CU to spend $29 million on power

by Karen E. Culp

SBJ Staff

A $29 million project to increase electric generation is in the works for City Utilities. Staff of the municipal utility were set to approach its board of directors Nov. 18 with a proposal to add a power generation unit by the summer of 2002.

In order to have the system up and running by 2002, City Utilities must get in line now, said Bill Burks, executive senior manager of electric systems.

"These units are in heavy demand now, and we've got to get the process started now in order to have one available when we need it," Burks said.

The unit will take care of some of CU's short-term capacity energy needs. It will generate electricity needed during peak times, helping the utility avoid purchasing that energy on the wholesale market, which saw great fluctuations in price in the 1998 and 1999 summers, Burks said. The utility has the generation capacity it needs now for its base load, Burks said.

"We don't need the energy for long stretches of time. We have plenty of capacity for that right now. What we need is generation for those times when we have high load, such as in the summer," Burks said.

The board was to have authorized Nov. 18 a plan to purchase the land for the new system, and to purchase the first generation unit.

The first unit will be a combustion turbine unit and it will be online by the summer of 2002, Burks said. Ultimately, there will be four such units at the site. Units will be added in 2004, 2006 and 2008, Burks said.

The combustion turbine units are ideal for this situation, Burks said, because unlike a coal-fired power plant, they do not have to run for long periods of time.

"If you fire up a coal-fired unit, you expect to run it for at least a year, if not longer. These units can be used for short periods of time. They don't have to keep running for so long," Burks said.

The coal-fired plants, such as those CU has at its James River and Southwest power stations, are to handle Springfield's long-term, base load electric generation, and there are no plans to add any more of that type of generation just yet, Burks said.

The new combustion turbine generation unit will be located at a site near the proposed second partnership industrial park. The site was a good one because of the amount of industrial development in the area, Burks said. The utility's need for energy during peak times may change as a result of industry restructuring.

The timeline for the project is strategically linked to the timeline when Missouri's electricity industry may be restructured, Burks said.

"This basically gets us through until 2007, when we should know what shape the restructuring will take. Then we'll have a better idea of what to be prepared for," he added.

City Utilities expects to lose large industrial customers when the electric industry is restructured, Burks said, which will affect the amount of energy it needs to generate.

"Right now, we don't know how we'll be affected. This basically buys us some time until we do know, " Burks said.

The project will also keep CU out of what has been a capricious wholesale energy market.

"In the past couple of years, we've seen the wholesale energy prices soar up and a lot of utility companies have been at the mercy of those prices. This way, we hope to save our customers from those exorbitant costs," Burks said.

Phase I, which includes purchase of land and of one unit, is to cost $29 million, for which the utility will have to secure some interim financing. Each of the combustion turbine units themselves cost about $20 million.

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