Public Power - January/February 2008 - (Page 17) It all began several years ago, when some joint action agencies and large municipalities in the Midwest became increasingly concerned about their dependence on power produced by investor-owned utilities. Some had power purchase agreements, others owned a small share of an IOU genera- others struggled with ways to create a centralized Midwest organization without losing individual control. When the Kentucky project, a coalfired plant to be built by Peabody Energy, ran into problems with its air permit, Peabody suggested that IMPA consider a facility planned for southern The Midwest has its own set of interests, but no group really represented those interests.” tion facility. Meanwhile, demand was growing, and public power utilities had to meet that demand with reliable, lowcost and environmentally acceptable electricity. “In Indiana, we needed 300-400 megawatts of baseload generation,” said Raj Rao, president and CEO of Indiana Municipal Power Agency, which provides electricity to 52 communities. At the time, not many IOUs had plants on the drawing board, he said. “We considered building a plant ourselves to meet this demand, but it would mean putting all our eggs in one basket, without the benefit of economies of scale,” Rao said. So IMPA began looking for power generation projects in the region, and found one that had attracted a couple of other joint action agencies. It was a 1,500MW coal-fired plant proposed for construction in Kentucky. “We knew we couldn’t do something like this as one joint action agency,” said Rao. “To diversify risk and realize economies of scale, we had to have a collective joint action agency.” At the same time that IMPA was seeking greater energy independence for the public power sector in the region, the Illinois Municipal Electric Agency was expressing frustration that the region had no single advocate. “The Midwest has its own set of interests,” said Ronald Earl, general manager and CEO of Illinois Municipal Electric Agency. “But no group really represented those interests.” Earl said he and www.APPAnet.org Illinois—the Prairie State Energy Campus. “We said great, but we want you to be a partner in the project too,” said Rao. From its starting point at a site in Lively Grove, Ill., the project began to attract participants. “As the circle got larger, Prairie State encompassed more municipal utilities and co-ops,” said Robert K. Harbour, president and CEO of Prairie Power Inc., a co-op G&T in Illinois. Several utilities—Paducah Power System in Kentucky and the cities of Geneva, Rochelle and Batavia, Ill. wanted to move from power purchase agreements to participation in a generating facility. “The Illinois cities were looking at building a portfolio owning assets, which we believed would offer the greatest potential for savings. With this in mind, Geneva, Rochelle and Batavia formed NIMPA,” said Mike Buffington, superintendent of electrical services for the city of Geneva and secretary of the Northern Illinois Municipal Power Agency. “This project would give the NIMPA communities the buying power that we—as individual cities—do not have.” He noted that electricity from the Prairie State plant is projected to cost approximately 4.6 cents per kilowatt-hour, compared with approximately 5.3 cents/kWh for market-purchased power. Others were faced with rising demand. According to its integrated resource plan, Soyland Power, a G&T co-op in Illinois, needed approximately 220 megawatts of baseload capacity. The co-op asked its members whether they wanted to participate in the Prairie State project. Of the G&T’s 11 members, six gave the project a nod. To isolate the other five from liability, Soyland formed a separate G&T, Prairie Power Inc. In the end, the remaining five members decided to join, so Soyland was merged with Prairie Power. Along the way, some joint action agencies joined, then dropped out. Others sat on the sidelines. By early 2007, close to half of the project’s 1,600 megawatts had not been spoken for. Illinois Municipal Electric Agency, which initially had joined the project, was lured away by an IOU generation project. Then, in February 2007, the city of Naperville joined IMEA. “That resulted in a tremendous increase in our load, so we went back to Prairie State,” said Prairie State Board of Directors Indiana Municipal Power Agency Raj Rao, chairman Illinois Municipal Electric Agency Ronald Earl, vice chairman AMP-Ohio Marc Gerken Kentucky Municipal Power Agency David Clark Lively Grove Energy Partners Rick Bowen Missouri Joint Municipal Electric Utility Commission Duncan Kincheloe Northern Illinois Municipal Power Agency Mike Buffington Prairie Power, Inc. Robert Harbour Southern Illinois Power Cooperative W. Scott Ramsey JANUARY-FEBRUARY 2008 17 http://www.APPAnet.org
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