Ameren Energy Resources Company, LLC (AER), the holding company for the merchant generation business of Ameren Corporation (NYSE: AEE), announced Tuesday the Meredosia and Hutsonville energy centers will cease operating by the end of 2011.
In a press release, Ameren stated that the shutdown of these centers will result in the elimination of 90 positions at the generating facilities in Meredosia and Hutsonville, Ill. Both energy centers are part of Ameren Energy Generating Company, a subsidiary of AER.
In addition, the company expects to incur other costs related to employee severance and the closure of these centers that are still being determined.
The two facilities provided approximately 4 percent of Ameren Energy Resources TM total generation over the last two years and a lesser percentage of margin.
We are working to provide alternative employment opportunities and reassignments within AER for many of the 22 management and 68 union-represented employees affected by these decisions, said AER President and Chief Executive Officer Steven R. Sullivan. It is my sincere hope that any employee desiring a reassignment opportunity can be accommodated. We will work hard to achieve this objective.
Why the closure?
The closure of these units is primarily the result of the expected cost of complying with the Cross-State Air Pollution Rule (CSAPR) issued in July 2011 by the U.S. Environmental Protection Agency . CSAPR requires reductions in sulfur dioxide (SO2) by 73 percent and nitrogen oxide (NOx) by 54 percent from 2005 levels. It is one of a number of regulations expected to require expensive environmental controls on coal-fired generating units across the nation in coming months and years.
CSAPR tightens the restrictions on SO2 and NOx emissions to the point that we cannot continue to economically operate these units, said AER President and Chief Executive Officer Steven R. Sullivan. Numerous options to bring these units into compliance were explored, including installing additional environmental controls, but the costs were just too high to be justified. We regret the impact this will have on our employees and the communities where these plants have been important to the local economies.
Another factor driving the closure of operations at these facilities is a lack of a multi-year capacity market managed by the Midwest Independent Transmission System Operator (MISO). Without the ability to sell capacity several years out, we cannot afford to make the substantial investment for environmental controls that would be required to keep these units in service, said Sullivan. I suspect that MISO TMs proposed capacity construct, recently filed with the Federal Energy Regulatory Commission, will lead to the closure of additional non-AER merchant plants in the Midwest over the next few years unless the proposal is significantly modified.
The Meredosia and Hutsonville energy centers have been venerable plants that have served the state of Illinois well over a number of decades. While we will miss the plants as part of our fleet, our immediate focus is on the impact to our employees.
Positions affected include 14 management and 39 union-represented employees at Meredosia Energy Center and 8 management and 29 union-represented employees at Hutsonville Energy Center. AER will be offering a range of severance benefits for those employees for whom other opportunities or reassignments are not found.
Ameren's merchant generating operations include AER's Ameren Energy Generating Company's and AmerenEnergy Resources Generating Company's coal-fired plants plus multiple natural gas-fired units and Ameren Energy Marketing, an energy marketing and trading operation.
With assets of approximately $23 billion, Ameren serves 2.4 million electric customers and one million natural gas customers in a 64,000-square-mile area of Missouri and Illinois.
(Information issued by Ameren Energy Resources Company, LLC via news release.)
What this means for Meredosia residents
"It hurts the whole village. That plant's been here all my life.There's always been a CIPS plant here and suddenly, I'm 72, and everything around here is disappearing. It's been a stability for the village," said James Rausch, a business owner in town.
"A place like the Ameren plant certainly draws in all kinds of people. They buy gas here, they eat at restaurants and when we lose some of that traffic, that hurts," said Ruth Schneider, superintendent for the Meredosia-Chambersburg School District.
Overall, the closures will eliminate 90 jobs from the two plants, including 53 from Meredosia.
"There's some local people here that will be on the list, I'm sure, and they're people that are important to our community," said Meredosia Mayor Kenneth Scott.
Ameren says they won't leave their employees high and dry.
"The folks at Meredosia, we're looking at providing alternative employment opportunities for them with the AER. So those skills will still be out there in our system," said Susan Gallagher with Ameren Energy.
But far from the Meredosia area, creating an economic problem for the village and its residents at home.
"Right now, I'd say the biggest employer is our public school system, and Ameren would be right behind them," said Scott.
"It's a concern because it's a domino effect. If people don't have jobs, people move out of the area which means enrollment at the school goes down," said Schneider.
That leads to fewer dollars going into the school and a change in the tax base.
"Based here in Meredosia, it's just taking everything away from us, little by little," said Rausch.
As hard as it may be to cope with, many residents understand why the change has to happen.
"The lack of purchase agreement for their electricity and the EPA regulations that are expensive to comply with, it's just not cost effective to keep the plant open," said Scott.
"Meredosia and Hutsonville are going to take the hit initially, but down the road, they'll probably take the rest of them out. Illinois' probably got the largest coal reserve in all of the United States, and they're telling us we can't use it," said Rausch.
What about FutureGen?
Many people now question the fate of Meredosia's FutureGen 2.0. The power plant was the proposed site for an experimental project that would burn coal for power but store emissions of carbon dioxide underground. Ameren Energy officials say the project will not be affected by the closure.
"One of the things I talked to the plant manager about was Unit 4. He said they were going to 'mothball it' was his term, but they were basically going to maintain it and keep a small crew on, and that will be the unit they'll use to power the Futuregen project," said Mayor Scott Kenneth.
Ameren says FutureGen is still several years from needing a generating unit to test clean coal technology. The company is currently in discussions with the FutureGen Alliance to determine how Meredosia's Unit 4 could best be used for this project.
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