Resource Planning Coalition Update
CMPAS’s Long-Term Power Supply Efforts Promise Competitive and Stable Power Costs
CMPAS will complete its long-running process towards obtaining long-term power supply in the near future with a diversified and hedged set of new long-term contracts. A few years ago, we began the process by forming a coalition of utilities for greater size — we’re triple the size if we’d gone out on our own — which allows cost sharing and better deals with power suppliers.
Our partners include:
1. CMMPA’s 12 members
2. Iowa affiliate members in Cedar Falls, Eldridge, and Montezuma
3. Wisconsin affiliate members belonging to the Upper Midwest Municipal Energy Group
As we plan for the long term, we are proposing to buy natural gas while it is priced in what is fundamentally a buyer’s market. We are aware that an ideal contractual arrangement should address possible natural gas price increases and/or public policy that could profoundly change natural gas risk.
Managing this risk requires us to hedge (reach some level of cost certainty) and diversify (buy from multiple suppliers, multiple types, and multiple terms). To mitigate risk, we expect to finalize long-term contracts that will last 10 or more years and address roughly 75 percent of our energy needs.
Within these parameters, we are working on obtaining contracts for a fixed-price power product, a share of a gas-fired combined cycle development, and a wind purchase to provide a financial hedge against (among other things) price changes for natural gas. CMPAS used years of research to design all three components of this portfolio to work together with existing assets. For this reason, we expect our new contracts to provide a high degree of cost certainty against a wide variety of risks for a long time. The fruit of our planning efforts can be seen in the above chart. The solid blue line represents and compares our low-cost, stable proposal with a do-nothing approach represented in red. For CMMPA members specifically, the contract either fixes or hedges 71 percent of CMMPA’s portfolio cost in 2025, compared to the present 32 percent. This analysis gives CMPAS reason to view the future positively, and we expect to deliver a competitively-priced, long-term power contract for our members and partners.
After concluding the contract negotiation with vendors, we will share the details when we come to your cities later this year. During those meetings, we will gauge your interest and answer questions regarding the proposals.
Here to Serve
In this process, as in all other things, we are here to serve you. If you have any questions or concerns, please contact us right away.