SPRINGFIELD – The members of Prairie Power, Inc., a generation and transmission cooperative serving ten central Illinois distribution cooperative, held its annual meeting, Feb. 8 in Springfield, Ill. President and CEO Jay Bartlett outlined the co-op’s progress and its plans for rates, reliability and investment in broadband infrastructure.
Bartlett said PPI continues to make reliability improvements to its transmission infrastructure. “We have a solid plan to take care of things on the system,” he said. “It is difficult to get the system back in shape and lower rates a the same time. I think we can have very stable rates while making substantial investments in the Prairie State Energy Campus and our transmission system to get us where we need to be from a reliability perspective.”
Prairie State Energy Campus (PSEC) is the new coal generation plant being built in southern Illinois with the backing of electric cooperatives and municipal utilities in eight states. Bartlett said both units will go online this year. With onsite coal and the highest efficiency of any coal generation plant in the world, the PSEC will be one of the most environmentally friendly and cost competitive generation plants in the country.
“We are part owners of the most advanced coal plant in the United States and probably the world,” said Bartlett.
He also commented on the co-op’s investment, along with two other generation and transmission cooperatives, in 40 megawatts of wind energy. “We should be proud of our investment in Pioneer Trail Wind Farm,” said Bartlett. “We told them we are not here for just window dressing. We’d like to do something. Together with the other two cooperative G&Ts, our purchase of 40 megawatts, of a 150-megawatt wind farm will have a fantastic economic impact on the rural area of Ford County and eastern Illinois. It will also be great diversification for our power portfolio.”
Bartlett said that wind prices have declined in Illinois from $70 per megawatt to $40. “We settled on this deal ($40 per megawatt) and we started looking for more and we have not found a better deal yet,” he said.
PPI has been increasing equity and putting new financial policies in place that will keep the cooperative financially strong and give it options for keeping rates stable. Bartlett said the current rate trend line shows rates falling slightly this year and next, but rising slightly in 2014 and leveling off in 2016. He also warned that the power market is not immune to the current economic uncertainty, and uncertainty about environmental rules.
“U.S. debt, the European economy and all other factors could lead to shocks without options. All of this is impacting energy markets and making risk management key,” said Bartlett.
PPI is investing in technology on its grid, which could provide rate options such as real time pricing, but will require communications. According to Bartlett, fiber optic cable will be added to any new PPI transmission lines
Bartlett said, “Fiber communication will be needed for substation communications and we will partner with telephone co-ops to drive fiber deeper into rural Illinois. Broadband will create business and economic development in rural areas the same way electricity did 75 years ago.”
Bartlett also told the members that the co-ops Pearl Generating plant, a small coal fired plant the co-op owns, would need to be decommissioned. Bartlett said, “We wanted to convert it to biomass and it was the perfect size for that project, but it is out of the money.” The biomass conversion of the Pearl Plant would have been difficult because of environmental uncertainty with biomass plants and because of the low cost of natural gas.
With uncertainty in the power markets, risk management is key. ACES Power Marketing, owned by 19 member cooperatives including PPI, helps keep rates stable by managing power portfolio risk. David Tudor, President/CEO of ACES, told the members at the PPI meeting that transmission congestion would be a growing issue. ACES made $3.2 billion power market trades for its owner co-ops and 51 other customers last year. It is the largest trader in the U.S., but unlike others making money is not the objective. “We focus on accuracy and rate management where one mistake can mean half a million dollars in one day,” said Tudor.
Tudor told the members, “You are in a really good position. My advice is look for portfolio diversity and be patient.”
Prairie Power, Inc. provides wholesale electricity to 10 electric distribution cooperatives and is a member of Touchstone Energy — an alliance of more than 720 local, consumer-owned electric utilities around the country. The co-op is committed to providing superior service based on four core principles: integrity, accountability, innovation and commitment to community.