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Rep. Kent Haden says Ameren acting in bad faith. Audrain County and Van-Far School District will lose nearly $400,000 a year due to Ameren sunset provision

Posted on Monday, November 2, 2020 at 10:25 am

Photo by Barry Dalton

By Barry Dalton
bdalton@vandalialeader.com

VANDALIA, MO–Four huge natural-gas fueled turbines operate like jet engines on 40 acres of fenced land just west of Vandalia on Route P.  The Audrain Generating Station, now owned by Ameren Missouri, was financed by Audrain County with Chapter 100 Bonds in 2000.

“Ameren Missouri ended up getting a sweetheart deal,” State Rep. Kent Haden said. “This was not the intent of the original deal [when the plant construction was approved and financed.]”

 Ameren’s combustion turbine generators (CTGs), also called peaking stations, provide electricity to Missouri during periods of high demand, especially when consumers are running their air conditioners nonstop.  

The Van-Far School District received $271,593.14 in 2019 from Ameren Missouri as a part of its annual payments in lieu of taxes. This agreement was negotiated with Duke Energy North America (DENA) when the plant was built in 2000-2001. 

The payments continued when Ameren purchased the plant in 2006. However, Superintendent John Fortney said the annual payments will sunset in 2021. 

“We’re at 39 percent reserve funds right now, which is good, and federal money has helped with that. So the loss of the annual payment won’t put us in financial straits, but losing those funds will definitely impact our budget negatively,” said Fortney. “That’s why we’ve been so protective of our reserve funds.”

The money has been used mostly for facilities and construction over the years, Fortney added. 

Ameren also provided funds to other county agencies in 2019: Tri-County Nursing Home ($23,281.60), Vandalia Ambulance District ($22,582.03), Vandalia Special Road ($31,849.50), Audrain Library ($18,997.66), Audrain Developmental Disability Services ($18,997.66), State of Missouri ($4,382.81), Audrain County General Revenue ($14,697.23), and Audrain Special Road and Bridge ($24,978.70). Those annual payments will cease next year as well.

Ameren Missouri issued the following statement in response to the Leader’s request for comment: “Ameren Missouri will continue to make payments to Audrain County through Dec. 21. Starting in 2022, Ameren Missouri will pay property tax on the facility to the Missouri State Tax Commission.”

That means that most of the tax revenue will shift away from Audrain County and be spread out across Eastern Missouri if something is not done, explained State Rep. Kent Haden, who represents District 43. The plant was built with financing from the county, but the county will now lose out on its investment, Haden added.

“The facility at Vandalia was built with Chapter 100 Bonds–community financing,” said Haden. “The agreement was in lieu of taxes and will revert back to the regular tax rate. When Ameren purchased the facility there was a wrench thrown into the agreement in that when the 20 years were up, it would revert to the statewide rate that Ameren negotiates, which is a lower rate.” 

Under this formula, Audrain county’s part of the revenue would be pennies on the dollar, Haden said. “This leaves Vandalia and Audrain County holding the bag.” 

Haden says that he does not believe Ameren Missouri has acted in good faith in working with him to get this issue resolved. He said that Ameren’s lobbyist initially agreed to work with him but then avoided him as the COVID-19 lockdown hit.

 “I finally tracked the lobbyist at the Capitol,” Haden said. “She informed me that their lawyers had met and were not willing to alter the payments. This upset me due to the time for filing a bill to correct this had already passed. And she knew that.” 

Haden said he will file a bill in the next session that excludes projects that are built with Chapter 100 Bonds, and consequently sold, from reverting to statewide assessment rates. He says he will include an emergency clause on the bill and seek support from State Senator Jeanie Riddle.

The bill will seek to correct the loss of revenue to Audrain County and the school district as well as help other projects in the state that have similar dilemmas. 

 

Mexico Turbine Shutting Down

When the turbines are working, birds won’t go near the exhaust stacks as they heat up to 1,200 degrees. Photo by Barry Dalton

The Audrain facility primarily runs in the summer, but it becomes more visible, especially at night, in the fall and winter after the corn fields have been harvested and the leaves have fallen.

“We have a lot of people ask us, ‘Does that place ever run?’” said Kevin Nietiedt, a technician at the plant. “Yes, but when it’s running, it’s so quiet, if you were passing on the highway out here, you wouldn’t know it unless you saw the heat distortion coming out of the exhaust stacks.”

Each turbine has two power blocks, two towering exhaust stacks and a generator. Each set of turbines operates independently, serving as backups to one another. The spinning of the turbine, which is run on natural gas, runs the generator, which creates the electricity. When running, there is a continuous stream of fire inside the unit, similar to a huge jet engine. 

Ameren Missouri announced its Net Zero plan on Sept. 28 to increase its renewable energy resources while eliminating its coal plants by 2042. However, Ameren’s plan also includes decommissioning some of its older combustion turbines, eliminating several hundred megawatts (MW) of power.

“Some combustion turbines will be retired in the next six years,” confirmed Brad Brown, an Ameren communications official. “The Audrain [Generating Station]] is not on that list.“

The company plans to shut down its smaller, oil-fired turbines in Mexico, Fairgrounds, Moreau, Meramec and Moberly by 2026. Built in the 1970s, each of these turbines has a capacity of only 54 MW.

By comparison, Ameren’s gas-fired turbines have a much higher capacity. They are located in Vandalia (608 MW), Venice (494 MW), Goose Creek (438 MW), Pinckneyville (316 MW), Raccoon Creek (308 MW), Kinmundy (210 MW) and Bowling Green’s Peno Creek Energy Center (192 MW).

Ameren Missouri currently owns and operates 10,142 megawatts (MW) of supply-side resources including 5,062 MW of coal, 1,194 MW of nuclear energy, 3,055 MW of natural gas/oil and 831 MW of renewables and storage. 

Coal-fired energy generation will continue until the capacity of Ameren’s renewable energy resources increases. In addition to its hydro resources, Ameren has already completed its first solar projects and plans to bring online approximately 700 MW of wind capacity next year. 

Aaron Nuremburger, lead plant tech at the Audrain Generating Station on Route P west of Vandalia shows part of the turbine that is run on natural gas. Photo by Barry Dalton

Ameren Peaking Generating Station – Yesteryear 2000

During the year 2000, Duke Energy was on the cover of The Vandalia Leader four times for its plans to build its $200 million, 640-megawatt peaking electric generation facility.

“There are kids at the high school now that don’t really know it’s out here because they don’t really pay attention to it,” said Aaron Nuremburger, lead plant tech. “A lot of people think it powers the town. It does not.” 

On May 24, 2000, the Leader reported that construction on the peaking plant had begun and that Duke promised to invest $350,000 a year in local governments in lieu of taxes, with Van-Far expected to “receive the biggest share of those annual payments.”

On June 7, 2000, Duke said it planned to be operational by the summer of 2001.

On June 21, 2000, it was reported that the turbines had been delivered to the Vandalia area and were being stored at the former Combustion Engineering plant between Farber and Vandalia. After being assembled in North Carolina, the units, each weighing 300,000 pounds, were brought in by rail.

On Aug. 23, construction manager Dick Clark said that 220 construction workers are putting in five 10-hour workdays. 

The testing of the first turbine was expected to begin in February 2001. By 2001, however, Duke had sold its flagship peaking plant to NRG Energy, before construction had even been completed. 

Darren Berry, now Vandalia’s city administrator, was one of the first eight operators that Duke Energy had hired before turning it over to NRG.

“After Duke sold the plant, they offered us an opportunity to transfer to a different plant within Duke,” Berry recalls. “Only one of us took them up on it.”

After a series of problems, the peaking facility wouldn’t run for another four years.

There are four General Electric units of turbines, generators and exhaust stacks at Ameren’s peak generating station. Photo by Barry Dalton

A Series of Unfortunate Events

Not long after NRG Energy bought the facility from Duke Energy North America in 2001, a problem developed with the high voltage transformers, says Nietiedt, who began working there in late 2000. 

“On the second or third day, they ended up pulling the plug on the whole works,” recalls Nietiedt. “This lasted through the summer of 2001, which was our peak season.”

The turbines had to be disassembled, put on rail cars and sent to St. Louis to be rebuilt. Then General Electric, who made the gas turbines, discovered there was a problem with the compressor section, which has 17 sets of blades. The blades were breaking off under really high loads.

“The blades had to be replaced on all eight machines, which took until 2003,” Nietiedt said.

When the Enron scandal hit, power prices plummeted and the cost of natural gas went up, making running the plant unprofitable.

“The price of power dropped to next to nothing and the price of natural gas went up, and so here we sat,” Nietiedt said.

By the beginning of 2005, the power plant was still not operational.

“But we had done all of our maintenance over that time, kept the machines ready to run,” Nietiedt said. “We finally started running in about May 2005.”

Not long afterwards, Ameren announced it was purchasing the facility. Pro Energy of Sedalia was contracted to handle operations, which it did for 10 years. In late 2016, Ameren took over daily operations, and the rest is history.

“In the summertime, we could pack about 5 percent of Ameren’s load in Missouri and Illinois,” said Nietiedt. “When we’re needed for backup for other power generating plants, we can be up in 25 to 30 minutes.”