September 26, 2014 Read More →

Report cites continued operating issues, expensive electricity at Prairie State

snlfinanciallogo“An environmental research group on Sept. 26 pounced on recent operating performance data for the coal-­fueled 1,600-­MW Prairie State Energy Campus, saying the plant continues to underachieve and produce expensive electricity.

The Institute for Energy Economics and Financial Analysis, or IEEFA, which frequently supplies economic testimony against coal projects, said in a report dated Sept. 22 that the Illinois plant achieved a 64.1% capacity factor through the first eight months of the year, below the 78.5% capacity factor that the owners projected. The performance did represent an increase compared to the 58% capacity factor in 2012 and the 60% capacity factor in 2013.

IEEFA cited data from American Municipal Power Inc., or AMP, and the Northern Illinois Municipal Power Agency, two co-­owners of the plant. IEEFA said AMP’s average cost of power from Prairie State during the first eight months of 2014 was $76.07 per MWh, not including transmission or congestion costs. IEEFA said that total is 40% more than it would have cost AMP to purchase the same amount of energy and capacity from the competitive PJM Interconnection LLC wholesale markets. The disparity is even larger for the Northern Illinois Municipal Power Agency through July, IEEFA said.

IEEFA said a Prairie State executive told the Paducah (Ky.) City Commission that it will take at least three more years to stabilize operations at the plant. The executive also cited a series of problems caused by the characteristics of the coal produced at the Lively Grove mine for the plant, IEEFA said. Coal producer Peabody Energy Corp. owns a 5% interest in the plant.

‘There is no evidence that Prairie State has made or is on the verge of making a significant turnabout in terms of operating performance or costs or that the cost of power will be below market prices at any time in the foreseeable future,’ IEEFA said in the report. ‘Instead, the cost of power from Prairie State will continue to be much more expensive than buying power from the competitive wholesale markets for many years.’

Prairie State, one of the last coal-­fired plants built before federal greenhouse gas regulations made coal plants much more difficult to pursue, is the target of a class action lawsuit alleging Indiana Municipal Power Agency, another plant co-­owner, and various consultants misrepresented the cost of the plant’s power….”

By Darren Epps, SNL Financial

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