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June 2012
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PPS seeks power sales revenue

By DAVID ZOELLER dzoeller@paducahsun.com

Paducah Power System continues to look for ways to get more revenue from the sale of its share of the power it buys from the Prairie State Energy Campus in Illinois.

The PPS board approved a resolution Monday which guarantees the utility's portion of an agreement between Kentucky Municipal Power Agency and TransAlta Energy, a large investor-owned power provider and wholesale marketer, for the purchase of power.

"This agreement enables KMPA to buy and sell energy with this company," said Dave Carroll, PPS director of finance and administration.

"This company is requesting a guarantee by KMPA members. Under the contract we would be guaranteeing 84 percent of the maximum amount of the contract, which is $3 million. (The Princeton Plant Board, the other KMPA partner, would guarantee the remainder.)

"Basically this is a credit-type of arrangement. We're saying we're guaranteeing KMPA transactions," Carroll said.

"We're going to have reciprocating agreements also. We'll be looking at them (TransAlta) and saying, 'OK, what type of credit arrangement do we need to have with you guaranteeing the contract?' So it works both ways."

Last month, PPS approved a similar guarantee agreement with another potential partner for power sales, AEP Energy Partners. According to Carroll, additional agreements may follow.

"We may have more of these in the future as other parties are identified," he said.

With the agreements, "You have the ability to sell power directly to another entity instead of just taking whatever the market price is. So the goal would be to have a contract with a party at a higher price than you would typically get. As we identify ways to increase the value of the revenue we receive from (selling) Prairie State energy, we've identified this as a possible means."

In other action Monday, the PPS board approved an agreement with Pratt & Whitney Power Systems for a $92,000 upgrade to the main computer system used to operate its peaking plant. According to Rick Windhorst, PPS director of engineering and operations, the peaking plant began operating in 2010.

"In 2009 is when we actually got most of that system installed," he said. "Most of these computers are running Windows XP and some things like that (and) giving us a lot of trouble. It's time to go ahead and upgrade. Also, the software that runs the plant is a couple of versions behind that we need to catch up on."

According to Windhorst, the upgrade will be done in June. Since it will be billed in July, the cost of the upgrade will come out of the next fiscal year's budget.

Windhorst also gave the board a brief presentation on the utility's efforts to recover from power outages related to the March 1 storm.

"This one (storm) was unique," he said.

"Since I've been here this is the first time we have had a storm come through that had 80-85 mph straight-line winds."

The majority of the outages occurred between 5:23 and 5:28 a.m., "So that tells you how quickly that storm rolled through," he said.

According to Windhorst, by 5:30 a.m. there were 6,800 customers without power; by 7 a.m., 2,346 customers; by 8 a.m., 1,400 customers, and at noon, 500.

"That's when we were starting to have to replace poles, which takes longer," he said. "That's kind of standard with a bigger outage."

Windhorst added, "We had everybody back on right before 2 a.m. (the following morning). It took us a while to do it, but we got it done safety. The guys did a great job out there in the field and everybody inside did a good job as well, with the warehouse crew running materials out to them."

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