Stories of the Year: Winners and losers in Missouri energy industry

 

Sources clockwise from right to left Wikkipedia/ Creative Commons (Top Right), OTC Magic (Lower Right), Ameren (Left).
Sources clockwise from right to left Wikkipedia/ Creative Commons (Top Right), OTC Magic (Lower Right), Ameren (Left).

The energy industry in Missouri experienced significant shifts in 2014, as coal’s longstanding dominant role was chipped away by renewable sources and gas prices plummeted. Solar and wind providers had a banner year, coal companies suffered and utilities announced major changes in their portfolios.

The Missouri Public Service Commission dealt with major conflicts over utility rates and a proposed wind energy transmission line across the northern part of the state.


Read more: Check out the rest of Missouri Business Alert’s Stories of the Year for 2014.


In February, Noranda Aluminum, Missouri’s largest electrical consumer, complained that Ameren overcharged consumers for electricity. The complaint filed with the Public Service Commission accused Ameren Missouri of “overearning” because its profit margin was above the 9.8 percent allowed by the commission. Noranda also argued that a rate cut of 25 percent for its New Madrid Smelter would prevent the company from laying off 150 to 200 of its 888 employees.

Regulators argued though that a rate cut for Noranda from 4.1 cents per kilowatt hour to 3 cents per kilowatt hour would raise electricity costs by 1.8 percent for Ameren’s other Missouri customers. Ultimately, the PSC denied Noranda’s request for a special rate, and in October the commission declined to rehear the request for a rate reduction.

In November, the PSC heard the pitch for a high-voltage transmission line that would bring electricity from Kansas wind farms across Missouri to population centers in the east, and the decision is upcoming.

Clean Line Energy Partners, based in Houston, wants the PSC to grant it public utility status so it can erect the a 750-mile, high-voltage transmission line that would make as many as 500 megawatts available for Missouri customers. An attorney representing the Missouri Landowners Alliance lawyer questioned the project’s economic benefits.

Solar strides 

SunEdison, which moved its headquarters across the Missouri River from O’Fallon to Maryland Heights, was the best performing solar company in 2014, and made several moves to expand its footprint. In November the company bought Boston based First Wind Holdings for as much as $2.4 billion

Talks are continuing between SunEdison and a Chinese company to produce low-cost solar panels. In December, the company also received a contract from National Energy Commission in Chile to supply 570 gigawatt hours of clean energy per year to Chile. That project will require a $700 million investment in projects SunEdison will eventually sell off individually to subsidiary TeraForm.

Coal declines 

St. Louis based Arch Coal and Patriot Coal had rough years as debt mounted and both trimmed their Appalachian mining operations. At the end of December, Patriot Coal announced that it would idle two Kentucky mines that employ 670 people while it weighs the future of coal production there. Those mines produced 3.9 million tons of thermal coal used to generate electricity.

In March, Arch Coal sold a Kentucky based subsidiary for $26.2 million in cash as part of its restructuring program. The sale included five Kentucky mines, and gave Arch the chance to earn $35 million from the sale of coal reserves Arch retained in the sale.

Arch was dealing with a debt of about $5.2 billion in debt, which worried investors. Arch Coal bond prices sank to below 50 cents by October.

The developments took place as thermal coal prices plummeted and companies like Patriot faced operating losses at many U.S. mines due to competition from natural gas and the effects of Environmental Protection Agency regulations.

Meanwhile, Missouri was a big beneficiary of plummeting oil prices, becoming the first state since 2009 to have an average gas price below $2 per gallon.

Utility transitions

Kansas City Power & Light announced early in the year that it will nearly double its wind-generating capacity, including the kilowatts that will come from new turbines in the northwest corner of the state where the breezes are strongest.

Near the end of the year, Ameren Missouri announced plans to expand its electricity generation through wind and natural gas to make up for the loss of two coal plants it will retire within 20 years. The utility also intends to add another 10 megawatts of utility-scale solar by 2016.

Ameren’s generation plan lays out the beginnings of a move away from its traditional reliance on coal power as the fuel faces ever stricter environmental regulations. “We’re looking at retiring about a third of our coal power fleet as they reach end of life,” an Ameren spokesman said.

 

 

 


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