Updated: Nebraska utility exits contract for Sheldan coal plant
Editor's note: The post has been updated to reflect the voting results.
- The boards of Lincoln Electric System and the Sheldon Station owner Nebraska Public Power District voted to dissolve a power purchase agreement in place since the early 1980s, multiple media outlets report.
- LES will pay $10.5 million to NPPD to exit the contract, which was for the life of the plant. NPPD announced plans to convert part of the coal plant to burn hydrogen on a utility scale in 2015, but will continue to burn coal in one boiler.
- LES said it has more capacity than it needs, and doesn't plan on replacing the lost capacity from the Sheldon Station anytime soon.
LES' move to shed its contract follows a trend of utilities looking to exit long-term power purchase agreements with coal plants as the nation's power mix evolves. For LES, terminating the contract will absolve it from any bills over plant upkeep and renovation, which comes in handy as one of the two steam boilers at the Sheldon Station is being converted to burn hydrogen.
Most decisions to leave coal contracts early are due to competition from gas and other resources, but this appears to be a slightly different case. NPPD is moving ahead with its plans to burn hydrogen, and the new converted boiler is slated to begin operating in 2019.
That still leaves LES with 65 MW of capacity to replace, since the contract gave it ownership of 30% of the plant's output. But the utility doesn't seem to be in a hurry to fill the gap anytime soon.
“LES is in the process of developing a new, integrated resource plan to evaluate the full-range of energy resources to best address our customers’ needs," Kevin Wailes, chief executive at LES told Omaha World-Herald. “Based on load forecasts, we have excess capacity well into the future, and this termination will not impact our ability to meet the long-term needs of our customers.”
- Lincoln Journal-Star LES looking to drop Sheldon Station
- Omaha World-Herald Lincoln Electric System wants to pay $10.5 million to NPPD to exit contract
- Associated Press NPPD, Lincoln Electric System utilities to end power plant partnership
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