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Morgan City withdraws from Idaho Carbon Free Power Project

Feb 08, 2023 03:28PM ● By Linda Petersen

Morgan City Council members have decided to pull the city out of the Utah Associated Municipal Power Systems Carbon Free Power Project. The project, a proposed nuclear plant near Idaho Falls, was expected to be able to provide cost-efficient power to Morgan and other cities in the Intermountain West but already, six years before the anticipated opening of the project, it is running into problems. One of those is projected cost overruns which has left Morgan City officials nervous about the city’s financial exposure.

The Utah Associated Municipal Power Systems is a state entity that provides wholesale electric-energy, transmission and other energy services to community-owned power systems in the Intermountain West. The majority of its 48 members are smaller cities in Utah. With its participation, taking on 1.2066 percent of the development cost share, Morgan would have received 1,398 kilowatts of power.

Projected costs for the six 77 megawatt power module nuclear plant, to be located at the Idaho National Laboratory near Idaho Falls, have increased significantly in the last couple of years. The proposed project recently underwent some analysis after projections determined that cost projections need to be increased, according to a Jan. 4 UAMPS letter that was sent to participating agencies.

The total cost of acquisition and construction of the project is now expected to be $9, 336 million, significantly higher than previous estimates, according to the letter. UAMPS indicated that these new figures are due to inflation, increased commodity prices and increased interest rates. These numbers show that instead of power from the plant being available to members at $58/MWh, what they were promised, it is going to be $89/MWh. 

This means it fails what is called the Economic Competitiveness Test and allows participating entities to exit the project. The UAMPS letter gave member cities the option of withdrawing, reducing their participation or continuing their current commitment level. 

Another factor which made city officials uncomfortable was the lack of new communities participating in the project. Although UAMPS has presented it to several communities, none have chosen to subscribe in the last two years. 

“Whether you’re for or against nuclear [power], zero subscription is a huge concern for me.” City Manager Ty Bailey said in a Jan. 24 work session. “You can have all the interest you want, but until somebody is willing to sign up and become part of the project, you really don’t have momentum.”

Another concern Bailey and city council members expressed was how little power Morgan would have in decisions about the project going forward, particularly if the city’s portion of the debt was increased.

“To be responsible with our public and utility and public funds it’s the cost of the money, but it’s also what’s in our control,” Bailey said. “If we stay in and just ride it out what we’re saying is no matter what happens, we’re along for that ride where internally it still might be expensive but it’s also an investment in our system that helps us keep the lights on, whatever that cost is.” 

Two years ago when Morgan City officials voted to rejoin the project (Morgan had previously been a member but opted out), this move would have been inconceivable, Bailey said, but now the city has several other options for providing future power to its residents and businesses.

I’m really hopeful on alternatives; I didn’t have that last time,” Bailey said. “I looked around at doing hydro, doing internal generation and everything looked like a dead-end road, but a lot of that was due to our current billing. We averaged 54 cents, and this project was right in line with those costs but at 89 or 90 cents it gives us some other options; you can consider some of those alternatives. Not only that —some of the market rates these last two seasons have been astronomical. So I’m confident that we can get an internal project put together.”

Those alternatives include solar power from a possible future solar farm, grid-scale batteries, natural gas generation facilities and a potentially large future customer coming on board that could share some of the variable load, he said.

The possibility of USDA or Department of Energy grants which may be made available under the 2021 Infrastructure Investment and Jobs Act Infrastructure Act could allow Morgan the resources to generate enough new power that it would not need to seek it from outside sources such as the UAMPS project, Bailey said.

Ultimately after prolonged discussion on the issue in the work session and public meeting that evening, the city council voted unanimously to leave the project. Members of the city council said that this was a difficult decision.

“We’re trying to make these decisions with the best information that we have at the time,” Councilmember Eric Turner said. “I think someone said we can either look like real fools or real heroes by the decision tonight but we’re trying to do the best that we can with the information that we got. I wish we could see into the future; I wish we could see where this is going but it’s hard to do that so we’re just trying to make the best decision that we can with the information that we have.”

With its exit, Morgan City will have to pay its portion of the debt which it committed to when it signed up to the project, at this point, $335,000. However, Bailey said he has been putting funds aside from the city’s involvement in other UAMPS projects to cover more than $238,000, most of that amount. Morgan will have a year to pay the balance.

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