As anticipated, consultants who compiled a master energy plan for Independence Power & Light recommend that the city close the aging Blue Valley power plant in the near future, as there are cheaper alternatives than keeping up a plant that has grown inefficient and is rarely employed.
The plan, presented by Burns & McDonnell to the City Council on Monday, also noted that increasing ownership in the natural-gas fired Dogwood plant in Pleasant Hill appears to be the best-cost alternative to replacing Blue Valley's power necessary to maintain capacity, as gas prices have settled greatly in the last few years and have a favorable projection.
While the city's gas-fired turbines also are aging, they still provide low-cost capacity even with maintenance investment. Mike Borgstadt of Burns & McDonnell said he would recommend continuing to use them – perhaps test run them a bit more often – and then re-evaluate their use in a future rate study. Retiring Blue Valley but maintaining the turbines would require the least investment in transmission.
IPL's membership in the regional Southwest Power Pool allows it buy wholesale power at the best price, but it must maintain 340 megawatts of capacity – it's all-time peak usage plus a 12-percent cushion. Take Blue Valley's 98 megawatts out and IPL would need to find 58 megawatts elsewhere. Off-system alternatives generally are cheaper than constructing new on-system generation.
The city gets most of its power from two coal-fired plants outside the metro area and from Dogwood, plus bits of wind power from Kansas and the community solar farm.
The city had not done a master energy plan since 2011 and paid $325,000 to Burns & McDonnell for the current study. Burns & McDonnell also is conducting a cost-of-services rate study for IPL, and that is scheduled to be completed and presented later this year.
Mayor Eileen Weir asked city staff to present some recommendations in October for stabilizing and potentially reducing rates based on that study's early findings.
Among the other highlights from the study:
• Over the course of the study, IPL had reduced staff at Blue Valley to the level Burns & McDonnell would recommend through attrition, role shifting and job sharing. But its fixed costs for power production are above industry average, so the city should continue to evaluate ways to reduce that.
• A new reciprocating engine could be considered to replace a combustion turbine, and while it would be more expensive it would be more reliable and would get IPL into new technology.
• If the city decides to close Blue Valley, it would have to select a retirement date (dependent on replacement options), give at least 180 days notice to the Southwest Power Pool, develop a plan for decommissioning and demolition and evaluate power production staffing. The last part would require some consideration for labor contracts.
Council Member Mike Huff, a retired IPL manager, said the report highlights the department's high cost of production and the need for the city to do more for its ratepayers to be more competitive for businesses.
He asked the city manager to start the “request for proposal” process for finding power capacity to replace Blue Valley.
“It's time we move forward – stop sitting around and start making some decisions,” he said.
Added Council Member Tom Van Camp, “We're going to get caught short if we don't start moving soon. I agree we should move with caution, but we should move.”
Council Members John Perkins and Scott Roberson asked if it might be possible to get IPL's contractually obligated capacity lowered a bit to better reflect most of the peak days – still accounting for the 12-percent cushion. Roberson noted that the highest-peak days in the summer would coincide with when the solar farm would have maximum harvest. City Manager Zach Walker said the capacity requirement fluctuates a bit from year to year and it's something he would try to get “trued up.”
A public hearing on the master energy plan has been scheduled by the Public Utilities Advisory Board for 6 p.m., Sept. 6 at the Utilities Center, 17221 E. 23rd St.