Cover story on power plants in Chicago in the Reader

Mick Dumke has a cover story in the Chicago Reader here on the lack of any progress on a Chicago ordinance to force the two coal-burning power plants in Chicago (Fisk and Crawford, both owned by Midwest Generation, itself a subsidiary of Edison International out of California) to install modern pollution control equipment.

The issue is that these two southwest side plants emit a lot of pollution and the federal government is, under the Bush Administration, not moving to cut pollution anywhere. Thus, it is up to the State or the City to figure out how to cut pollution from these power plants. The same issue extends to just about every Illinois town with a coal-burning power plant, but Chicago's plants are the most residential (I believe).

So far, neither government has done much.

The Blagojevich Administration decided about a year ago to punt on this one, choosing not to impose tough pollution control requirements and instead work on a regional plan with other Midwest state legislatures and governors to come up with a Midwest standard. No word on whether there's been any progress on that front.

On the city side, as the article details, the ordinance has been stuck in committee for four years. Some argue that a city can't impose stricter emissions standards than what federal law allows. I confess I haven't studied the extent to which federal law pre-empts states or cities from setting their own standards, but I can't imagine that a city or a state couldn't choose to set tougher standards to protect the public health of their own people.

That leaves us with figuring out what to do about these plants that employ about 200 people, provide power to about a million homes (a good thing in the event of another breakdown in the electric grid) and make hundreds or thousands of people sick every year.

I've wondered why we can't figure out how to tax pollution to give Midwest Generation a financial incentive to invest in pollution control technology. Currently, the incentives are backward. Each generator sells their power on an open market, and there's no price differential based on pollution generated. In fact, if a generator invests in pollution control, that makes the price of the power more expensive, since the generator needs to include the millions that any modern equipment to control pollution costs into the price of the power that they sell. So the less a power plant invests in pollution control, the cheaper they can produce power and the fatter the profit margin.

One way to deal with this problem is to have the government set a standard for how much pollution power plants can generate. That works best if the federal government sets the standard, because then every generator faces the same constraints. It doesn't work so well if only Chicago has the standard, because then Chicago-generated power is more expensive to sell than power generated elsewhere, and the incentive then is to shut the plant down altogether.

It seems to me that a state tax on pollution would make some sense, since it would affect each plant equally and it lines up the incentives to cut pollution in order to make more money.

Of course, there is no correct answer as to how much to tax one ton of NOx or one pound of mercury or how to calculate the tax for a pound of radioactive waste from a nuclear plant, but that shouldn't stop us from coming up with our best guess (or let the ICC come up with a good guess) to keep Illinois plants profitable but give them a strong reason to invest the millions in pollution control equipment.

After all, as ComEd moves ever closer to its long-awaited retail rate hike in 2006, there ought to be a way that the public gets something out of the deal too in terms of fewer cancer deaths.