Wabash Valley seeks FERC approval for buy of stake in Prairie State coal plant

The Wabash Valley Power Association (WVPA), Peabody Electricity LLC and Lively Grove Energy Partners LLC applied Jan. 27 at the Federal Energy Regulatory Commission for all authorizations necessary for Peabody Electricity to sell and for WVPA to purchase all membership interests in Lively Grove, whose only physical asset is a 5.06% undivided interest in the Prairie State Energy Campus.

The assets involved also include associated interconnection facilities and an adjacent coal mine and coal reserves. WVPA said it currently anticipates transferring the facility out of Lively Grove to WVPA and, at some point thereafter, dissolving Lively Grove as a corporate entity.

The applicants requested the issuance of a FERC order approving this application on or before March 28.

The facility includes two pulverized coal-fired units located in Washington County, Illinois, approximately 40 miles southeast of St. Louis, Missouri. Each of the coal units is nominally rated at approximately 800 MW. The facility is electrically interconnected with the transmission system owned by Ameren Illinois, which transmission facilities are under the functional control of the Midcontinent ISO.

Peabody Electricity and Lively Grove are part of coal producer Peabody Energy (NYSE: BTU), which developed this project several years ago and has since sold off most of its interests in it, mostly to municipal utilities in the region. Peabody had announced this sale deal for Lively Grove on Jan. 21, saying it is part of a campign to divest non-core assets.

The Wabash Valley Power Association on Jan. 21 had petitioned the Indiana Utility Regulatory Commission for a Certificate of Public Convenience and Necessity to purchase Lively Grove Energy Partners. Wabash Valley is also seeking from the Indiana commission authority to execute notes as evidence of indebtedness to finance the purchase and related costs.

M. Keith Thompson, employed by the Wabash Valley Power Association as its Vice President of Power Production, said in Jan. 21 supporting testimony with the Indiana commission that this 5.06% undivided interest represents 83 MW of capacity in the plant.

The PSEC is owned by the nine participants as tenants in common. Peabody is currently the only non-public power owner of PSEC. There are eight public power owners of PSEC, including American Municipal PowerIllinois Municipal Power Agency, Indiana Municipal Power AgencyMissouri Joint Electric Utility CommissionPrairie PowerSouthern Illinois Power Cooperative, Kentucky Municipal Power and the Northern Illinois Municipal Power Agency.

Lee R. Wilmes, employed by Wabash Valley Power Association as its Vice President of Power Supply, said the purchase price for Lively Grove and its 5.06% undivided interest in PSEC is $57 million. He said Wabash Valley did not issue a request for proposals (RFP) for this capacity. Wabash Valley is continuously in the marketplace looking for opportunities to add to its power supply portfolio to meet the needs of its members. The challenge Wabash Valley faces is that the owners of existing generation typically desire to sell entire units, and sometimes fleets of units, in one transaction. The scale of such a purchase would be too large for Wabash Valley’s needs, Wilmes pointed out.

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.