Monday's Independence City Council meeting already included a possibly generational decision – whether to proceed with a contract for power capacity that would pave the way to shutting down the 60-year-old Blue Valley power plant in mid-2020.
The agenda also now includes:
• Proposals for a large electric rate reduction.
• Another attempt to put the question of advanced metering infrastructure, better known as smart meters, on the ballot for a public vote.
• An alternative power contract to replace Blue Valley.
• Directing city staff to investigate possible new power production.
The proposed agreement with Oneta Power, a natural gas plant in Oklahoma, is a 20-year contract for 45 megawatts of capacity power, enough to cover Power & Light's commitment with the Southwest Power Pool without the Blue Valley plant. The average annual cost is nearly $1.5 million, or about $32.8 over 20 years – the best price offered on long-term contracts when the city requested power proposals.
20 years – or 10?
Individually, council members have not sided against the recommendation to close Blue Valley. But they don't offer strong support for this particular Oneta proposal, as several are wary of a 20-year commitment and some prefer increasing the city's stake in Dogwood, another gas-fired plant in Pleasant Hill.
The public hearing regarding Blue Valley, which started at the April 15 council meeting, will continue before the council makes any vote.
“My preference would be Oneta for 10 years,” Council Member Scott Roberson said, “but if there's not enough support for that I would vote for the 20.”
“I think the shorter contract would give us a little more flexibility, and the master energy plan advised that we don't want to put too many eggs in one basket,” he said. “If we can avoid all those liabilities and expenses (with more Dogwood ownership), it would be far cheaper. All we need is capacity because we have basically enough on energy. The only unknown is transmission, but there would be some cost with Dogwood, too.”
Council Member Mike Huff has made the other proposals, including negotiating to buy additional 46-megawatt share in Dogwood, where the city already owns 75 megawatts. He also is asking the city to issue proposals for a new 46-megawatt turbine to supplement the current combustion turbines throughout the city (but not at Blue Valley) used as peaking stations, as well as make a 10 percent reduction for all Power & Light rates that would be phased in over three years.
Participating in the Southwest Power Pool, which covers much of middle America, allows Power & Light to purchase power at lower wholesale prices and thus better control rates. IPL must maintain capacity of 12 percent above peak demand. SPP evaluates proposed transmission changes each July and January, and the city would need to submit a proposed change in June to issue the required six-month notice of transmission change (if it were to close Blue Valley) in November.
If IPL ends production at Blue Valley and maintains its six oil-fueled combustion turbines around the city – used at times of peak demand – analyst reports project it would retain 23 full-time equivalent positions at a cost of about $3.47 million annually. That means an estimated staff savings of closing Blue Valley of about $1 million a year.
The plant has run 15 days this year, up from seven at this point last year. Since 2014, when IPL joined the power pool, Blue Valley ran 32 and 33 days while still burning coal, and from 2016 through 2018 ran 40, 20 and 53 days, respectively.
Council Member Curt Dougherty said he's opposed to the Oneta contract particularly at the 20-year length, preferring to use long-term savings from closing Blue Valley toward replacing and enhancing the city's turbines.
The capacity requirement for SPP, he said, is like the buy-in at the poker table.
“I hate to commit to capacity for that long. It doesn't solve the inherent problem, and who would've thought 20 years ago we wouldn't be burning coal,” Dougherty said. “Buying Oneta kicks the can down the road; it's not addressing worn-out equipment (in the peaking stations).”
Huff and Van Camp could not be reached for comment Friday. During council meeting discussions, Van Camp has said he's comfortable with the city's arrangement with Dogwood. Council Member Karen DeLuccie said Thursday she initially viewed Oneta as the best price but as of now is undecided on her vote.
Documents from the city's power proposals indicate the average annual cost of Dogwood's proposal would be about twice that of Oneta if energy revenues were low. The cost could dip below $2 million if revenues were high.
Mayor Eileen Weir and Council Member John Perkins said they are still evaluating and have not completely decided.
“It's just so complex and we definitely want to get as much information as possible,” Perkins said. “Obviously it's a generational decision. I don't know necessarily know if a 20-year contract is the best, but I don't know if short-term is the best.”
Weir pointed out that the long-awaited cost-of-service study on IPL should be in the council's hands next week, which could factor into her decision.
“I don't know if we'll be ready to make a decision. We do have a deadline, but it isn't Monday, though I don't want to repeat the pattern of AMI,” she said, referring to the council’s many discussions on smart meters and its indecisiveness for 1½ years until last month.
“There's no doubt we have to figure out how to replace this capacity, that we know,” the mayor said. “A 20-year agreement is a long time, but I don't necessarily think would be huge issue to shorten it.”
'Smart meter' petition
Next week also marks the deadline for the citizen petition to be submitted in order to have a public vote on smart meters on the August ballot. Van Camp requested an ordinance for such an action that would have its first reading on Monday.
Indy Energy, a grassroots citizen group that has advocated for smart meters and has been critical of the council’s process regarding them, said it supports a public vote even if the citizen petition did not garner enough valid signatures.
“The ballot language needs to be simple, clear and provide an opt-out option for those who do not want smart meters,” the group said in a statement. “Under present circumstances, and considering the fact that Independence Power & Light is a public utility, a public vote appears to be the best way to resolve an issue which has been poorly handled by the City Council.”
Providing some resolution to smart meters, the group said, would allow the council to better focus on issues such as closing Blue Valley and lowering rates “in a financially responsible fashion.”