Owensboro Municipal Utilities' administrative staff recommended Monday a $21.9 million decommissioning plan for its coal-fired power plant -- Elmer Smith Station -- during a work session with the City Utility Commission board.
Kevin Frizzell, OMU's general manager, assured the board that there is enough money in reserves along with another $8.3 million in a facilities or decommissioning fund to cover the entire project's cost.
"... I think we have enough reserves where we can do the recommended option without impacting (utility) rates," Frizzell said.
OMU is preparing for when it shuts down its 47-year-old, 282-megawatt boiler known as Unit 2 on June 1, 2020, which will end the city's power production era and use of coal.
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Unit 1, the smaller 55-year-old coal-fired, 164-megawatt boiler, was idled permanently in May.
"One of the first things we realized is there is no real standard across the country for what decommissioning means," said Brad Howton, OMU's director of production.
OMU did hire the Burns and McDonnell firm for $60,000 to conduct a decommissioning study that looked at three cost options -- retire in place with no smokestack removal; retire in place with smokestack removal and full demolition of the plant.
OMU officials called the study a "sanity check" before they came up with their own plan and cost estimates based on the three options.
Howton said Burns and McDonnell had managed other decommissions and had insight into the process.
The study, Howton said, was then combined with OMU officials' plant knowledge and potential future uses of the facilities.
"It basically gave us a road map," Howton said. "... So once we got their study, it proved to be very beneficial to us."
According to OMU's estimated figures of the three options, it would cost $16.9 million to retire in place with no smokestack removal; it would cost $21.9 million to retire in place with smokestack removal and $41 million for full demolition.
In the recommended $21.9 million plan, the largest expenses are for the complete cleanup of the ash ponds at $8.1 million, the removal of all internal and external asbestos from the plant at $3.7 million and the teardown of the two concrete smokestacks -- one 650-feet tall and the other 400-feet tall -- at $4.5 million.
To keep the smokestacks, OMU officials estimated that it would come with an annual maintenance cost of $75,000.
The smokestacks, Frizzell said, are costly because they will have to be taken down in pieces to avoid collapsing on nearby structures such as the switchyard, which is OMU's connection to the electrical grid.
"We're going to have to do a more controlled demolition," Frizzell said. "... The fall radius of those stacks is significant. It would have been a lot cheaper if we could've toppled them."
Frizzell said the remaining coal ash will be hauled off to two different sources -- the Daviess County landfill and Peabody Coal, which uses the ash on its coal mine roads.
As far as the future of Elmer Smith Station site, Frizzell said it only consumes a small portion of the entire 165-acre site.
"There's just not a lot there because we have so much of it we need to maintain for ongoing OMU operations," Frizzell said. "... There's only one-third of it that would be emptied out if we did the full demolition."
The City Utility Commission will have plenty of time to absorb the decommissioning recommendation.
Howton said the funding will still have to go through OMU's next budgeting process that won't be up for approval until the spring of 2020.
The City Utility Commission has signed a purchase power agreement with Big Rivers Electric Corp. for when Unit 2 is shut down.
OMU's goal is to have Elmer Smith's decommissioning complete by June 2021.
Don Wilkins, firstname.lastname@example.org, 270-691-7299