The Board of Directors of the Kentucky Municipal Energy Agency (KyMEA) held a special meeting at the offices of Owensboro Municipal Utilities on Wednesday July, 13, 2016 and authorized the Agency to enter into power supply contracts. The power supply contracts include the following:
1. A power purchase agreement with Big Rivers Electric Corporation under which KyMEA will purchase capacity and energy from Big Rivers, beginning June 1, 2019. This agreement will be subject to approval by the Kentucky Public Service Commission and the Rural Utilities Service;
2. A power purchase agreement with Illinois Power Marketing Company, a subsidiary of Dynegy, to purchase capacity and energy from the Illinois Power, beginning June 1, 2019; and
3. A power purchase agreement with The Electric Plant Board of the City of Paducah, Kentucky, dba Paducah Power Systems to purchase capacity and energy from the Paducah Peaking Plant, beginning June 1, 2019.
The contracts were awarded pursuant responses received to requests for proposals issued by KyMEA in September, 2015 and April, 2016. KyMEA’s consultants and advisors, nFront Consulting, LLC recommended the contracts after they were evaluated to be the most advantageous to the Agency.
Additionally, the Board of KyMEA approved an All Requirements Contract between the Agency and its members under which KyMEA will use the approved power purchase agreements and other power supply sources to provide electric energy and capacity to the participating all requirements members of KyMEA. The All Requirements Contract will be presented to each of the participating member’s governing bodies over the next two months for approval and execution.
KyMEA is an Inter-local Cooperation Agency formed in June of 2015 to develop a power supply portfolio to serve the city-owned utilities in Kentucky that terminated their long-term power supply arrangement with Kentucky Utilities Company, as well as other Kentucky municipally owned electric utilities. The termination of the Kentucky Utilities agreement will be effective in May, 2019. Members of KyMEA include the cities of Barbourville, Bardwell, Benham, Corbin, Falmouth, Frankfort, Madisonville, Paris, Providence and Owensboro. Owensboro Municipal Utilities is not anticipated to become an all requirements participant of the Agency until after the retirement of the Elmer Smith Station in Owensboro, KY.
“The approval of these power supply contracts and the All Requirements Agreement represents a major milestone for KyMEA and its members. The benefits that will be achieved validate the decision made by many of the Agency’s members to terminate their Kentucky Utilities Supply Agreements.” said Ron Herd, Chairman of KyMEA and General Manager of Corbin City Utilities.
KyMEA’s power supply portfolio includes the power purchase agreements approved today and hydroelectric entitlements of members on the Cumberland River system managed by the Southeast Power Administration, and is anticipated to achieve significant savings for the customer-owners of the participating member systems compared to Kentucky Utilities projected power supply costs. Participating members will be able to regain control of their future power supply, while providing real and meaningful rate relief, and insuring that member cities will remain regionally competitive. This is due in part to staggered terms of the power purchase agreements which provide a significant level of future supply flexibility. As such, the potential for integration of renewable energy, alternative fuels, distributed generation, and energy conservation can be accommodated, based upon the future supply mix objectives of the Agency and its members.