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City Council approved $13 million coal-hauling contract

Thomas Clatterbuck

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Coal is still king in Springfield. Even as new renewable energy sources are brought online, coal remains the most important energy source for CWLP. But even though coal is critical to energy in Springfield, CWLP is limited by the amount of space at its facilities. They can only store enough coal for about two weeks of peak usage.

To make sure the lights stay on, the City Council voted on the new coal-hauling contract. This three year, $13 million dollar deal was awarded to McLeod Express. McLeod was recognized as having the lowest responsible bid, and has local operations. Their bid was based on a fuel adjustment, and changes based on the price of diesel. If the price stays low, the city could see a refund, but higher prices would mean the price of the contract would go up.

But there was a challenge to the method used to select McLeod. Beelman Truck Co. though that their bid was better overall for the city. Although Beelman’s bid was slightly higher, their bid had a fixed price for fuel. Beelman said that with so much talk of a new gas tax, having a set price would protect the city from price increases down the road. They argued that McLeod’s fuel adjustment might put the city at risk if prices go up and McLeod cancels the contract.

What’s good for the goose

Beelman’s own logic ultimately did them in. The contract says it is for three years, but because either party can cancel the contract with 30 days notice, Beelman said the city really only has a string of 30 day contracts. While this is true, it was also true for the Beelman bid. Despite assurances they would keep their set price if costs went up, there was nothing in the contract to hold them to that.

If there is a new fuel tax, both bids would be adjusted. So the city decided to go with the bid that is lower now, and then see what the future holds.

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Senior strategist, statehouse reporter and political correspondent for Springfield Daily. Graduate of District 117 and UIS. Thomas covers stories in both Morgan and Sangamon Counties, as well as statewide politics.

Business

Local Airbnbs to City Council: let us pay taxes

Thomas Clatterbuck

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Who wants to pay more in taxes? Normally, business owners point to Illinois’ high tax burden as a problem, but some property owners in Jacksonville actually want to be allowed to pay more. One of these owners is E. Scott DeWolf, who runs an Airbnb location in Jacksonville. But when DeWolf went to the city to voluntarily pay the hotel motel occupancy tax, he was told he wouldn’t be allowed to do so.

Airbnb is a short-term rental service where property owners can rent out rooms or buildings that they own. DeWolf was joined by Professor Kevin Klein and Bryan Leonard to discuss the positive impact Airbnb has had on the local tourism environment. They shared how the experience they can create in their properties fills a niche that regular hotels don’t, and that this draws visitors from across the state and even some from over seas.

However, despite being an internationally recognized brand, Airbnb still operates in a legal grey area. Listings aren’t considered rental properties, because visitors have short stays like at a regular hotel or bed and breakfast. But they aren’t recognized as hotels either because they are otherwise residential properties. As a result, since the start of Airbnb, taxation has been an issue. While Airbnb has taken some voluntary steps to collect the occupancy tax, this collection has varied from jurisdiction to jurisdiction. To further complicate matters, not every area wants Airbnb to operate there. Adding new rooms may impact the viability of existing hotels, and adding new traffic to residential areas can disrupt neighborhoods. In Jacksonville’s case, Airbnb is not recognized as a hotel, which is why they cannot pay the local occupancy taxes.

It may seem strange that Airbnb operators would want this to change. Why ask the council to raise their taxes? There is a very pragmatic reason: if Airbnb locations do not pay the occupancy tax, they cannot advertise with the local tourism boards. This keeps them out of some of the main local referral networks. They cannot even leave brochures with the tourism board.

But their request is also driven by a genuine commitment to the community. These owners have heavily invested in building up their properties and enhancing local tourism. And adding more rooms is necessary for Jacksonville’s busiest tourism days. When sporting events take place, or the college host graduation, visitors often have to room as far away as Springfield or Lincoln. Building up a healthy community is good business for everyone.

In the mean time, DeWolf said that they were still willing to contribute to the community even if they cannot pay taxes directly. He personally offered to donate 5% of his sales, equivalent to the tax he can’t pay, to the Jacksonville Heritage Culture Museum.

You can watch their full presentation in the player above, and the rest of the city council meeting below.

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Integrated Resource Plan recommends shift towards renewables

Thomas Clatterbuck

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What does the future hold for CWLP? Currently, four coal-fired Dallman units provide almost all of Springfield’s power. But that may change soon. At the Monday meeting of the Public Utility Committee, experts from The Energy Authority (TEA) unveiled the results of their months-long integrated resource plan (IRP), which called for major changes to the utility.

The IRP is based on economic models. Energy markets are impacted by many different factors, including the price of fuel, government regulations, market demand, and even the weather. It is impossible to know how the future will play out, but by running many scenarios, TEA was able to come up with recommendations that fit the most likely futures. By 2031, power generation will be evenly split between renewables and coal (53-43), up from the current 100 percent coal generation. Improvements to energy efficiency will account for the remainder.

Phasing out coal

Coal will play a much smaller role in CWLP’s future. Every scenario called for retiring Dallman units 1 and 2. These units should be retired in the next few years; possibly as early as 2020. Additionally, Unit 3 was also recommended to be retired. However, because of the logistics of the plants, unit 3 will take longer to decommission.

This recommendation was based on the economics of coal. Kevin Galke, who presented for TEA, said that fracking was a “game changer” for energy markets, and one that no one saw coming. At the same time, renewable energy has also become substantially more competitive. This combined with the high capital expenses at the units, made them economically unviable.

But coal is not totally eliminated from the portfolio. Unit 4 is expected to provide energy for the city for at least the next decade. Its ultimate fate depends in large part on the price of coal. If the city can keep coal costs low, unit 4 remains much more viable than if prices continue to climb. However, in the event its capacity needs to be replaced, a gas plant is a more likely choice than a new coal one.

Adding in renewables

Renewables are the source of choice to replace coal. TEA acknowledged that many renewable projects in the past had been motivated by social consciousness rather than economics, but that new technologies were changing that landscape. Under the TEA plan, renewables will account for nearly half of the city’s power by 2023 and into the 2030s.

The transition from the Dallman units to renewables will be facilitated by a few years of heavy market purchases. But after the transition is complete, the city should return to being a net seller of energy.

What comes next

The IRP was just the first step in creating the future of CWLP. Now that the city knows what direction it needs to go, the task of implementing this plan will fall to the city council. Their task will not be easy. Taking coal plants offline is in many respects just as hard as building them, due to the complicated machinery and environmental issues with coal waste. And although CWLP may be eligible for certain Future Energy Jobs Act (FEJA) grants, creating the renewable capacity will also require significant planning.

But there is also a human element to CWLP. The three units recommended for retirement employ a large number of workers directly, and supports the coal mines and trucking companies that keep the units fueled. Even if this move is the right one for CWLP and the city as a whole, many people stand to lose their current employment. The council acknowledged that they will have to find a way to transition these workers to other jobs either in the utility or in the private sector. They cannot simply be abandoned with no plan.

In the mean time, the public comment period for the report is now open. The public is invited to comment either by email to IRP@cwlp.com or by mail to CWLP General Office, 4th Floor, Attention IRP, 800 East Monroe St, Springfield IL, 62757. There will also be an open house May 20th at Lincoln Library from 5:00 to 7:00 PM.

To learn more about the IRP, you can visit CWLP’s website, or watch the live presentation in the player above.

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LIVE | Springfield City Council Committee of the Whole April 9th

Staff Contributor

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Follow along live with the Springfield City Council committee of the whole meeting. The council will be discussing proposals to allow businesses to access the local fiber optic network. Fiber optic connections can dramatically increase network speeds over other technologies.

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