Why We Made the Decisions We Made
and
Where We Are in Building New Generation
February 17, 2005
Prepared by
Nilaksh Kothari, P.E.
General Manager
Manitowoc Public Utilities
OUTLINE OF PRESENTATION
 OVERVIEW OF THE SYSTEM
 THE PROBLEM/CONCERNS
 POWER SUPPLY OPTIONS CONSIDERED
 BENEFITS OF OWNING GENERATION
 PROJECT STATUS
 QUESTIONS
February 17, 2005
2
Facts in Brief-2003
Electric Utility
Water Utility
Revenues
$35,140,092
$4,748,813
Number of
Customers
17,502
13,540
Units sold
522,931 MWhs
2,917,478 kgals
Miles of
Line/Mains
222.5
174.3
Average Net
Investment
$54,242,542
$20,450,225
February 17, 2005
3
Sources of Capacity
 Sources of Capacity -122 MW Total in 2004




Steam Generating Plant
Diesel
Combustion Turbine (Gas)
Market Purchases
70.0 MW
11.0 MW
21.0 MW
20.0 MW
 Age of Facilities / Capacity











Boiler #5
Boiler #6
Boiler #7
Boiler #8
Diesel
Combustion Turbine
Steam Turbine Generator #2
Steam Turbine Generator #3
Steam Turbine Generator #4
Steam Turbine Generator #5
Steam Turbine Generator #6
50 Years / 15.0 MW
46 Years / 17.5 MW
38 Years / 17.5 MW
12 Years / 21.0 MW
17 Years / 11.0 MW
3 Years (Refurbished) /20.5 MW
67 Years
62 Years
51 Years
46 Years
38 Years
February 17, 2005
4
Sources of Energy
 Sources of Energy – 2003
 MPU Generation
– Steam
– Natural Gas
– Diesel
292,133 MWH (55%)
291,070
36
1,027
 Market Purchases
–
–
–
–
WPPI
WPS
WE Energies
Alliant
242,392 MWH (45%)
91,149
148,633
2,588
22
 Purchased vs. Produced Energy (MWH):




2002
2001
2000
1999
Purchased / Generated
266,573 / 293,477
292,769 / 264,189
286,502 / 294,157
302,768 / 255,168
February 17, 2005
5
48/52
53/47
49/51
54/46
THE PROBLEM
MPU System Demand vs. Supply
Historical
180.0
Projected
160.0
MWs
140.0
120.0
100.0
80.0
Year
Total System Demand
February 17, 2005
6
Total Supply
2018
2014
2010
2006
2002
1998
1994
1990
1986
60.0
Concerns
 Age of the existing facilities
 Boiler and generators > 50 years as compared to expected life of 40-50
years
 Increased down time of equipment for maintenance
 Boiler #5
 Environmental concerns- notice of violation from DNR
 Requires special fuel, and is relatively expensive to operate
 Transmission constraints limit import capability
 Regional and Statewide
 Interconnect through the Shoto Substation limited to 55 MW (summer)
 Wholesale purchased capacity not reasonably available
 MPU’s average cost of generation is higher than the cost of purchased
power
February 17, 2005
7
Energy Production Costs - Existing
Equipment Operating Cost
Variable Operating Cost($/MWH)
$70.00
$60.00
$50.00
$40.00
Weighted Average Generation Cost = $34.94
$30.00
$60.38
2001 Purchased Power Cost = $30.93
$54.21
$20.00
$32.08
$10.00
$20.78
$23.54
$23.54
Boiler 8
Boiler 6
Boiler 7
$0.00
February 17, 2005
8
Boiler 5
Recip
Generator
Combustion
Turbine
Power Supply Options Considered (2000-2002)
 Existing Generation Resources
 Potential Lease Options
MPU Steam Plant Improvements
11. Edison Mission
2. MPU Steam Plant Package Boiler
12. FPLE/Tenaska
3. MPU Peakers
13. Dominion Thermal
1.
 Capacity and Energy Proposed to
MPU
4.
McCartin Group Manitowoc steam
plant
 Potential Self Build Options
14. 34 MW combustion turbine(CT)
15. 80 MW combustion turbine(CT)
5. Dominion Evantage peakers
16. 80 MW combined-cycle unit
6. Dynegy
17. MPU Plant Expansion
7. Xcel Energy
18. Other Independent Power
Producers
8. Dairyland Cooperative
9. WE Energies
10. Capacity and Energy Proposals to
GLU
February 17, 2005
9
Factors Considered in Evaluation of Options








Demand and energy forecast
Assessment of existing facilities
Management/diversification of power supply portfolio
Capital, operating and maintenance costs
Minimize MPU’s generation costs/competitive electric rates
Maximize use of existing site
Financing feasibility
Account for uncertainties/trends
 Retail deregulation
 Environmental regulations
 Transmission constraints
 Role of Regional Transmission Organizations
 Wholesale market transition
February 17, 2005
10
$ per Megawatt-hour
Projected Energy Cost Saving
100
90
80
70
60
50
40
30
20
10
0
Average Purchased Power Cost (2003 $) = $38.97
Average cost of generation (2006 $) = $24.73
Boiler 9
Boiler 8
Boiler 6
Boiler 7
February 17, 2005
11
Boiler 5
Recip
C.T.
Benefits of Power Plant Expansion
 The 63.3 MW expansion at the existing site results in the lowest rate
impact to MPU’s customers of all alternatives
 Reduces air emissions per megawatt produced by one-third
 Utilizes existing CFB technology (same as Boiler 8):
 With Boiler 8, provides all of MPU’s baseload energy requirements at an
average variable cost of $15-18 per MWH
 Like Boiler 8, burns a wide range of fuels allowing more options to stabilize
operating costs
 Minimizes reliance on wholesale electricity markets that experience
price volatility due to forces outside MPU’s control
 Removes reliance on transmission system for power imports
 Keeps money from MPU’s ratepayers in Manitowoc
 Significantly increases MPU’s payment in lieu of taxes
 Maintains jobs in Manitowoc and provides infrastructure for economic
development
February 17, 2005
12
PROJECT STATUS
Power Plant prior to demolition (Looking South)
February 2004
Foundation for Boiler Building in progress
April 2004
Steel erection of
Boiler Building
July 2004
Boiler and Turbine Building (Looking Southeast)
January 2005
Boiler Building
(Looking Northwest)
January 2005
Turbine Building Operating Deck
Turbine Foundation Preps
January 2005
QUESTIONS