Excess capacity sales end CU fiscal year on high note

by Karen E. Culp

SBJ Staff

City Utilities has seen a 38 percent increase in the amount of energy sold as off-peak or excess generation on the wholesale market to other utility companies, said Dave Christiano, manager of electric systems control for CU.

The increase in sales on the wholesale market has netted just under $15 million in revenue for the utility, a 90 percent increase over the revenue generated in last fiscal year.

"This year the markets were very active and volatile, and the prices were up. We also had better access to some markets and were able to open a lot of markets that had not been open to us previously," Christiano said.

The utility also made the decision this summer to join forces with The Energy Authority, a company that will market its off-system generation around the country.

TEA will handle agreements struck for energy to be transmitted in fewer than 30 days; CU has some long-term agreements already in place for sale of electricity to Nixa and Malden, for example.

City Utilities had virtually no problems with its system, which ran at 99 percent capacity for most of the year.

"It was a good test for our system, which ran quite well. We had very few problems at all," Christiano said.

Of the $15 million in revenue it generated this fiscal year, about half was absorbed in the utility's cost of production. The rest of it flows into the income stream and goes toward paying off bonds, paying salaries the business of CU, Christiano said. The revenue generated this year is quite an increase, though, and even CU didn't anticipate the extra revenue.

"It's so much more than we budgeted for," Christiano said.

Supplies of energy got scarce early in the summer, resulting in high demand and high prices for what was available.

"As the wholesale market moves closer to becoming a free market, then you become ruled by the laws of supply and demand, and that's exactly what happened this year," Christiano said.

A warmer-than-usual May was what sparked the market price fluctuations, some of which were great, Christiano said. The market has calmed somewhat now, but whether the process will repeat in coming months remains to be seen.

CU expects to do as well with off-system sales this year and hopes to do a great deal more selling during off-peak hours, such as at night, through its new alliance with TEA.

Though prices may be higher for energy this fiscal year, CU will have less excess capacity to sell this year, since its load is growing.

"The benefits of the alliance with TEA is that it will allow us to sell 24 hours a day. We did not have the staff to handle selling during the off-peak hours previously," Christiano said.

Empire District Electric, an investor-owned utility which serves southwest Missouri all around Springfield, has not had as much of an increase in its off-system sales, said Amy Bass, director of corporate communications.

"We don't have as much excess capacity to sell as other utility companies," Bass said.

Empire sold a little more excess electricity in June and July, but not a great amount, Bass said.

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