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Dairyland Power took its coal plant offline because of flooding. It may cost less to buy power from the grid

Source: 
ArabianSupplyChain.com

Dairyland Power Cooperative took its coal-fired power plant in Genoa offline at the beginning of June to avoid fuel shortages caused by the lack of barges carrying coal up a flooded Mississippi River.

Instead, the La Crosse-headquartered cooperative is purchasing electricity from the Midcontinent Independent System Operator Inc. market to make up for the power normally produced by the plant in Genoa, said Phil Moilien, Dairylands vice president.

MISO manages a wholesale electricity market that spans several states in the Midwest, including parts of Wisconsin, Minnesota, Iowa, Illinois and Missouri.

At face value, buying power from the grid could be cheaper for Dairyland than running its coal plant.

Dairylands 345-megawatt coal-fired power plant is one of 17 coal plants in Wisconsin. At 50 years old, its the eighth oldest coal-burning power plant in the state.

Record flooding along the Mississippi River, especially in Missouri and Iowa, has delayed commercial barge traffic for months, keeping grain from moving downstream and fertilizers, cement, salt and coal from moving upstream.

Since the Genoa plant, situated on the Mississippi River, gets its coal solely by barge, Moilien said, Dairyland made the decision to temporarily halt operations not because we are out of coal, but to ensure we have enough coal for the summer months."

Moilien declined to say how much coal it had stockpiled from the winter, but that the amount was proprietary.

Dairyland, as a cooperative, is not required to share its operation and maintenance costs with the Federal Energy Regulatory Commission. The cooperative declined to say how much it costs to generate power at its Genoa plant.

However, Dairyland reported to the U.S. Energy Information Administration that its fuel cost $27.28 per megawatt-hour in 2017. And it costs about $17 per megawatt-hour to run the power plant, based on EIA modeling. Altogether, thats a combined cost of about $44 per megawatt-hour to produce electricity at a coal-fired power plant such as Dairylands.

By comparison, it costs about $32 per megawatt-hour to buy power from the grid, according to MISO market figures from June 2018.

When the cost of operating a plant exceeds the market price, its likely Dairyland could have saved money by buying power in the MISO market instead, said Christina Gosnell, co-founder and president of Catalyst Cooperative. Catalyst collects federal data and builds open-source tools to analyze utility information.

In other words, Gosnell said, this seems like an expensive plant to run.

And while Dairyland saves money on fuel costs by buying from the grid, it spends about $14 per megawatt-hour to keep background operations going at the plant, even if the turbine isn't churning to make power.

It's surprising they're operating this plant since, as a cooperative, their goal is to provide the most value for co-op members, Gosnell said.

"Generally, the trend has been that the economics have flipped so that coal plants have become more expensive than they used to be, said Tom Content, executive director of the Citizens Utility Board, which advocates for fair, safe and reliable utility service for customers.

There's enough power supply in this region that it's often less expensive to buy, Content said.

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