The Independence City Council will not make a decision on power to replace the Blue Valley plant for another two weeks, though it appears that decision leans toward more ownership in the gas-fired Dogwood plant in Pleasant Hill.
A council majority voted down a proposal for 45 megawatts of capacity for 20 years from Oneta Power, a natural gas plant in Oklahoma. Before that, though, the council approved a resolution to seek a “best-and-final” offer for a 46-megawatt ownership share in Dogwood, enough to cover Power & Light's commitment with the Southwest Power Pool without the 60-year-old Blue Valley plant.
City Manager Zach Walker said the council should have a proposed contract to consider later in the month. The city could still then notify the power pool and remain on track to close Blue Valley in mid-2020.
Council Members Curt Dougherty and Scott Roberson argued against a possible larger Dogwood share, noting that the city is still paying off bonds from its first Dogwood purchase of part of it several years ago and shared potential liability costs it wouldn't have with Oneta. Roberson asked for a shorter Oneta contract, but no council member supported him.
Dougherty, John Perkins, Mike Huff, who originally proposed taking a closer look at Dogwood, and Tom Van Camp, voted against the Oneta contract. Roberson and Mayor Eileen Weir voted in favor. Huff and Van Camp said Dogwood provided better long-term security for the city's power supply, and Huff said he made his original proposal to get an “apples-to-apples” comparison with Oneta.
Council Member Karen DeLuccie was out of town for family business and unable to join in Monday's meeting due to technical difficulties with the video feed.
Rob Janssen, senior vice president of Kelson Energy, which has controlling ownership of Dogwood, said during the meeting the plant's offer should be different than what Power & Light evaluated from power proposals thanks to recent technology developments.
He acknowledged Oneta was the cheapest option at the time, but Dogwood's offer would be different now. Whereas the Oneta contract showed an average annual cost of nearly $1.5 million – compared with $3 million down to $1.7 million for Dogwood depending on energy revenues – Dogwood can project a longer and better lifespan than what IPL originally evaluated.
Even at 38 years IPL evaluated, he said, Dogwood projects an annual cost for IPL at less than $950,000. For 50 years, it can project less than $350,000 annually.
“The plant is only getting better and working better,” Janssen said, adding that he believes Dogwood would be the cheaper option.
“We can be more specific on long-term costs,” he said afterward, specifically with a long-term maintenance contract that was approved in January.
Dogwood's five-year projected budget has just a net cash flow of $3,000, but Janssen said the plant's future beyond that is more promising due to cost efficiencies. Dogwood's energy revenue this year has already exceeded 2018, he said.
The city's current ownership share of more than 12 percent accounts for 75 megawatts. Theoretically, Janssen said, the proposed 46 megawatts would bring the city's ownership share to nearly 20 percent.
While the council has not wavered on closing Blue Valley, but it still must replace a portion of the plant's 98-megawatt capacity to fulfill its obligation with the Southwest Power Pool. 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.