Coal-fired power plant shutters operations School district, village brace for loss in tax revenue

The Dynegy, Inc.-operated power plant, left, in East Alton is set to permanently close Wednesday. Storm clouds hovered overhead Tuesday as upwards of 90 jobs were about to be eliminated by the shutdown of the 1950s-era, coal-fired power plant. The company cites unfair market conditions and the lack of need for the plant as the reasons it is closing. The plant was once a critical part of powering the Alton area’s industries for nearly three decades, allowing the Riverbend to grow into the third-largest industrial district in the state by the early 1970s. Most of those industries are gone or greatly reduced in size and output. less The Dynegy, Inc.-operated power plant, left, in East Alton is set to permanently close Wednesday. Storm clouds hovered overhead Tuesday as upwards of 90 jobs were about to be eliminated by the shutdown of the ... more Image 1 of / 1 Caption Close Coal-fired power plant shutters operations 1 / 1 Back to Gallery

EAST ALTON — A coal-fired power plant in operation here since 1954 will close down Wednesday, leading to a painful loss in tax revenue and nearly 90 permanent layoffs.

Owner Dynegy, Inc., a Houston-based power generation company, announced in November its decision to close the Wood River Power Plant, citing unfair market conditions. A study by grid operator Midcontinent Independent System Operator (MISO) found the plant is not needed to reliably supply electricity to the region.

Over the next three years, the closure will cause the loss of $300,000 in property tax revenue for the village of East Alton and $600,000 for the Alton School District. According to numbers from the state, a total of 83 employees will be laid off by July 15.

The closure will have an immediate impact on employees and their families, said East Alton Mayor Joe Silkwood.

“We were all out in front of this quite a bit, but the fact still remains that a huge part of our region is closing down. Families are being disrupted. It’s a real blow to the area,” Silkwood said.

Businesses that serve the plant and its employees will also feel the pain of the closure, the mayor added.

“The hardship on the families is immediate. There are also families affected who work in businesses that do business with this power plant. We don’t even know who they are, but they do. They’ll know. They’re either going to have to move, retire or just be laid off. It’s very devastating for some of those folks have been there for a long time.”

A spokesperson for Dynegy, David Onufer, said the decision to close the facility wasn’t come by easily.

“It’s always our last choice to have to close a facility, and it’s certainly not a choice we like to make,” Onufer said.

MISO, a not-for-profit organization, is responsible for setting “capacity costs,” the price customers pay on their energy bills to ensure power plants are able to deliver electricity when demand is highest. Dynegy says the capacity cost system is “poorly designed” in central and southern Illinois, and does not allow generators to recover costs.

Dynegy will relocate some employees to other company locations, and will provide job search skills training to others, Onufer said.

“These are high-caliber individuals and they continue to be true professionals,” Onufer said. “They’ve carried out their responsibilities throughout.”

Decreasing value, loss in revenue

East Alton won’t see a decrease in property tax payments for at least another year. Dynegy will pay its regular 2015 tax bill this year — property tax payments for a year are always made in the following year — but the tax revenue will be reduced over time as the property value decreases.

Taxes due in 2017 will drop by “approximately half” for East Alton, the mayor said. By 2019, the village will see the full scope of the loss at $300,000, or roughly 23 percent of overall property tax revenue.

“We’ve got some time to plan and we’re scrambling around now trying to make sure that when that tax loss hits that we can operate as efficiently as we can,” Silkwood said. “We’re working hard trying to get our retail base back again on the Route 3 corridor, and we’re continuing to look at every operation and run it as efficiently as we can.”

The reduced revenue represents less of a loss for the Alton School District. The power plant’s payments represent less than 2 percent of the total property tax revenue the district receives, said Financial Director Chris Norman. The district went through a mediation process with Dynegy late last year, and the two parties came up with an agreement on how the plant’s property value will be calculated moving forward.

Revenue for the district will see a slight decrease in the 2017-18 school year, but the most significant impact will be felt in the 2018-19 school year, Norman said. Property tax revenue is paid into several school funds, but the education fund and the operations and maintenance fund will feel the most pain because those funds can’t recover the lost dollars.

“When you’re talking about $600,000, that’s certainly an impact,” Norman said. “This is just one factor of our budget. The state budget and state funding play a big part of it. While this is one piece, we’ll be keeping a close eye on others.”

Illinois has gone nearly a year without a state budget.

Though the plant’s closure will have an immediate impact on employees, the loss of 83 jobs will not affect the region’s unemployment rate, said Vicki Niederhofer, a labor market economist for the Illinois Department of Employment Security.

Niederhofer said individuals impacted by any layoffs can access the Illinois workNet Centers, which offer options to assist in job search and training, including resume and interview workshops and direct hiring events by staffing firms.

Lasting environmental issues

The Dynegy spokesperson says the company will fully comply with a legal obligation to close the property’s ash ponds, which are filled with a watery byproduct of the coal processing system. CEO Bob Flexon has said the cost to clean up the coal ash ponds is estimated at $18 million, according to a study by third-party contractors. The Environmental Protection Agency regulates the cleanup of areas polluted by coal-powered plants.

Draining and capping the ponds will take “several years” to complete, Onufer said, while the removal of unused oils and chemicals will be complete later this year. Groundwater monitoring will continue for at least another 20 years, he added.

The East Alton mayor said he hopes the company will decide to eventually tear down the facility.

“Dynegy has made a commitment to clean that space up. I hope it someday becomes a useful parcel of land for whatever the best use is,” Silkwood said.

Reach Kelsey Landis at 618-208-6460 x 1396 or on Twitter @kelseylandis.