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June 2012
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Time for Prairie State to perform

By STEVE WILSON Executive Editor The Paducah Sun

After hearing about the latest accident at Prairie State Energy Campus, which calls itself "a reliable, low-cost and stable source of electric power" with an "ultra-efficient design," I wondered:

Is Prairie State jinxed?

Does it have the least competent management this side of Mid-Continent University?

Could it have a diabolical, anti-coal fanatic on its payroll who is a skilled saboteur?

The company's costly operating problems in the past year follow its eye-popping construction cost overrun. When Peabody Energy began construction in 2007, the price tag was put at $2.9 billion. By the time it went on line in 2012, the figure had ballooned to $5.1 billion.

In the past year, various problems have curtailed output and forced its municipal owners, which include Paducah and Princeton, to buy more expensive power on the open market while continuing to make construction debt payments.

The most recent accident two weeks ago, caused by steam and water damage from a storage tank overflow, is keeping one of the plant's two 800-megawatt generators off line, which cuts generating capacity in half. Repairs are in progress, and the company expects to have the unit back in service by June 22.

If it stays down much longer, ratepayers could take another hit since hot summer weather creates peak demand and high prices on the open market.

It would be one thing if Prairie State were like most companies. A typical company can't pass on the price of its mistakes to its customers. But Prairie State can, and the 2.5 million people it serves in 217 Midwestern towns that have invested in the plant are being stuck with sharply higher electric bills.

Since February, the Power Cost Adjustment (PCA) charged to Paducah Power customers has bumped up our monthly bills nearly a third higher than what customers elsewhere in Kentucky are paying.

The company may have other problems.

CEO Peter DeQuattro abruptly resigned last month, and neither he nor the company has given a reason.

The Securities and Exchange Commission last year subpoenaed documents from Peabody Energy and is probing its role in selling Prairie State to its municipal owners.

And the federal government's push to reduce carbon emissions could cost Prairie State a bundle. Even with nearly $1 billion spent on pollution controls, it is such a huge operation that its carbon dioxide emissions exceed 90 percent of the nation's power plants.

Prairie State's critics are legion. One is Ronnie Goode of Paducah, whose company operates six lumber yards in six counties in western Kentucky. In a letter the Sun published last month, he wrote that the kilowatt rate he was paying in Paducah was 30 percent higher than the next highest rate his company paid and 65 percent above the lowest rate.

When I spoke with Goode last week, he said his phone was still ringing with calls from people who share his view that Paducah "was sold a bill of goods" by Peabody Energy.

Despite all these negatives, Prairie State has its defenders. City Manager Jeff Pederson is one. He didn't come to Paducah until after the city's eggs were placed in Prairie State's basket, but he believes the deal makes sense.

"The decision by Paducah Power to own the facilities that we depend upon for electricity is sound, and we will have an advantage over communities that depend upon older facilities in need of upgrade," he said. "Once operating at design efficiency, the benefits of investing in Prairie State will become evident."

David Clark, general manager at Paducah Power and a Prairie State board member, is also a strong advocate.

Clark, who has worked in the utility business most of his life, said Paducah Power left the Tennessee Valley Authority for good reason. TVA had (and still has) debt of around $25 billion. Because Congress imposed a $30 billion debt limit, it's unclear how TVA can get the many billions it will need in the next few years to replace its roster of aging power plants.

The Prairie State plant was state-of-the-art, and communities that bought in also secured a 30-year supply of relatively cheap coal in a mine next to the plant. In the volatile world of electrical power, this was a package deal that looked as good as it gets.

But Clark knows that local customers have legitimate complaints.

"A new plant shakedown usually takes a year or a year a half. Now it's going on two years, and we're behind the curve," he acknowledged.

"We've had a lot of aches and pains. When the PCA went up this winter and people got their bills, a lot of angry customers came through our doors. I understand how they feel. But we took the long-term view when we decided to go with Prairie State, and I still think it was the right decision.

"I expect the PCA will go down very soon and should be at zero in the next year or so. We're on the cusp of normal operation and are about to see good, steady production."

Let's hope he's right. It's not like we have a lot of options.

Steve Wilson is executive editor of the Paducah Sun. You can reach him at


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