The Federal Energy Regulatory Commission on April 6 approved a Jan. 27 application from the Wabash Valley Power Association (WVPA), Peabody Electricity LLC and Lively Grove Energy Partners LLC 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. 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 campaign to divest non-core assets.
The Wabash Valley Power Association on Jan. 21 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. Both of those cases were still pending as of April 6.
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 Power, Illinois Municipal Power Agency, Indiana Municipal Power Agency, Missouri Joint Electric Utility Commission, Prairie Power, Southern 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 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.