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City ends Ameren deal, takes ownership of Columbia Energy Center

End of contract with Ameren prompts city to find new sources of power
Thursday, June 2, 2011 | 6:21 p.m. CDT; updated 6:56 p.m. CDT, Thursday, June 2, 2011
One of the Columbia Energy Center's four combustion turbine generators stands against a blue sky Wednesday. The center is a natural gas fired electric generation facility.

COLUMBIA — Columbia's energy portfolio began a big shift this week.

The city ended its contract with Ameren Energy Marketing on Tuesday and took full ownership of the Columbia Energy Center on Wednesday.

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“We are in transition mode,” said Jim Windsor, manager of rates and fiscal planning for the Columbia Water and Light Department.

The contract with Ameren Energy Marketing, which has power plants in Illinois, supplied more than 50 percent of Columbia's electricity last year, Windsor said.

The city has contracted to buy power from Iatan 2, a coal-fired plant in Weston that came on line Jan. 1. The city also has contracted with Prairie State Energy Campus in Washington County, Ill., which has one coal-fired generator set to open in December 2011 and another in August 2012. Prairie State eventually will generate about 26 percent of Columbia’s energy, Windsor said.

The new portfolio still has Columbia getting the vast majority — perhaps 90 percent or even more — of its electricity from coal. Windsor said coal is the cheapest source of power in Missouri.

Dick Parker, member of the Environment and Energy Commission and the Water and Light Advisory Board, said he pushes hard for renewable energy but realizes coal is a cheap way to produce enough energy.

"Wind and solar power depend on the intermittence of the sun shining and the wind blowing," Parker said. "We're not yet in a position to bypass coal as a major source of our power."

Until the new power plants are fully on line, the city will need to buy more energy off the market, Windsor said.

On Wednesday, the city took full ownership of Columbia Energy Center, a move that's expected to save $1 million annually. The center primarily will supply electricity during high-use periods and emergencies, said Connie Kacprowicz, utility services specialist with Water and Light.

The Columbia Energy Center is a 144-megawatt electric generation facility powered by natural gas, located in Columbia near the landfill. In April, 86 percent of voters approved Proposition 2, a $49.5 million bond issue to purchase remaining shares of the plant from Ameren Energy Marketing. 

Previously, the city owned 25 percent of the plant and paid for half the plant's energy production capacity at a cost of $6 million every year. With full ownership, Water and Light can operate the plant for about $5 million, Windsor said.

“We are required to estimate peak energy and have capacity for 15 percent more than that,” Windsor said. “(The center) serves to help us meet our energy requirements and serves as a cap to market prices, based on natural gas prices.”

According to Water and Light’s 2011 Renewable Energy Report, Columbia used more than 1.185 million megawatt hours in 2010. The energy center gives the city the capacity to produce 108 more megawatts, Windsor said.

If market prices for electricity rise higher than the combined cost of natural gas and operation of the energy center, the city can choose to use the facility to generate cheaper electricity. It also can choose to sell the electricity in the market to make a profit, Windsor said. 

Purchasing the plant makes the whole system more reliable because it is within the city’s grid and can back up renewable energy sources, which are more intermittent, Kacprowicz said.

A ballot passed in 2004 required the city to purchase increasing amounts of renewable energy without exceeding a 3 percent rate increase as a result. The city’s sales of electricity from renewable sources must be at least 5 percent by 2012, 10 percent by 2017 and 15 percent by 2022. This is different from the state requirement that investor-owned utilities use 15 percent renewable energy by 2021.

Some of the approved sources of renewable energy are wind, solar, hydropower, geothermal and biomass, which includes landfill gas, paper-based products and wood, according to the renewable energy report.

The city receives most of its renewable energy from wind and biogas facilities. The Columbia Power Plant burns 10 percent waste wood from a barrel production plant in Lebanon, according to the report.

The city also is negotiating another wind contract, but Windsor said he could give no more details at this time.

In December, the Columbia City Council signed a solar energy lease agreement with the Free Power Company, which would supply, install and maintain equipment if the city provides the land. Currently, solar projects provide only a negligible amount of the city's overall energy, Windsor said.

Kacprowicz said solar energy is promising because it produces the most during the summer, when energy demand is high.

“We’re looking and will continue looking for renewable energy resources to stay ahead of the renewable goal,” Kacprowicz said.

Windsor said the city gets about 5 percent of its energy from renewable sources now, which puts it slightly ahead of the pace required by the 2004 ballot issue.


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Comments

Mark Foecking June 3, 2011 | 6:08 p.m.

This is a very good story, that I'm afraid a lot of people won't read all the way through. Good treatment of the technical aspects.

Natural gas (NG) combustion turbines have the highest fuel cost sensitivity of any common generating technique. That means if there is a spike in NG prices, there's a spike in electricity prices also.

Hydraulic fracturing of shale deposits has been successful at increasing domestic supply of NG, but there are issues with possible groundwater contamination that may limit its use. Diversifying Columbia's electrical supply is necessary, but it has to include unconventional sources, and plan for the intermittency of some of those sources.

DK

(Report Comment)
frank christian June 3, 2011 | 8:36 p.m.

Mark F. - "That means if there is a spike in NG prices, there's a spike in electricity prices also." And that means, we need to elect governmental administrators that will re-regulate our energy policies away from those that create the necessity for our "utilities to necessarily have to skyrocket." Can you imagine such an honest Administration?

Your green house gas theories must be working well also. Boat traffic, in my opinion, on the "Lake" seems to be about 1/3 of normal, with a gallon of gas running around $4.40. Prices have to go higher tho, the PWCs and elite owners of the go-fast, offshore, boats are still wasting our oil and killing our planet.

(Report Comment)
hank ottinger June 3, 2011 | 9:46 p.m.

With all due modesty, I think you might be missing the point: these units (Columbia Energy Center, as it's called) are essentially peakers, and as I understand it, used only to offset those (we hope) few times when demand is so excessive that the city would otherwise have to go out in the market and purchase electricity at exceedingly high rates.

(Report Comment)
Kevin Petersen June 8, 2011 | 10:30 a.m.

According to Jim Windsor, the approximate Energy Portfolio for June through December 2011 is:
-35 percent Sikeston Power Station in Sikeston, Mo.
-12 percent Nearman Creek Power Station in Kansas City, Kan.
-12 percent Iatan 2 in Weston, Mo.
-2 percent Prairie State Energy Campus in Washington County, Ill.
-7 percent Columbia Power Plant
-7 percent Renewable Energy Sources
-25 percent Market Purchases

You are correct -- the Columbia Energy Center will be used to offset high market prices or to meet peak demand.

(Report Comment)
Jimmy Bearfield June 8, 2011 | 12:08 p.m.

Iatan 2 might go offline due to flooding.

(Report Comment)

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