Crystal Thomas
The State Journal-Register
Three of City Water, Light and Power’s older coal-fired plants don’t meet the standards set in a recent report from Moody’s Investors Service on what’s considered “economical” for operation. That report is further evidence that CWLP ought to more more quickly to retire those plants, says the Sierra Club.
The city, however, says that keeping Dallman 31, 32 and 33 online gives it more flexibility that ultimately keeps its costs down. The debate over the plants’ efficiency comes as the city moves forward with a long-term study about the future of those units.
Moody’s Investors Service, which rates CWLP’s electric and water bonds, released a report this month in which it declared coal plants to be economical if they had a capacity factor, or the ratio of actual output over time, above 50 percent and a production cost lower than $30 per megawatt hour.
Because CWLP’s three older units have a capacity factor much lower than 50 percent and have a higher production cost than $30 per megawatt hour, they should be retired, said Andy Knott, Sierra Club campaign representative.
According to CWLP, as of 2017, Dallman 1, 2, 3 had net capacity factors of about 35 percent, 32 percent and 46 percent, respectively. According to S&P Global Intelligence, which provides conservative numbers on coal costs, the older units hovered around $36 to $37 per megawatt hour for their 2016 production costs. All three units were commissioned over 40 years ago.
Doug Brown, CWLP chief utility engineer, said having more than one plant in operation, as has been the practice for decades, gives the city flexibility. Brown said the utility is in the process of commissioning an “Integrated Resource Plan.” The plan will recommend when the units should be retired, as well as what should replace the units.
An ordinance filed Friday awarded the study to the lowest bidder, The Energy Authority. One of the delays in awarding the bid was the concern from aldermen that The Energy Authority would have a conflict of interest, as it is the CWLP’s agent for buying and selling power on the grid.
Mayor Jim Langfelder said TEA’s bid was almost $100,000 lower than the next highest bid and its relationship with the utility gave it advantage in knowing CWLP’s strengths and weaknesses.
Brown predicted the plan would take TEA six months to generate. Once completed, the City Council and the public will be able to weigh in on CWLP’s future strategy.
Knott said plenty already shows that the older units should be shut down. A 2013 environmental compliance study from Burns & McDonnell commissioned by CWLP said that while the utility should delay decision on whether to retire Dallman 31 and 32, it would have adequate capacity for the city’s native load even without them.
A 2017 report, commissioned by the Sierra Club, concluded it would be better to buy electricity off the grid than producing it.
The report only included plants whose bonds are rated by Moody’s. It showed Dallman 4, CWLP’s newest unit, had the lowest capacity factor of the 61 coal-fired plants found “economical.” However, Moody’s used numbers from 2016, a year in which Dallman 4 was offline for turbine repairs. In 2017, Dallman 4′s capacity factor was at about 66 percent.
The report cautioned that the lower price of renewables like wind power and natural gas, as well as increased regulation on coal, would endanger the economic viability of the plants.
Joe McMenamin for Ward 7 