Utility commission selects future power supply options

In a process that began in 2013, OMU has been carefully considering its future power supply, completing multiple integrated resource plans and additional studies to determine the best path to provide reliable and affordable power to our customer-owners. This extensive analysis was based upon several factors including the cost to OMU’s customers, reliability, and the ability to provide stable rates.

After careful consideration, OMU staff and the Owensboro Utility Commission have selected a portfolio that meets the needs of our community and our customers, while providing supply diversity and rate stability.

In its meeting on June 22, 2018, the OMU Utility Commission approved a contract to purchase power from Big Rivers Electric Corporation (BREC) as well as a recommendation to pursue the lowest-cost solar option provider as selected through a cooperative bid with KyMEA.  These power options will be used in conjunction with OMU’s existing allocation of hydropower from the Southeast Power Administration.

BREC’s fixed-price proposal would provide full requirements purchased power supply beginning June 1, 2020, and continuing through 2026. This is the lowest cost and best proposal for OMU and its customers. Upon the implementation of this contract, OMU’s Elmer Smith Generating Station will cease operation on June 1, 2020.

Low power market prices driven by an abundance of natural gas and historically low gas prices, impending and current environmental regulations and the fact that OMU’s two coal power production units are aging contributed to the need to select an alternative power supply.

“OMU has owned and operated its own coal power production units since its inception over 100 years ago. Whereas this is a change both for the utility and our community, it is the most cost-effective option for our customer-owners.  Throughout our analysis, it was very clear that continuing to own coal-powered facilities will continue to drive OMU’s rates up and is not in the best interest of OMU’s customer-owners,” explained Owensboro Utility Commission Chair J.T. Fulkerson.

“We arrived at this decision after a thorough analysis that began in 2013.  We understand the gravity of the recommendation to change from self-generating to becoming a power purchaser, but the action taken by our Commission today fulfills OMU’s mission of providing reliable and quality service at the most economical cost,” Kevin Frizzell, OMU Interim General Manager said.

“While I am confident that this is the best option for OMU’s customers-owners, it is bittersweet for me because it also means that some fine people at the Elmer Smith Station will lose their jobs.  We have a great group of employees out there and they have continued to serve with a high level of dedication and commitment throughout this time of uncertainty,” Frizzell added.