An independent power producer, Dogwood Energy LLC, asked the Missouri Public Service Commission on Jan. 8 for a rule change that would extend commission pre-approval for “construction” of new electric utility power plants to the purchase by those utilities of existing power plants.
Dogwood said the pre-approval rules need to cover three new things: plants acquired from others by those utilities; renovation of existing plants; and plants actually located in other states outside of Missouri.
Dogwood Energy owns a majority interest in the 650-MW Dogwood Energy Facility, a combined-cycle operation in Pleasant Hill, Mo.
The company cited as examples of situations that should be covered by commission pre-approval power: KCP&L Greater Missouri Operations’ acquisition of a capital lease interest in the municipal Crossroads power plant in Mississippi; and Empire District Electric’s plan to convert as of 2016 its 150-MW, gas-fired Riverton Unit 12 from a combustion turbine operation into a 250-MW combined-cycle facility.
The “gap” in commission rules that allow these kinds of projects to proceed without pre-approval is detrimental to both utility ratepayers and shareholders, and also to independent power producers like Dogwood Energy, the company argued.
Among other things, Dogwood Energy’s recommended changes would require that utilities seek alternatives to power projects through competitive bidding before they are allowed to proceed with those projects.
Dogwood noted that in April 2012, at a point when Empire had indicated plans for the Riverton Unit 12 conversion but had not issued a request for proposals (RFP) seeking alternative options, it offered to sell 100 MW of the Dogwood power plant to Empire for $67.8m. It said that other new co-owners of the Dogwood plant had agreed to similar purchase terms at around the time this offer was made to Empire.
Empire stuck with the Riverton Unit 12 conversion plan and never issued an RFP, Dogwood Energy noted. In July 2013, Empire adjusted upward by $50m, to $175m, its cost estimate for the Riverton Unit 12 conversion, which is well above the $67.8m offer for 100 MW of capacity at Dogwood, the company added.
The commission, in an order issued Jan. 8, directed its staff to look at the situation behind this petition and to report back before the commission decides whether to take up the petition or not.