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Rural Missouri Magazine

Spend now, save later
Maintenance costs increase for aging power plants

by Jim McCarty

Editor’s note: Across the state, electric rates are on the rise. This is the sixth in a series explaining why this is taking place and what you can do to help manage your energy bill.

• August 2007 — "Great growth means rising rates."
• September 2007 — "The high costs of cleaner air."
• October 2007 — "The need for more baseload."
• November 2007 — "When time is money."
• December 2007 — "Unconventional kilowatts."
• January 2008 — "Spend now, save later."
• February 2008 — "What about transmission?"
• March 2008 — "The high price of fuel"
• April 2008 — "Negawatts"
• May 2008 — "The glass half full"

Power plants are a lot like senior citizens. Both require more care as they grow older. To ensure power plants do the job of generating electricity efficiently and cleanly, frequent maintenance must become more routine.

Missouri’s electric cooperatives are fortunate to own two large power plants — one in north-central Missouri at Thomas Hill and the other at New Madrid in southeast Missouri. Along with the federal hydroelectric generating resources, these workhorses, together capable of generating 2,353 megawatts, are the cheapest and most reliable source of power for the state’s electric cooperatives.

The first power plant owned jointly by electric cooperatives through Associated Electric Cooperative was the Thomas Hill Energy Center.

Unit 1 was dedicated in 1966. Two more units were added, with the last one completed in 1982. The New Madrid plant is nearly as old. Its two units were completed in 1972 and 1977.

Maintenance at both power plants has stepped up because the two plants are the most valuable assets owned by Associated Electric Cooperative, says Duane Highley, director of power production for the Springfield-based supplier of power for most of Missouri’s electric cooperatives.

“Maintenance costs are rising on those plants, and it’s costing more and more, partly because of escalating costs in the materials marketplace,” Highley says. “On the other hand, they are worth more and more every day because the ability to generate with coal is so attractive compared to generating with gas. So we can afford to spend more money on these units to keep them running well.”

While a new, much-needed power plant is in the works, it will take until 2013 to 2014 before it can be brought on line. So employees at the cooperative power plants work hard to keep these plants operating properly.

Across the country, the price of electricity is on the rise. And one significant reason for this is the cost of maintaining this aging fleet of power plants. Because the cost for wholesale power makes up about 70 percent of the expenses for electric cooperatives, anything that adds to generation expense will show up eventually on the bills members pay.

Highley says there is a pattern between maintenance and reliability. “If you don’t spend enough on maintenance, your reliability goes down. Currently, we are in a mode where we are playing catch up and spending more than the average utility. We are investing in projects that will pay dividends for years.”

The repairs Highley is talking about are major investments costing Associated millions of dollars. The cost of maintenance includes material and labor, two components that are on the rise. But there’s a second cost that is adding even more to the price of maintenance.

Years ago, when a utility took a coal plant off line for repairs it could purchase the power from another utility for just a little more than it cost to generate that power. That’s because most surplus power came from low-cost coal units. But in the 1990s, utilities built power plants that instead used natural gas for fuel.

“So now, when you go to the market to buy energy, you’re buying it from a gas plant instead of coal and the cost is much, much higher,” Highley says.

That change to higher replacement energy costs forced a quick change in philosophy for Associated.

Suddenly, the value of the coal units increased and the cost for having them out of service became a tremendous burden. Highley says it can cost Associated half a million dollars a day to replace the energy that would be generated at Thomas Hill or New Madrid.

That’s the reason maintenance has stepped up. And the plan is working. Despite its age, the New Madrid Power Plant set a series of production records in 2007. Nine of the plant’s top 10 all-time gross generation days took place in November 2007.

“If we weren’t maintaining the equipment like it was new, we wouldn’t be able to achieve those kinds of numbers,” Highley says.

A millwright working to replace one of the Thomas Hill Energy Center’s generators is dwarfed by the massive piece of equipment. When this unit failed, Associated staff located a new one in Texas and saved the cooperative millions by getting it installed quickly. Unplanned outages are increasingly expensive, one reason maintenance has been stepped up.

But maintenance costs are not the only additional expenses the power plants are seeing. As the plants have aged, so too has the workforce. Both plants went many years with only minimal turnover of employees.

Now, with many employees reaching retirement age, new faces are showing up for work at both plants. And these new employees need considerable training to ensure they can operate the equipment in the most efficient manner.

“So we have built up and we are hiring additional people to be on the shifts so that on any given day we can spend time in training,” Highley says.

He says the employees are a big part of the reason why Associated is one of the lowest-cost suppliers of electricity in the country.

“They have the same equipment we do, they can hire the same vendors to do work that we can,” Highley says of the competition. “The only real competitive advantage we have is the people and the training we invest in them.”

Highley expects another couple of years of heavy maintenance costs before Associated will scale back repairs and reap the benefits of the hard work. That’s especially true at Thomas Hill where workers are taking advantage of a long outage while new emissions-control equipment is being installed to make repairs they wouldn’t normally have time for.

“When it finally comes back on line, it should be in terrific shape and we should have a really good run. In fact, I would expect an all-time record breaking run for Thomas Hill Unit 3 next year.”

Highley compares the maintenance investment Associated is making to the decisions people make about repairs on the cars they drive.

“You don’t want to drive it until you lose the crankshaft and can’t get back home. You want to anticipate the time before that breaks. We try to figure out how much longer will this turbine last or how long this particular valve will last and repair it before it fails. But not years before it fails.

“We get better at it all the time.”

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Association of Missouri Electric Cooperatives

Rural Missouri
2722 E. McCarty Street
P.O. Box 1645 • Jefferson City, Mo. 65102
573-659-3423

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