The Owensboro Utility Commission on Thursday voted to terminate an agreement to begin purchasing solar power in late 2022 from Ashwood Solar I, LLC. The move was made after the Federal Energy Regulatory Commission (FERC) handed down a ruling that would result in increased transmission costs that could make the agreement uneconomical.
FERC’s decision follows a request filed by LG&E/KU to eliminate a longstanding FERC requirement that shielded municipal utilities, including OMU, from paying additional transmission charges on energy transmitted to and from the Midcontinent Independent System Operator (MISO).
The original agreement with a 20-year term between OMU and Ashwood Solar was made in 2018. That contract would have provided solar energy amounting to about 5 percent of OMU’s annual energy needs.
However, at the time officials knew there were potential changes to OMU’s transmission position under consideration by FERC which could result in dramatically increasing the cost of transmitting the energy from Ashwood. The Purchase Power Agreement (PPA) included an option to be terminated under certain conditions where OMU could be exposed to significantly increased transmission costs.
Upon considering FERC’s decision and its impact upon the potential costs, OMU officials voted during a Thursday work session to unanimously approve terminating the agreement.
Currently, neither OMU nor Ashwood are members of the MISO — and according to the original FERC requirement, they were not subject to transmission costs.
However, OMU officials are now considering joining MISO in the coming years — a move that would eventually lead to increased transmission costs for getting energy from Ashwood.
The municipal utility currently purchases power from Big Rivers Electric Corporation (BREC) under a PPA that extends over approximately six more years.
In preparing for what happens when this agreement with BREC ends, the utility will soon begin the development of an integrated resource review to determine the most feasible, cost-effective and beneficial sources of power going forward.
Power sources from MISO will be at the top of the list of those evaluated by OMU. As Ashwood is not a member of MISO, OMU would incur increased transmission costs, which would make it cost-prohibitive.
“As we begin to plan our power supply beyond our Power Purchase Agreement with Big Rivers Electric, when we start looking at that, joining MISO will be under consideration,” said Sonya Dixon, OMU spokesperson. “If we (join MISO), there would have been essentially increased transmission costs (with Ashwood). Because of that, it makes that plan cost-prohibitive for us and our customers.”
Because Ashwood is nearing a date in which they need to know who is participating in their project, OMU officials needed to make a decision now.
Dixon said OMU officials were confident the move MISO could be the best long-term solution because it may open the door to more renewable energy options — particularly wind and solar.
