Generation pays off for Iolans

Creating power means savings

By RICHARD LUKEN
Register Reporter

Declining prices in natural gas are paying off for Iola in more ways than one this summer.
With the price of gas today at about $2.50 per thousand cubic feet — less than one-fourth of what it cost in 2008 — the city can, for the first time in years, generate electricity cheaper than it can buy it on the open market.
That creates twice the benefit, explained Mike Phillips, Iola’s interim power plant superintendent.
Since mid-June, the city has fired up its two natural gas-powered generators during the peak hours of 10 a.m. to 8 p.m. — when demand for electricity is at its greatest — producing between 8 and 9 megawatts of power.
In years past, local generation during peak hours was a necessary evil, because running the Wartsila generators cost 8 cents or more per kilowatt hour, twice what it cost to buy the electricity from outside sources.
But with lower gas prices, the generators today are producing electricity at about 2.5 cents per kilowatt hour. The city is paying 3.1 cents per kilowatt hour from the Kansas Power Pool this week.
Phillips is waiting to see just how much the generators will save the city because Iola is charged for its wholesale power from KPP on a monthly basis.
The local generation may create at least nominal savings for Iolans’ utility bills, said City Administrator Judy Brigham.
“It may not be a large amount — maybe a tenth of a cent per kilowatt hour — but utility bills should be lower than they would be otherwise,” Brigham said.

IF GENERATING electricity is cheaper than buying it, why doesn’t the city supply all of its own power?
Two reasons.
First, Iola does not have the capability of meeting all of the city’s daily electric needs. If the Wartsilas and two sets of diesel generators were to operate 24 hours a day, seven days a week, the city still would not be able to meet Iola’s peak electric demand.
In addition, the diesel generators are much more costly to operate and are not as efficient as the newer Wartsilas.
“And without our steam generation, we’d fall short,” Phillips said, referring to a pair of steam generators ruined in the 2007 flood. Those generators have yet to be replaced.
They don’t come cheaply. Former plant superintendent Steve Robb estimated cost at $1 million per megawatt. Ideally, the city could use a 10- to 12-megawatt generator.
Secondly, generators are like any piece of equipment. The more you use them, the more maintenance is necessary.
As it is, “we do routine maintenance on them every day,” Phillips said.
Still, the advantageous natural gas rates mean Phillips likely will keep the Wartsilas fired up daily through September.
They are used in the winter months on an emergency basis only because they cannot be winterized, Phillips said.
“You can’t put antifreeze in them, so if you have them online in the winter, you pretty much have to use them 24/7,” he said.
The city fired up the Wartsilas once in early February 2002, when an ice storm snapped power lines and kept many area residents in the dark for a several days.