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Peabody to start building Ill. plant this fall; considering another plant in Ky.

By AP/KWMU

Springfield, Ill. – Peabody Energy said Tuesday it has entered into the final phase of developing a $2.9 billion, coal-fired power plant in southern Illinois and expects to begin building it this fall.

Environmentalists called St. Louis-company's announcement premature, saying a federal court has yet to rule on their appeal of the project's air permit.

"I think they're jumping the gun," said Kathy Andria of the American Bottom Conservancy and the Illinois Sierra Club, two of the groups challenging the air permit. "I think they have their heads stuck in a hole. Actually, it must be down a mine."

Peabody said Bechtel Power Corp. has signed on to oversee the expected four-year construction of the plant in Illinois' Washington County, southeast of St. Louis.

The plant would be fueled by six million tons of coal expected from a new Lively Grove Mine, with electricity to be distributed through the Illinois power grid and transmitted to Midwest communities and other energy suppliers.

Peabody has said the plant will have advanced pollution controls, with as little as one-fifth the regulated emission rates of existing U.S. power plants. The new plant's emission of carbon dioxide would be roughly 15% less than the typical U.S. coal plant, the company said.

"This is a great day for clean coal-field generation in the U.S.," said Vic Svec, a Peabody spokesman.

Environmental groups say they're not convinced, arguing the project still would worsen existing pollution. Andria said Tuesday that "Peabody is going forward with 19th-century technology."

Peabody said roughly 1,000 of the plant's expected output of 1,600 megawatts has been spoken for by a consortium of roughly a half-dozen Midwest utilities, with commitments for another 300 megawatts expected soon.

The company has said it expects the project to create 450 permanent jobs and pump some $100 million into the local economy each year.

Prairie State, which Illinois Gov. Rod Blagojevich has called the biggest private capital project ever planned for southern Illinois, has been hailed as a milestone in helping revive Illinois' ailing coal fields, which in previous decades were overlooked in favor of cleaner-burning Western coal.

But environmental and public health groups have argued that the plant would pose a health risk and diminish visibility in southeast Missouri's Mingo National Wildlife Refuge by releasing sulfur dioxide, mercury and other pollutants into the air.

Prairie State has all major permits necessary to begin construction. Peabody last fall began building the infrastructure at the plant's site, though no ground actually has been broken yet for the plant itself.

PLANS IN KENTUCKY

Meanwhile, the office of Kentucky Gov. Ernie Fletcher on Tuesday released a letter in which Peabody said it's considering building a coal conversion plant in that state.

It could cost up to $3 billion and bring up to 800 full-time jobs.

Gov. Ernie Fletcher's administration released the letter in an effort to underscore the need for calling the General Assembly into a special session to deal with possible tax incentives for energy companies, a spokeswoman for the governor said.

Peabody wants to decide this summer where to build the plant, and Kentucky would need to pass financial incentives to stay in the running, according to a letter from Rick Bowen, Peabody's president of generation and Btu conversion.

"Without the financial development incentives similar to those of neighboring states, Peabody would be unable to consider locating this initial project in Kentucky," Bowen wrote in his May 31 letter to Fletcher.

"Although it would be premature for us to commit to locating this facility in Kentucky, if the commonwealth were to offer these financial incentives, it is unlikely that we could convince our investors to site this project in Kentucky without them."

Fletcher, who is seeking re-election in November, has said he's considering calling lawmakers into a special session later this summer to deal with an energy bill and possibly other matters.

Legislative leaders in the House and Senate, however, have not agreed on whether such a session would be necessary now or whether the proposed legislation could wait until early next year when the legislature is scheduled to reconvene.

Peabody is currently considering putting one of the high-tech plants, which could produce up to 200 million cubic feet of synthetic natural gas per day, in either Illinois, Indiana or Kentucky, Peabody spokesman Vic Svec said. The company is also considering a separate facility out west, possibly in Arizona, Wyoming or Montana, Svec said.

"We are in the early stages of evaluating a facility coal-to-gas as well as coal-to-liquid in the midwest," Svec said.

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