AECI to build new facility

Commercial operation of the plant is projected to begin in July 2000.

Though the new plant is a part of Associated's long-term plan, its construction was hastened by events of the summer, when wholesale electricity prices spiked. Electricity that had sold at wholesale for as low as $20 per megawatt hour when contracted long in advance cost utilities up to $10,000 per megawatt hour on a demand-heavy and short-supply spot market during the summer's hottest weeks.

Associated's current capacity to generate electricity stands at 2,457 megawatts mainly from coal-fired power plants in New Madrid, Thomas Hill and three other facilities on those Missouri sites. Associated hit a peak-demand record July 21 when it required 2,957 megawatts of electricity.

Associated has long-term contracts for other generators to provide 970 megawatts of electricity when needed, but upheaval in a newly deregulated wholesale electricity market convinced AECI to step up its plans to provide for itself.

"We have had contracts in the past to purchase" needed electricity, said Nancy Southworth, spokeswoman for AECI. "With the changing marketplace, we felt we were no longer able to rely on that kind of purchase. We just moved into higher gear to save us a sense of urgency later on. They were in our long-range plans."

The Chouteau plant is part of that long-range plan. Three facilities, already under construction, will add 550 megawatts of generating capacity. The newly announced Chouteau project is the biggest addition of the four, capable of generating 530 megawatts of electricity.

Attractions of Associated's first pick for a site near Chouteau include its location in an industrial park, proximity to two natural gas lines and availability of water. Southworth said federal regulators require the company to name a preferred and alternative site for construction.

A release from Associated said the plant will use $40 million to $45 million of natural gas each year. Two pipelines currently run near the industrial park site. David Burton, a spokesman for AECI, said negotiations are continuing with gas suppliers. A decision is expected in the next few weeks, he said.

The regulatory process of the Rural Utilities Service, successor to the U.S. Department of Agriculture's Rural Electricity Association, began Oct. 29 when a public meeting was held in Oklahoma.

Following a 30-day comment period, the regulators will request an environmental impact study or issue its finding of no significant impact on the environment, Southworth said. If the latter is determined, another 30-day public comment period will open before a final decision is reached.

Southworth said the Siemens gas-fired turbine is state-of-the-art, with other attractions. "This is the way the utility world is going now."

Natural gas power plants are smaller, more efficient and less labor-intensive than coal-fired plants. Southworth also said the lead time for a coal-fired plant was up to eight years. The Chouteau plant will go up much more quickly.

Associated said in a release that the plant, when complete, would employ 22 to 25 people.

"This project will yield benefits for cooperative members in Oklahoma and Missouri for years to come É competitively priced energy that is an environmentally clean source of reliable electricity," said Chris Cariker, executive vice president of KAMO.

KAMO, based in Vinita, Okla., began in July to provide its nine Oklahoma distribution cooperatives with power from Associated. The deal, struck in November 1997, was worth about $50 million in new sales to Associated. KAMO has eight distribution cooperatives, including White River, Ozark and Southwest electric cooperatives, in Missouri, that were previously provided electricity by Associated.

KAMO, along with five other regional cooperatives, owns Associated. The regional cooperatives in turn provide electricity to 51 local electrical cooperatives in Missouri, Oklahoma and Iowa. More than 680,000 homes and businesses are provided power by the organization.

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