Fitch: Golden Spread’s new simple-cycle peaker has gone commercial

Fitch Ratings said June 26 that a new, 190-MW simple-cycle peaker for Golden Spread Electric Cooperative went into commercial operation in June.

Fitch said it has affirmed the ‘A’ rating on Golden Spread Electric Cooperative’s (GSEC) $36.38 million 5.75% senior secured notes, series 2005. The Rating Outlook is Stable.

Golden Spread’s operating model has evolved from a strategy dependent on purchased power agreements in favor of owned generation and greater plant diversity, Fitch noted. The strategy appears well designed and effectively managed and is intended to optimize long-term power supply costs with the forthcoming expiration of certain power supply contracts.

Starting in 2010, GSEC undertook a major capital expansion program to make adjustments to its power supply program. Over the past several years, GSEC constructed over 400 MW of new capacity, purchased 244 MW of combined-cycle capacity and executed two long-term fixed-price wind purchase power agreements (200 MW). “Also, in June 2015, a new 190 MW simple-cycle plant was completed and began commercial operation,” Fitch said.

Golden Spread is a generation and transmission (G&T) cooperative providing wholesale electric service to 16 member-distribution systems. The members cover a 61,700 square mile service territory and serve approximately 231,000 retail customers in two different North American Electric Reliability Corporation (NERC) reliability areas; the Electric Reliability Council of Texas (ERCOT) and the Southwest Power Pool (SPP).

Golden Spread’s power supply strategy for the period 2016-2020 incorporates the addition of 380 MW of simple-cycle combustion turbines, along with 150 MW of solar capacity procured under purchase agreements. Capital expenditures for remaining projects are estimated at around $200 million. These additions will help offset the scheduled expiration of power-supply contracts with SPP-based Southwestern Public Service (May 2019) and ERCOT-situated AEP Energy (May 2017), Fitch wrote.

The rate forecast assumes long-term wholesale rates plateauing at around $65/MWh over the next several years, which is down from a prior forecast of over $70/MWh. This primarily reflects the elimination of a planned combined-cycle plant and the substitution of a solar purchase power agreement for an owned simple-cycle combustion turbine.

Said Golden Spread’s 2014 annual report about the expansion projects: “Over the last five years, we have completed 411 MW of new generation at a total cost, including Allowance for Funds Used During Construction (AFUDC), of $364.7 million and purchased an additional 244 MW at a cost of $94.4 million. During 2014, we began the construction of a 190 MW simple-cycle plant which is to begin commercial operations in mid-2015. Total capital expenditures, including the purchase of generation equipment for future plants, during this time were $707.0 million.

“Our generation expansion plan for 2015-2016 includes an additional 380 MW of simple-cycle generation. This planned construction for new generation will provide the additional capacity needed to replace expiring power purchase agreements and to meet the growing demand and energy needs of our 16 Members and their Member-Consumers. Our third-party power purchase agreements, totaling approximately 960 MW at the end of 2014, will have capacity reductions, and 760 MW will ultimately terminate between 2015 and 2019. The remaining 200 MW (wind contracts) terminate in 2032 and 2034.”

Said the Golden Spread website about the site for the new simple-cycle capacity: “Elk Station is Golden Spread’s latest addition to a growing generation fleet. Golden Spread awarded the design and construction of Elk Station to Kiweit/TIC, who broke ground the first week of June, 2014, just East of our existing Antelope station. The project will include one of GE‘s latest 7FA turbine designs, the .05. This unit has a guaranteed maximum winter output of 202 MWs and a maximum summer output of 190 MWs. In addition, this design will provide a great opportunity to Golden Spread members—the ability to respond to the new energy market with 70% of full load capacity within 10 minutes.”

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.