Big Rivers Electric Corp.—a member-owned, not-for-profit, generation and transmission cooperative serving western Kentucky—plans to idle two of its coal-fired power plants following the loss of its largest industrial load.
The D.B. Wilson Station, a 417-MW plant located in Centertown, Ky., will idle on Feb. 1, barring a miracle. Big Rivers simply doesn’t need the power following the loss of its biggest customer, Century Aluminum Co. Century had previously purchased power from Big Rivers for its Hawesville, Ky., aluminum smelter plant and for its Sebree aluminum smelter located in Henderson County, Ky.
Big Rivers relied on the two smelters’ 850-MW combined load to keep some of its coal-plants online. The Hawesville contract expired in August 2013, and on Jan. 31, the Sebree contract will end. Century will continue operating the smelters, but has decided to purchase market-based power going forward. With average market prices currently below Big Rivers’ cost of production, the coal-fired plants just don’t pencil out.
The loss is significant to Big Rivers. The company had received $360 million per year from Century, which was about 64% of the company’s electric revenue. Big Rivers has applied for rate increases amounting to $106 million, but it will also have to look for cuts of $250 million to balance its books. For the time being, reserve funds will be used until they are depleted, which is expected to occur by April 2015.
Although the Wilson plant is newer—commissioned in 1984—the Kenneth C. Coleman Station will remain in operation for several months longer. Coleman—a three-unit, 443-MW plant whose last unit was commissioned in 1971—is located in Hawesville and is needed for grid stability and voltage support. Once additional protective equipment is installed for Century, which is scheduled to occur by May or June, all three of Coleman’s units will also be idled.
It is worth noting that the plants are being idled, not retired. The company believes electric prices are poised for a rebound and that they are positioned to benefit when the market does recover. Being a member of the Midcontinent Independent System Operator has offered some opportunities that have not always been available. Big Rivers has requests for proposal out for over 1,500 MW in states as far away as Florida, North Carolina, Oklahoma, Nebraska, Wisconsin, and Michigan.
The company seems to run a tight ship. In July 2013, the Coleman plant received the Navigant Plant Operational Excellence Award in the small unit category for the second year in a row. The award recognizes the best demonstrated excellence in cost and operational management over the most recent five-year period. Coleman has also earned 10 Governor’s Safety Awards, while the Wilson plant has earned the award 11 times.
The idling will affect 188 jobs within the company. Hiring was deferred for many openings leading up to the Century contract expiration. The company is offering severance pay to employees who are interested in leaving, but in the end it will undoubtedly have to layoff a large number of personnel.
—Aaron Larson, associate editor (@AaronL_Power, @POWERmagazine)