Southeast to Discontinue Co-Generation of Electricity at Campus Power Plant

CAPE GIRARDEAU, Mo.,

Dec. 12, 2007 – The Southeast Missouri State University Board of Regents today approved a motion to discontinue co-generation of electricity at the campus power plant.

The decision was made after a cost analysis indicated that co-generation does not produce a significant cost savings for the University within the framework of a recent increase in the small primary rate announced by the Missouri Public Service Commission in June.

“Direct purchase of all electricity would reduce overall energy costs significantly,” said Dr. Dennis Holt, vice president for administration and enrollment management.

University officials estimate a net annual saving the first year of about $150,000, Holt said. Savings of over $1.3 million will include reduced coal purchases, reduced personnel costs, and reduced maintenance and repair costs, among other items. These savings will be offset by the cost of purchasing electricity that is currently being co-generated, estimated at about $1 million, and by a reduction in payments currently being made to the University under a 2005 agreement with Johnson Controls International.

He said discontinuing co-generation of electricity on campus will require revisions to that contract approved by the Board of Regents in December 2005. Johnson Controls International maintains a performance service contract with Southeast for its control systems on campus and operations in the power plant to ensure energy efficiency.

Under the terms of the contract, Johnson Controls would no longer be required to pay the stipulated annual amount to the University if it ceases co-generation, Holt said. Nonetheless, Johnson Controls has agreed to a payment reduction rather than terminating the annual payments entirely, he said. Thus, Johnson Controls will reduce the amount it owes the University annually and the resulting reduction will be added to the total additional electricity costs.

Another significant cost factor, Holt says, is the power plant’s current inoperable turbine. The turbine needs repairs estimated at $500,000 to $600,000, plus $200,000 for work required to remain in compliance with Department of Natural Resources regulations. Even if it was repaired, the turbine would likely need to be overhauled again in five to six years at an additional $500,000 to $600,000, he said.

The University co-generates about 60 percent of its electricity on the main campus and purchases 40 percent. Its boilers produce steam for heating, cooking, hot water and to run a steam absorption chiller as well as some other small use items. Co-generation uses the excess steam to turn a turbine and make electricity. However, a much higher temperature, pressure and high quality steam must be produced to run the turbine.

Holt says the savings the University will realize from discontinuing co-generation of electricity will be used for renovating the power plant for more efficient and reliable operation. By moving to full purchase of electricity, the University will avoid the unreliability of an old turbine and boiler system which causes curtailments to occur, often during inopportune times. Full purchase of electricity also will help free management efforts currently used to keep the turbine running for more productive purposes, including better use of Siemens control systems to reduce energy consumption and costs.

He added that savings from this reduction will be used to evaluate plant operations and invest in improvements that improve energy efficiency and provide additional emergency backup generation. Reduction in the amount of coal used by the power plant also will result in a cleaner operation and campus, Holt said.