s General Assembly and the inclusion of Illinois Coal to Solar and Energy Storage Act.
“The governor’s (energy) plan will shut down all coal by 2035 and then natural gas by 2045. What’s been seriously proposed is going to completely renewable (energy) by the terms of this plan,” Atherton said, noting he contacted Vistra’s lobbyist on the way to the meeting to learn the latest on the proposed energy bill, which is in several variations.
“Coal to Solar is in the bill that has the best chance; that’s good news. When could they act on this? August, maybe September; it’s going to get worked out, I just don’t know when,” he said. “(With the) flood of renewables, there’s a lot of electricity out there. But battery storage has got to be a part of it, and Vistra has the largest battery storage in the country. Vistra has proposed to each of the communities what it would like to build there — some get solar, some get battery storage, some get both. Let us all hope we get Coal to Solar passed, and we do have battery storage here.”
Using Texas’ February winter blast as an example, Sandusky asked if that “battery storage will be enough for our electricity. Are they going to be prepared to keep us warm?”
Atherton said MISO (Midcontinent Independent System Operator), the electric grid operator for this region of the state, “is in charge of insuring there is enough supply so we have enough to take care of hot days and cold days. You cannot shut this plant down until MISO gives you the order.”
Atherton assured the board that Vistra’s original plan was to keep EEI operating until 2025, “but several things happened: the litigation (with the Sierra Club) and the air standards tightened, increasing problems to run this plant properly.”
With those factors, coupled with the environmental regulations, specifically the cleaning of the coal ash ponds, “there is no reason this plant can continue to operate profitably. There are millions of dollars that are going to have to be spent on these plants in the future to clean them up. And that’s part of the settlement with the Sierra Club. ... There has to be millions spent on maintenance just to keep the plant in operation at all. ... Coal-produced electricity in Illinois and in this country has dropped, and it will continue to drop,” he said.
In his April 2021 closure statement, Curt Morgan, chief executive officer of Vistra, said the company “will work with our team members and the impacted communities to ensure a just transition, including our commitment to pay $1.1 million in incremental property taxes over three years.” Atherton said there have been multi-year settlement agreements offered by Vistra to eight plants with some accepted and awaiting signatures, while others are in process and a few have no agreements.
“It is very difficult to characterize the pattern of these agreements that have been proposed or agreed to because the plants started at different levels of assessment. What we’ve tried to do is taper (their tax assessments) down,” Atherton explained. “We want to see the assessments come down, because we don’t want anybody to be in a situation five years from now where you’ve gone from high assessments down to nothing. The offers for the closed plants are all three years. For the operating plants, we had a little longer to phase down, so they have offers that are about as long as yours — no one has a longer offer.”
Atherton noted the proposal made to JMG “contains both an assessment, which will be subject to the tax rates,” and those used are from 2019 because 2020 wasn’t available yet, “and a PILOT. I have found in working with numerous taxing bodies over the years, they like PILOTs better (because) PILOTs provide complete flexibility.”
Whichever way JMG decides to go, “the assessments have got to come down, that’s important to us. The assessments cannot stay high, they have to taper,” he said.
Atherton told the board the proposal is based on the “reality the assessments must come down; we have other counties to look at; and we have a preference for taxing bodies to have more PILOT than tax. It wasn’t a science — I don’t have a master formula. While I see a movement within the numbers, what I don’t see is a movement of the numbers — the bottom line for all the years is the most Vistra is prepared to pay.”
The board questioned how long the process takes once an offer is agreed upon. Atherton said it’s called a 945 agreement and takes several months, as all taxing bodies and the courts are involved.
The meeting with Atherton concluded after an hour.
“I’m just very disappointed in what’s happening,” Sandusky said as it concluded. “I was a teenage child when that plant was built, and I’ve breathed that air all these years. We were assured a couple years ago the plant would be open until 2025, so this has kind of been a slammer for us here.”
JMG superintendent Dr. Vickie Artman noted an appreciation to Vistra that an extension of funds through 2025 is at least on the table.
“The Joppa-Maple Grove school board is very receptive to listening to Vistra’s proposal,” Artman said. “We acknowledge the Joppa plant is scheduled to close in 2022. The school district and the community will be hit hard financially when the plant closes. This proposal includes payments for taxes and PILOTs through 2025, which means we have time to plan and analyze the results.”