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Sunflower Electric set to raise wholesale rates
Published 1/27/2012 in News
By MIKE CORN
Special to The Telegram
Hays-based Sunflower Electric will be raising its wholesale electric rates almost immediately by as much as 11 percent, according to Sunflower President and CEO Stuart Lowry.
Sunflower also is working on final documents that could mean the construction of a natural-gas powered generation plant similar to that built and operated by Midwest Energy on the northwest edge of Hays.
The power plant is an outgrowth of new federal regulations that have all but mothballed many of the diesel power plants either operated or held in reserve by Kansas communities. Those plants — no longer able to meet clean air standards — had been counted on by Sunflower as a backup supply, allowing it to meet required reserve standards.
Sunflower's base rate will be increasing by about 6 percent, while costs for fuel will be increasing by an estimated 5 percent, Lowry said.
"Our members will start seeing that on what they used for January," he said.
Sunflower is owned by six rural electric cooperatives, which receive most of the electricity it produces.
Those six include Prairie Land, based in Norton, Western Cooperative Electric, based in WaKeeney, and Lane-Scott, based in Dighton and covering most of Ness County.
Neither Sunflower nor any of the six cooperatives that own it are required to receive approval for rate hikes from the Kansas Corporation Commission, an exemption that was carved out with the legislation allowing Sunflower to move forward with getting a permit to build a 895 megawatt coal-fired power plant near Holcomb.
That process has been stalled, however, after the Sierra Club filed suit challenging the Kansas Department of Health and Environment's issuance of the permit for the plant.
While coal costs are considerably more stable, Sunflower does have natural gas costs that fluctuate frequently.
It's the fuel costs that are harder to pin down because of that variability, Lowry said.
Typically, however, increases in fuel costs are passed on almost immediately to customers through energy adjustments.
The increase in base rates, however, already are under study, according to member services director Dennis Deines at Western Cooperative in WaKeeney, but have not been implemented.
He said it's his understanding the same is true at other cooperatives supplied by Sunflower.
While federal regulations frequently were mentioned by Lowry, he said one is behind Sunflower's move to construct a generation system similar to the Goodman Energy Center northwest of Hays.
As part of its planning, Sunflower — and other electric utilities — need to have access to approximately 12 percent more than it needs. Most of that came from municipal power plants that could have been pressed into service to augment available supply.
"We either have to build it or buy it," Lowry said.
By mothballing local plants, about 43 megawatts of standby power was lost.
"We're looking at building another resource in addition to Holcomb," he said.
Likely, Lowry said, such a plant would produce anywhere from 56 to 60 megawatts.
"It's going to be in the southern part of the system," he said. "We're actually working on some of the contracts right now."
He declined to say where it might be located.
"Negotiations for real estate are extraordinarily sensitive for power plants," he said.
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