Since late last year the Hannibal Board of Public Works began making $600,000 a month payments for its ownership share in the Prairie State coal-fired power plant in Illinois. And while the sale of power generated at the plant has begun to lessen the monthly bill, it’s still not a break-even proposition for the city.
“We’re still losing money,” Bob Stevenson, the BPW’s general manager. “We are getting revenue from the sale of energy off of our piece of that plant. The revenue we’re receiving does not cover our whole expense yet and it won’t for a long time.”
The size of the loss varies from month to month. Less revenue comes in when one or both of the two generators at the plant, located approximately 60 miles southeast of St. Louis, is off line. That was the case during the entire month of November when Unit 1 was idle because of a turbine valve problem and some failed fiberglass piping.
Another factor in the size of the loss has to do with the value of power on the open market.
“The grid price for energy is way down because of the economy and in part because the market price for natural gas has been dramatically lowered because of new technologies. That has a direct impact on the price of electricity,” said Stevenson. “If the economy turned around and electric demands returned to levels we were seeing in 2006 and 2007, the price of energy out of this plant would look way more attractive. But for right now we are paying $52 (per megawatt hour) and the market price we’re able to sell off of it is running from a low of $16 (MWh) to a high of $30 (MWh) over the last month.
“We’re losing money on every megawatt hour. We anticipated losing money. We budgeted losing money. In our budget we didn’t anticipate we would be losing as much as we are, so we’re falling behind a little bit. But I wouldn’t put our situation as any kind of a crisis scenario or anything.”
Hannibal owns a 20 MW share of the power generated at the plant, whose capacity is listed as 1,600 MW. Communities that purchased a bigger share of the plant are shouldering larger payments.
“Other communities bought in for 100 percent of their needs and they’re getting hammered a little harder than we are,” said Stevenson.
The 20 MW the BPW owns would meet about 60 percent of Hannibal’s current energy needs. However, under terms of its current power supply contract with Ameren Energy Marketing Company that runs through May 2017, Hannibal cannot use any of the Prairie State power it owns.
Page 2 of 2 - “We did that because we didn’t really know when the plant was going to start performing correctly. It is establishing a track record of operation and that track record is not that great yet, and it won’t be for several more months. They’ve got bugs to work out. And during those times when the plant’s availability is unreliable, having a full compliance contract (with Ameren) seems pretty prudent on our part,” said Stevenson. “In a year or two we’ll be wishing we could just move over and start using that Prairie State energy in Hannibal. We’re not ready for that yet.”