Peabody: Incentives Important: House Speaker Assures Company That Bill Benefiting Plant Will Be Passed Next Year
By Owen Covington, Messenger-Inquirer, Owensboro, Ky.
Jul. 7–FRANKFORT — A Peabody Energy Corp. executive told legislators Friday that state incentives will play a role in its decision, expected within 90 days, about where to build a multibillion-dollar synthetic natural gas plant.
The testimony of Rick Bowen, president of Peabody’s Btu conversion group, to the Senate Agriculture and Natural Resources Committee came as Gov. Ernie Fletcher and Senate leaders urged the House of Representatives to return to work after adjourning Thursday on the opening day of a special legislative session.
“That decision will be made this summer, not next year as some continue to say,” Bowen said. “The availability of financial incentives is extremely important to our decision-making process.”
However, House Speaker Jody Richards offered assurances after meeting with Bowen that a letter promising to adopt an energy incentives package when the General Assembly convenes in January for its regular session should be enough to lure the Peabody plant.
Richards reiterated his contention that the special session called by Fletcher was unnecessary and politically motivated and the House would not be returning to Frankfort during the special session, which is continuing on in that chamber’s absence.
“I felt after the conversation with Mr. Bowen that he felt confident that the Kentucky House very much supported alternative energy, very much supported these incentives,” Richards said. “I certainly think we’re in the ballgame.”
Richards said he anticipates a conference call between Fletcher and House leadership on Monday, but he gave no indication the House would be reversing Thursday’s move.
“We’re not coming back,” Richards said. “We’re done.”
Bowen’s testimony came as the Senate committee took up Senate Bill 1, the proposed energy independence act that would provide incentives in the form of rebates on sales, income and coal severance taxes from the construction and operation of the plant.
Bowen outlined plans for a $2 billion plant that along with an accompanying coal mine would employ 375 workers and use up to 2.5 million tons of coal a year, while producing more than 100 million standard cubic feet of synthetic natural gas a day.
Sen. David Boswell, a Sorgho Democrat, noted that the Owensboro area was in line for several alternative fuels plants in the late 1970s and 1980s, but after the federal government’s emphasis on alternative energy waned, plans to build the plants fell by the wayside.
Bowen said producing synthetic natural gas is less dependent on federal subsidies than producing liquid fuel from coal, so the future of a Peabody plant is more certain.
The company is spending $10 million on the preliminary site selection process and is looking at possible locations in Kentucky, Illinois and Indiana.
Most of the 19 locations included in a potential site list released by Fletcher on Thursday were in western Kentucky, including two sites in Muhlenberg County and sites in Hancock and Ohio counties.
Peabody has its largest Kentucky coal mine in Waverly in Muhlenberg County, and Bowen said the company was giving special consideration to sites near where it already operates.
The next decision for Peabody will be what state the plant will be located in, with a determination of a specific site next and then an extensive engineering and feasibility study of that site, Bowen said.
Fletcher testified to the committee that the construction and operation of the plant during the 25 years of the incentive agreement would have a direct and indirect economic impact statewide of $10.8 billion, as well as bolstering the local economy.
“The investment here that’s going to be made is in the western part of the state where we have higher unemployment,” Fletcher said. “To walk away from those job opportunities is unconscionable.”
Senate President David Williams has said he believes the energy bill can be passed quickly by the legislature and that he has not heard of policy-based objections to the measure from the House leadership.
“If there are any problems with this energy bill, we’re not aware of them,” Williams said. “We’re not aware of any disagreements about the bill.”
After breaking for the weekend, the Senate will reconvene Monday to continue with committee meetings on the four bills introduced for the special session.
Williams has said that if the House does not return, the Senate will either adjourn for the session on Monday or ask the governor to adjourn the legislature until a later date.
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Copyright (c) 2007, Messenger-Inquirer, Owensboro, Ky.
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