Fitch: Plum Point coal plant still working through teething pains

The 2012 operating performance of the coal-fired Plum Point plant in Arkansas, which went online in 2010, improved relative to industry standards, as management worked through routine startup issues.

However, the unit has not yet reached desired levels, said Fitch Ratings in a July 18 assessment of the bond ratings for a Plum Point owner. The heat rate was a good 9,893 Btu/kWh in 2012, and the forced outage rate decreased to 4.5% from 18.9% in 2011, Fitch said. While the plant’s capacity factor increased to 74.2% from 71.3%, it was below the 85.6% budgeted amount. The 2013 capacity factor has only recently begun to improve after forced outages at the start of the year, Fitch added.

Though slightly higher than initial forecasts, Plum Point’s forecast cost of power through 2017 remains competitive and averages near the high end of 2011 estimates ($54/MWh) at the commencement of commercial operations. In addition, the Missouri Joint Municipal Electric Utility Commission (MJMEUC) believes that the unit’s state-of-the-art emission control technology should ultimately ensure rate stability over the long term.

Fitch affirmed the ‘A-‘ rating on various MJMEUC power project revenue bonds for Plum Point. The bonds are secured by project net revenues, which are principally derived from: six unit power purchasers (UPPs) located in Missouri and Arkansas, pursuant to take-or-pay unit power purchase agreements (UPPAs); and members of the Missouri Public Energy Pool #1 (MoPEP 1). MoPEP 1 took assignment of the city of Kennett, Mo.’s rights, benefits, and obligations under its UPPA in June 2011.

MJMEUC is a joint action agency consisting of 67 municipally-owned, growing retail electric systems dispersed across the state of Missouri, as well as four systems in Arkansas. MJMEUC has a 147-MW (22.11%) share of the Plum Point project, which achieved commercial operations in September 2010. Plum Point is a 665-MW pulverized coal-fired facility.

The forecast cost of power averages $54.57/MWh through 2017, which is competitive and remains largely in line with prior estimates, Fitch said. No major environmental retrofits are envisioned – given the newly installed technologies at Plum Point – which should enhance rate stability. In addition, excess bond proceeds have been used to fully fund two operating reserves that provide additional rate support.

U.S. Energy Information Administration data shows Plum Point getting coal earlier this year from Cloud Peak Energy‘s (NYSE: CLD) Antelope mine and Arch Coal‘s (NYSE: ACI) Black Thunder mine, both in the Wyoming end of the Powder River Basin.

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.