Midwest Gen to spend up to $3.4 bil to cut emissions in Illinois

Washington (Platts)--12Dec2006

Chicago-based independent power producer Midwest Generation Tuesday said
it had reached an agreement with Illinois Governor Rod Blagojevich on a plan
that will allow the company to begin reducing mercury emissions from its power
plants 18 months ahead of federal regulations, followed by multi-year programs
to further cut other emissions at each of the company's six plants in the
state.

The company estimates that the plan, which will run through 2018, could
cost it between $2.71 billion and $3.41 billion.

Under the agreement, Midwest Gen parent Edison Mission Group and the
state will work to develop up to 400 MW of wind power projects, provided the
company can obtain "commercially reasonable" terms for building and selling
the output from the projects. EMG is the fifth-largest owner of wind energy
projects in the US, and is developing the proposed 200-MW Big Sky project near
LaSalle, Illinois.

In addition, Midwest Gen said it and the state would work to develop the
terms and conditions that would be required for the company to build new
integrated gasification combined-cycle plants that would gasify Illinois coal
to produce electricity and permanently sequester carbon dioxide emissions.

Midwest Gen said that under the long-range emissions plan it will cut
mercury emissions at each of its plants by July 2009 at an estimated cost of
$60 million. The company said that because of special concerns about mercury
in Lake Michigan, controls will be installed on plants in the cities of
Chicago and Waukegan by July of 2008. Under the plan, the company said,
installation of mercury controls will begin 18 months ahead of federal
regulations and a year ahead of more-stringent state rules that have been
approved by the Illinois Pollution Control Board.

Midwest Gen said the plan also requires it to cut nitrogen oxide
emissions by 66% as of January 1, 2012. Those cuts, the company said, will be
in addition to a 50% reduction it has achieved since acquiring its Illinois
plants in 1999. A Midwest Gen spokesman said the company is estimating the
cost of the NOx emission controls at roughly $450 million.

The plan also calls for the company to reduce sulfur dioxide emissions by
78% between 2012 and 2018. That reduction is on top of a 30% reduction Midwest
Gen has achieved since acquiring its Illinois plants. The cost range for this
part of the emissions-reduction plan is $2.2 billion to $2.9 billion, the
spokesman added.

As part of its implementation plan, the company said it plans to shut
down the three smallest generating units in its fleet--two units at the Will
County Station in Romeoville and one at its Waukegan Station--between the end
of 2007 and the end of 2010.

The company also said it agreed that its smallest plant--the single-unit
Fisk Generation Station in Chicago--will either have additional controls for
S02 emissions or be shut down by the end of 2015. The same agreement to shut
down or install additional controls applies to the Waukegan Station by the end
of 2014 and to the Crawford Station in Chicago by the end of 2018.

For more news, request a free trial to Platts Electric Utility Week at
http://www.platts.com/Request%20More%20Information/index.xml?src=story
or subscribe now at
http://www.platts.com/infostore/product_info.php?cPath=2_31&products_id=48