Thanks to question from a reader, I’ll digress for this one post to explain something about another kind of MJMEUC power contract. Not everyone being victimized by MJMEUC’s growing unregulated power empire has what we just described, and keep referring to, as a “MoPEP contract.” MJMEUC has other contracts to supply power to other small towns and cities that may or may not be members of MJMEUC. These contracts are titled “Amended and Restated Unit Power Purchase Agreement between MJMEUC and (whichever city) for the Purchase and Sale of Capacity and Energy from the Prairie State Energy Campus” (or other facility where MJMEUC/MoPEP has an equity interest.) In these contracts MJMEUC is selling long-term 40-year contracts for some part of the percentage of the total MW of power they expect to get from their share in that particular plant. The UPPA’s, while not MoPEP contracts as described in the last blog, are connected to the MJMEUC/MoPEP investment debt system by several clauses and loopholes in the UPPA such as the definition in 1.11 of “Incremental Base Purchase Price shall mean the increment of costs incurred by MJMEUC for acquisition of any additional ownership share(s) of PSEEC (Prairie State Energy Campus) in order to make sales to one or more PSEC Unit Power Purchasers who did not execute a PSEC Unit Power Purchase Agreement prior to 2006 that exceeds, on a per-kilowatt basis, the costs incurred by MJMEUC on a per-kilowatt basis for its initial 6.32% ownership share of PSEC.” On page 11, 7.1 “Cost responsibility,” it says, “It is the Parties’ intention that city will be responsible for its proportionate share of (a) the fixed and variable costs MJMEUC incurs in connection with its PSEC ownership, and (b) MJMEUC’s administrative and other reasonable costs associated etc, etc.” That section cuts the UPPA customers in for a share of MoPEP’s debts and their “direct costs” regardless of what those debts may turn out to be. Once again it’s not just what IS in the contract it’s what is not in the contract – a limit on MJMEUC’s debt that will be passed along to customers.
These UPPC’s, to sell a percentage of MJMEUC/MoPEP’s percentage of ownership in the megawatts of power from plants that haven’t been built yet, are not as numerous as the MoPEP contracts but, because everything about MJMEUC and all their sister alphabet soup organizations is exempt from PSC oversight and regulation and because there is no oversight, regulation or control from the MoPEP Pool Committee (which is nothing but a front organization), the UPPC’s will proliferate. Here’s Duncan Kincheloe’s press release and a sample of the terms of the City of Kirkwood’s UPPC. (emphasis ed.)
Kirkwood Secures Long-term Power Supply
Kirkwood, Missouri – Thursday, November 16, 2006 -- The City of Kirkwood is excited to announce its recent agreement for a long-term, cost-based purchase of electricity through the Missouri Joint Municipal Electric Utility Commission (MJMEUC). The electricity will come from the Prairie State Energy Campus, a 1,600 megawatt coal-fired electricity generation project near Lively Grove, Illinois. MJMEUC is taking an equity ownership position in the development of this new plant, which is expected to have power available to sell by late 2011. The U.S. Department of Energy projects America’s energy needs will increase 45 percent over the next 20 years and that the nation will need new power plants along with new high-tech transmission lines to deliver energy. Kirkwood Electric is a member of MJMEUC. General Manager and Chief Executive Officer Duncan Kincheloe of MJMEUC said, “We believe that a project like Prairie State is the best way for us to secure this substantial portion of our customers’ needs for an affordable, long-term source of electricity. The project offers us cleaner energy from a convenient source located just across the river.”
Along with several other Midwest municipal electric utility cooperative members, Kirkwood will enter into a long-term 40-year contract with MJMEUC to purchase 75% of the city’s electricity needs at a cost of around $42 per megawatt from the Prairie State plant. Kirkwood will need to find another vendor of electricity for the remaining 25% of its electricity needs. Kirkwood Electric’s current contract for purchasing electricity is due to expire at the end of 2008. In the interim, between the expiration of the city’s current contract and the time when Prairie State comes on line, the city will also need to secure other vendors for its power needs.
The benefit of entering into this extended agreement with Prairie State is that the price is very reasonable compared to the current market price of power now and in the foreseeable future and the price of power won’t change significantly over time because the price is based on the fixed up-front costs of the plant. In addition, since the plant is at the mouth of a coal mine there’s no transportation costs involved in the operation. The only thing that might slightly change the cost per megawatt over the course of the contract is the cost of labor, which is a very small portion of what goes into setting the cost per megawatt.
Kirkwood will pay a one-time entry fee of $500,000 as part of the agreement to compensate MJMEUC for the development costs and a portion of the cost of the coal reserves for Kirkwood that it must bear in connection with its obligations as a part owner of the project. # # end # # #
In the February 15, 2007 minutes of the MoPEP meeting your Pool Member “representatives” were informed that the “2004 projection for Prairie State was $32-35 MWH” but “the current projections are in the range of approximately $45 MWH.” In his press release on the Kirkwood deal Kinchloe said, “The benefit of entering into this extended agreement with Prairie State is that the price is very reasonable compared to the current market price of power now and in the foreseeable future and the price of power won’t change significantly over time because the price is based on the fixed up-front costs of the plant.” Apparently the Pool Committee Members at that meeting made no comments and asked no questions. If they don’t understand their own MoPEP contracts they couldn’t possibly grasp this one. What will the MJMEUC board do when they realize that they signed 40-year contracts like the Kirkwood contract that committed to sell power from Prairie State for $42 per MW when the cost of production is now up to $45 and could go higher? Guess.
Now back to MJMEUC/MoPEP….
