AECI Coal Plant Delayed Indefinitely
On March 3, 2008, the Board of Directors of Associated Electric Cooperative (AECI), our generation cooperative, announced that they are delaying indefinitely its plans to build a 660-megawatt coal plant near Norborne, MO.
Several factors lead up to this decision. Due to delays in the permitting process, the cost of the plant had grown from an estimated $1.3 billion to an estimated cost of almost $2 billion.
During this same time period, the Rural Utilities Service of the U.S. Department of Agriculture, (the old REA) announced that they were placing a moratorium on lending for coal fired generation such as our proposed plant at Norborne. This would require us to obtain financing in the private market, thus increasing our interest rates and adding even more to the cost of the plant.
In addition, the unknown costs of regulatory uncertainties are significant factors, including a recent U.S. Supreme Court ruling involving mercury emissions, as well as the expected regulating of carbon emissions to combat climate change.
The Board of Directors at AECI felt there was too much risk to proceed with the Norborne power plant at this time.
As I have shared with you many times in this column, we must invest in additional generating resources to meet our growing demand for electricity. The delay of the Norborne power plant does not change our need for more generation. Currently, AECI is planning to supply our needs by adding additional natural gas fired generation, adding more renewable generating resources and by partnering with us to expand our energy efficiency programs. AECI is also exploring potential opportunities to partner in proposed nuclear power plants. While the nuclear option holds much in promises, realistically the earliest that I expect a nuclear plant to be on line is 2020.
After reading this news, you are probably wondering how this will affect my monthly bill. It probably is not going to have much of an immediate impact. Coal plants are obviously very expensive to build, but the coal that fuels them is relatively inexpensive. Natural gas plants on the other hand are relativity inexpensive to build, but the natural gas that fuels them is expensive. The real risk to our rates going forward is what natural gas will cost in the future. There are many competing uses for natural gas. It is used to heat our homes, make plastic, manufacture fertilizer, and in many other manufacturing processes. Its supply can be interrupted by hurricanes; remember Katrina? Our use is quickly exceeding our domestic production, so in the future we will need to import some of our needs.
This is a major reason for us to increase our energy efficiency programs. The cheapest kilowatt-hour is the one we don’t have to buy. Later this summer, we will be expanding our rebate programs for heating and cooling, water heating, lighting and rebates for some appliances. I encourage you to take advantage of these programs.