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Archive for Sunday, August 5, 2001

Sunflower Corp. plans to build coal-fired plant

Advocate questions need, costs of three-year project

August 5, 2001

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— A Kansas utility and a Maryland developer plan to build a coal-fired power plant in southwest Kansas, but an advocate for utility ratepayers questioned the need for the project.

Sunflower Electric Power Corp., based in Hays, plans to build the plant southwest of Garden City at a cost of $600 million to $800 million. Sunflower already operates a coal-fired plant at the site.

The 600-megawatt Sand Sage Power plant would be a joint venture between Sunflower and IEP, a developer of independent power projects based in Bethesda, Md.

Sunflower spokesman Steve Miller said the new venture will be a "merchant plant" offering excess power capacity for sale on the wholesale grid.

"Essentially, it will a twin to the current plant," Miller said. "It will be attached to the existing plant and will more than double our existing capacity."

The partners filed an air permit application with the Kansas Department of Health and Environment in June and expect to begin construction as early as mid-2002. Approvals from local, state and regulatory officials are pending, and commercial operations are expected to start in 2005.

Miller said the partners expect to sell power under a combination of long-term arrangements as well as to retail markets in Kansas and deregulated states in the region.

Thomas Hoffman, IEP's president and CEO, said Sand Sage Power will supply power in a region where the need for electric power is increasing and supplies are getting tighter.

But at the Citizens' Utility Ratepayers Board in Topeka, chief consumer counsel Walker Hendrix questioned whether there is sufficient demand in the region to pay for the construction of a new plant. Several new generating plants, including a wind power farm and two other coal-fired projects, also are in the works.

Excess capacity could be a good thing for ratepayers in the state, Hendrix said, if it results in competition that helps hold rates down. However, he said, the cost of additional construction could create a burden on ratepayers.

"My question would be whether there is sufficient transmission systems to go after new markets," he said. "If new transmission lines have to be built, that could create all kinds of problems. And for the customers of the cooperatives that are part of Sunflower Electric, rates are already among the highest in the state."

Miller cited the intent of the new company to negotiate long-term power supply deals with other utilities and power marketers and said that the venture is being attempted after a year of feasibility studies.

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