Lincoln Electric System is poised to scrap a decades-old purchase agreement for 30 percent of power generated by Sheldon Station, a coal-fired plant near Hallam.
The boards for both LES and Nebraska Public Power District, which owns Sheldon Station, plan to vote Thursday on whether to dissolve the agreement, which has been in place since the early 1980s and is for the life of the plant.
An exit plan has been tentatively agreed to by staff of both utilities, but must be confirmed by the boards, said LES Chief Executive Officer Kevin Wailes.
If approved, the Lincoln utility will pay NPPD $10.5 million to terminate its energy supply agreement at the end of 2017.
LES staff and board members for years have discussed the possibility of severing ties with Sheldon Station, which is capable of generating 225 megawatts of electricity. LES pays for the rights to 30 percent of that. The agreement also obligates the Lincoln utility to foot the bill for a proportionate cost of running the power plant, including upkeep and renovations. LES’ projected budget put that cost at $12 million for 2017.
LES has more capacity than it needs and the loss of Sheldon Station would not need to be replaced anytime soon.
"We have sufficient capacity into the 2040 time frame. Sixty-five megawatts is not going to have an impact in the short term on our power supply capacity in terms of needing capacity," Wailes said.
NPPD has plans to convert one of two steam boilers at Sheldon Station to burn hydrogen, a byproduct of a new Monolith Materials Inc. plant being built next door that will make carbon black, a fine, flour-like powder used in tires, plastic, inks and cellphones.
Monolith will use electricity to extract carbon from natural gas, leaving a byproduct of water and hydrogen, which will be sold to NPPD as fuel that produces nearly zero greenhouse gas emissions. The conversion is expected to be done by 2019.
If LES continued its agreement with NPPD, the Lincoln utility would be obligated to pay a portion of the cost to renovate the boiler to run on hydrogen.
LES in recent years has expanded its renewable energy generation and last year produced enough electricity from renewable sources, most of it wind, to equal 48 percent of demand from its customers.
LES’ administrative board is scheduled to meet at 4:30 p.m. Thursday in the Lincoln board room at 1040 O St. NPPD’s Board of Directors meets beginning at 8:30 a.m. Thursday at 1414 15th St., Columbus.