At the monthly Board of Water, Electric and Communications Trustees meeting, the Board was provided with an overview of plans to commemorate the completion of Muscatine Power and Water’s (MPW) 161 kV transmission line – Line 106. The Utility, in collaboration with the Greater Muscatine Chamber of Commerce and Industry (GMCCI), will host an invitation-only ribbon cutting event on Friday, September 9.
The energizing of Line 106 marks a milestone in MPW’s Powering the Future initiative. With continued changes in how power is generated and transmitted across the grid, the new asset will provide transmission redundancy and maintain reliability as coal-fired generation decreases and renewables increase in the region.
MPW worked with utility neighbors – Central Iowa Power Cooperative, or CIPCO, MidAmerican Energy, and area landowners – to build a transmission connection to the north of Muscatine and make upgrades to existing substations.
“Without the cooperation of local landowners, Line 106 would have taken much longer to complete,” shared General Manager Gage Huston.
Nearly 40 years has passed since the Utility constructed a transmission line. “Line 106 is consequential,” said Huston. “The line will be in use for decades, providing reliability and more flexibility in how we deliver energy to our customers. The investment in MPW’s power infrastructure fortifies Muscatine’s energy security – providing value for generations.”
MPW staff also reviewed their proposed plans to operate Plant 1 – Units 7 and 8 – as “peaking units” beginning in 2023. These units were originally slated for retirement at that time due, in part, to increasing regulatory requirements on river water intake. Now that the units are planned to operate instead of retire, MPW has proposed operational restrictions for the units to limit the amount of river water intake over the course of each year. This restriction would limit each unit to under about 16.7% of its maximum electrical output over the course of the year.
Plant 1’s retirement was recently deferred to keep the units available and operational as peaking units, which are expected to operate only during times of high energy demand and grid instability.
“To maintain grid reliability and stability, dispatchable generating units such as Plant 1 are depended on to meet customer demand,” said Huston. “The further large-scale development of transmission infrastructure, like Line 106, and energy storage advancements will help alleviate these concerns, but at this time, dispatchable generation must be available to keep the system reliable.”
Huston shared the short- and long-term concerns of power resource adequacy in the Midcontinent Independent System Operator (MISO) footprint. A recent resource adequacy workshop, hosted by state regulators from the MISO region, discussed the evolving power generation portfolio.
The group of state regulators, MISO staff, and utility members from across the MISO footprint attended the workshop to discuss the necessity of focusing on the replacement of the generation attributes, or characteristics, versus simple nameplate capacity. An example of a generation attribute is dispatchability – how quickly energy can be made available when demand is high.
“The challenge before the energy industry is how to maintain a reliable and stable power grid while incorporating renewable generation resources,” shared Huston. “Utilities will need to be nimble to incorporate evolving renewable technologies while simultaneously keeping costs low and ensuring utility infrastructure is robust enough to maintain reliability.”
Huston added, “MPW has an ambitious goal of reducing carbon emissions from our electric generation by at least 65% by 2030 while maintaining a reliable and affordable system for Muscatine residents. Our proposed operating plans for Plant 1 will help us achieve those goals for our customers.”
Reflecting on Muscatine’s local generation status, Huston shared MPW’s energy production continues to be reliable and cost effective. Compared to other Iowa communities, Muscatine is still experiencing lower rates even as costs increase across the state and region. “MPW’s balanced approach to energy generation and the prioritization of our community’s needs means steady rates even during a time of higher energy prices.”
Higher capacity revenues and high wholesale prices were big reasons MPW’s net income was substantially above budget. Net income for the month of $2,492k was $1,599k above budget, driven by the Electric Utility earnings of $1,549k being $1,473k over budget. Strong margins for wholesale sales were $824k better than budget despite an unbudgeted Unit 9 outage of nearly six days. The high MISO prices are in large part caused by continued high prices for natural gas, which resulted in average prices for MPW energy sold into MISO being 9.6¢/kWh. Further net capacity revenues and demand expenses that resulted from the higher prices from this year’s MISO capacity auction resulted in these net revenues being $648k better than budget.
Mark Roberts, director of finance and administrative services, stated “these benefits to customers are a direct result of having local, dispatchable generation with a fuel cost that does not substantially vary with the price of natural gas.” Roberts continued noting that “at a time of volatile energy prices and many electric utilities struggling with how to cover higher costs and even recover cost from the February 2021 cold weather event, MPW has been able to be net ahead to the benefit of its customers and hold rates on plan.”
The Water and Communications utilities also had solid months, with Water being $18k under budget due to some timing issues and Communications continuing to perform better than budget ($69k over budget for month and $642k better for the year through July).
In other Board action, the Trustees:
- Awarded a contract for Unit 9 FGD Upper Roof Overlay Project to T&K Roofing (Ely, IA) for a total of $273,000
- Approved a resolution requesting the Mayor and Muscatine City Council designate October 2-8, 2022, as Public Power Week
- Entered into closed session to discuss negotiations strategy with the Utility’s union, International Brotherhood of Electrical Workers (IBEW), Local 55.10. The five-year Collective Bargaining Agreement beginning December 2019 provided for the Agreement to be reopened for the sole purpose of wage negotiations for years 4 and 5