Climate Challenge Participation Accord

DOE's Energy Partnerships for a Strong Economy

This Participation Accord describes the commitments that Illinois Power (IP) and the U.S. Department of Energy (DOE) have made to participate in the Climate Challenge Program in pursuit of the President’s goals for reducing greenhouse gas emissions. The Climate Challenge Program is a joint, voluntary effort of DOE and the electric utility industry to reduce, avoid or sequester greenhouse gas emissions. The framework of the Climate Challenge Program was established in the Climate Challenge Program Memorandum of Understanding (copy attached as Attachment A) and exhibits thereto dated April 20, 1994.

IP is an investor-owned public utility engaged principally in the generation, transmission, distribution, and sale of electric energy and the distribution, transportation, and sale of natural gas. IP serves approximately 560,000 electric and 390,000 gas customers in Illinois. Electric generation is approximately 70% coal and 30% nuclear. Much of the coal is produced in Illinois.

I. IP Commitments

A.
Consistent with paragraph II.B.1 of the Climate Challenge Program MOU, IP will:
1.
Undertake the specific projects or actions listed below and discussed in Exhibit 1 in order to reduce greenhouse gas emissions:
• Baldwin Unit #3 Heat Rate Improvement Project
  
• Tree Planting in Illinois
  
• Dual-Fuel Capability at the Vermilion Power Station
  
• Joint Implementation Project - The People's Republic of China
  
• Burn Waste Oil at Baldwin and Havana Power Stations
  
• Burn Waste Seed Corn at Havana and Hennepin Power Stations
  
• Use of Compressed Natural Gas for Vehicle Fuel
  
• Hennepin 1 Gas Reburn Project
  
• Other Projects
  

2.
Make a specified contribution to particular industry initiatives that support the Climate Challenge Program. The Utility Forest Carbon Management Program is supported by IP and is discussed in Exhibit 2.

B.
IP will report annually on activities and achievements under the Climate Challenge Program. Results achieved during each year shall be reported in a clear and understandable manner that is consistent with the guidelines adopted pursuant to subsection 1605(b) Energy Policy Act and the Climate Challenge accounting protocols in Exhibit B of the Climate Challenge Program MOU. The first such report may include a description of the activities and achievements of IP prior to its becoming a participant in the Program, expressed on an annual basis to the extent possible.
C.
IP will confer with DOE on or before June 30, 1997 to evaluate jointly the progress of the IP in achieving its Climate Challenge Program goals and to discuss possible adjustments to its voluntary commitments.
D.
The Climate Challenge Program representative for IP will be:
Mr. Jim Smithson
Illinois Power Company
500 S. 27th Street
Decatur, Illinois 62525

IP agrees to notify DOE prior to or, in any event, no later than 30 days after any change in the contact.

A.
DOE’s commitments to IP are those set out in Section III of the Climate Challenge Program MOU, which are hereby incorporated in this Participation Accord by reference.
B.
DOE will consider IP requests to intervene in regulatory proceedings of federal, state and local commissions and boards on issues pertinent to the Climate Challenge Program. Before DOE intervenes in regulatory and other proceedings pertaining to IP for purposes of addressing Climate Challenge Program issues, it will provide notice to IP.
C.
DOE will provide an annual report to IP describing the actions that it has taken to fulfill its commitments under Section III and Exhibit C of the Climate Challenge Program MOU and the results of those actions.
D.
The Climate Challenge Program representative for DOE, who will serve as liaison to IP, will be:
Mr. Allan Hoffman
Office of Energy Efficiency and Renewable Energy
Department of Energy
1000 Independence Avenue, S.W.
Washington, D. C. 20585
(202) 586-1786

DOE agrees to notify IP prior to or, in any event, no later than 30 days after any change in liaison responsibilities or personnel.

A.
Use of DOE-developed materials by IP will be governed by the provisions of Section IV of the Climate Challenge Program MOU, which are hereby incorporated in this Participation Accord by reference.
B.
In addition to the foregoing provisions, DOE and IP agree to act in accordance with the principles set out in Section I of the Climate Challenge Program MOU and the general provisions set out in subsections V.A-V.D, V.F and V.G of the Climate Challenge Program MOU, which are hereby incorporated by reference.
C.
Either party may withdraw from this Participation Accord or any of its activities under the Climate Challenge Program without penalty and without being subject to remedies at law or equity.

   (Original signed for)
_____________________________
       Larry D. Haab
Chairman, President and CEO

_____________________[date]


   (Original signed by)
_______________________________
Secretary of Energy or designee 
U.S. Department of Energy   

_____________________[date]

Attachment:

Attachment A—Climate Challenge Program MOU and exhibits

Exhibits:

Exhibit 1 -- Illinois Power Actions to Reduce or Sequester Greenhouse Gas Emissions

Exhibit 2 -- Illinois Power Contributions to Industry Initiatives

EXHIBIT 1

During the spring of 1994, Illinois Power began a major upgrade of Baldwin 3 to improve the availability and efficiency of the unit. Baldwin 3 is a pulverized coal-fired unit with a total capability of 595 megawatts.

During the outage, workers:

1. Replaced the reheater.

2. Added tube surface to the final superheater.

3. Installed a new boiler control system, burner management system, and data acquisition system.

4. Overhauled the turbine-generator.

Because of wear and tear, the efficiency degrades over time. The heat rate improvements completed at Baldwin 3 will reduce CO2 emissions by an estimated 45,000 metric tons in the year 2000.

IP contributed $50,000 in 1994 and has committed $100,000 in 1995 to support incremental planting of 855,000 hardwood trees in Illinois. These hardwood trees will be planted in 1996 and 1997 and, during their lifetime, will sequester on average more than 10,000 metric tons of CO2 per year.

IP has entered into a contract with the Illinois Department of Conservation and the Illinois Conservation Foundation to fund production and planting of trees beyond these agencies' budgetary limits. IP will consider options granted in the contract to fund additional tree plantings in 1998 and beyond for additional sequestering of CO2.

IP has committed funds to install natural gas supply and combustion equipment at its Vermilion Power Station. Vermilion is a two-unit pulverized coal-fired plant with a total capability of 173 megawatts.

The use of natural gas at Vermilion will displace on-peak coal-fired generation. The project is in the design phase. Construction and start up is scheduled to be completed in June 1995. Testing will determine the efficiency and production cost. This, in turn, will determine the generation that is displaced to other sources and the generation that will be produced by natural gas.

In 1993, Vermilion produced 649,000 metric tons of CO2. Future year estimates will be a function of efficiency and production costs at the refueled plant. This information will be made a part of IP’s 1995 Climate Challenge report.

On November 2, 1994, IP submitted to the USIJI (U.S. Initiative on Joint Implementation) Panel a proposed joint implementation project in Liaoning Province, People’s Republic of China. The project involves replacing 44 kilometers of old, leaking natural gas piping and using recovered gas to convert additional households from coal to natural gas for cooking.

If this project is included in the USIJI program, a feasibility study will be completed in 1995. Estimated methane and carbon dioxide reductions will be determined during the study. Once the study is completed, IP will determine whether or not it will implement the project.

During 1991-1994, the Baldwin and Havana stations burned 162,127 gallons of waste oil from various IP locations for energy recovery, including waste lubrication oils and waste transformer oil. Energy recovered from the waste oil displaced coal and resulted in CO2 reductions of approximately 445 metric tons.

Future volumes of waste oil are expected to decline due to recycling and pollution prevention programs, however, IP expects to continue to burn waste oils at the Baldwin station when it is economically feasible and practical to do so.

During 1992, the Hennepin and Havana power stations burned 1,482 tons of waste seed corn. This chemically treated seed corn was no longer acceptable for planting or other uses and was burned as fuel rather than being disposed of in a landfill.

This renewable fuel displaced coal in these boilers and resulted in a CO2 reduction of approximately 1,900 metric tons.

The availability of waste seed corn varies from year to year, however, IP will continue to burn this renewable energy source when it does not increase the Company's cost of operations.

In 1993, IP constructed a compressed natural gas (CNG) refueling station at the Belleville Service Area (a non-attainment area for ozone). During 1993 and 1994 the company converted thirty vehicles to CNG fuel, and plans to convert an additional fourteen vehicles in 1995.

IP used the successful demonstration project to promote the concept with the Scott Air Force base, an IP customer located east of Belleville. IP provided a preliminary design and engineering specifications for a CNG refueling facility on the base. In 1994 the base installed a CNG refueling station and converted thirty vehicles to CNG fuel. The base plans to fuel as many as 200 of its vehicles with CNG over the next five years.

IP will continue to promote CNG use with other fleet operators and expects additional conversions in future years. IP will report progress on this program and the resulting CO2 reductions in IP’s 1995 Climate Challenge report.

IP tested Gas Reburning - Sorbent Injection, an experimental clean coal technology, at Hennepin Unit #1 in 1991 and 1992. This test was part of the U.S. Department of Energy’s Clean Coal Technology program to demonstrate that SO2 reductions of 50% and NOx reductions of 60% are economically feasible by introducing a calcium-based sorbent and natural gas into the boiler.

During these tests, coal was displaced by 63,491,000 cubic feet of natural gas, reducing CO2 emissions from Hennepin #1 by approximately 2,700 metric tons.

All pilot burns associated with this program have been completed. IP will consider burning natural gas in this unit when it is cost-effective.

IP continues to consider the use of a variety of wastes for boiler fuel. These include petroleum coke, used railroad ties, wood waste and other clean biomass. The Company will report experiences with these fuel sources in the annual Climate Challenge reports.

In 1992 and 1993, the Company recycled 349 tons of paper and cardboard. The Company also recycles aluminum soft drink cans. IP expects to continue these recycling programs in future years.

The goal of this initiative is to develop a utility industry program to evaluate and implement forestry carbon management projects. IP will analyze specific projects, as necessary, to meet IP's goals and commitments and, where possible, participate in appropriate projects.

Please send comments to:
Lawrence.Mansueti@hq.doe.gov