KENTUCKY MUNICIPAL POWER AGENCY
KMPA is duly organized under provisions of Chapter 65 of the Kentucky Revised Statutes pursuant to an Interlocal Cooperation Agreement dated February 7, 2005 (the “Interlocal Agreement”) entered into by KMPA’s founding members, the Electric Plant Board of the City of Paducah, Kentucky d/b/a Paducah Power System (“Paducah Electric”) and the Electric Plant Board of the City of Princeton, Kentucky (“Princeton Electric”), both of which are municipal utilities located in the Commonwealth of Kentucky. Presently, Paducah Electric and Princeton Electric are the only two members of KMPA (the “Members”). However, it is anticipated that additional municipal utilities may request and may become members of KMPA in the future.
From the early 1960’s until 2009, the Members were full requirements wholesale distribution customers of TVA. During the almost five decades that the TVA Wholesale Power Contracts were in force, TVA supplied all of the Members’ power and energy requirements in excess of relatively small allotments of power received by each Member from federally-owned facilities through the Southeastern Power Administration (“SEPA”). Consequently, neither Member had the need to construct or acquire any other generating or contractual power supply resources for serving its power and energy requirements. Each Member’s Wholesale Power Contract with TVA was terminable upon five years notice prior to termination and on December 14, 2004, Paducah Electric provided TVA with notice of termination of its Wholesale Power Contract effective December 21, 2009. Princeton Electric followed suit the next month giving notice to TVA that it would terminate its Wholesale Power Contract effective January 25, 2010.
The events leading up to each Member’s decision to terminate its Wholesale Power Contract with TVA began in 2003, when R.W. Beck, Inc. (“R.W. Beck”) was retained by the Members to prepare the first of several power supply feasibility studies for each Member. Said feasibility studies investigated and analyzed alternative power supply strategies available to the Members for the period of 2010 and beyond. The results of these studies indicated that there were considerable economic benefits to be derived by the Members through the procurement of and ownership in long-term baseload electric generating resources, combined with the development of local peaking generation resources within the Members’ respective electric systems, and supplemented with opportunistic purchases and sales of electric power and energy within the regional marketplace.
Based upon the feasibility studies, the Members determined that mutual advantage would be derived from the coordinated planning, construction and operation of new energy facilities and joint purchases, sales and exchanges of electric power and energy. KMPA was subsequently organized by the Members on February 7, 2005 in order to acquire an interest in the development of the Prairie State Energy Campus, to provide for additional services necessary to implement the programs and procedures required to obtain the long-term benefits indicated by the initial power supply studies and to manage the operations of the Members’ resource portfolios.
KMPA, on behalf of its Members, coordinates planning, construction and operation of joint electric power supply projects and any and all facilities, including all equipment, structures, machinery, and tangible and intangible property, real and personal, required for the generation or transmission of electrical energy, including any fuel supply or source useful for such a project.
Pursuant to Chapters 65 and 96 of the Kentucky Revised Statutes, KMPA is authorized and empowered to issue bonds to defray the costs of acquiring, constructing and equipping electric generation facilities such as the Project. From time to time, KMPA may issue future series of notes or bonds to provide for the completion of the Project and for additional projects to benefit its Members.
The governing body of KMPA is a Board of Directors (the “Board”) composed of two directors designated by each KMPA Member, one of whom is required to be the chief executive officer, or equivalent thereto, of the Member. Three members of the Board of KMPA constitute a quorum for the transaction of business. The Board directs the business and affairs of KMPA. The Interlocal Cooperation Agreement under which KMPA was created and operates provides that each director shall have one vote.
KMPA’s officers and directors are as follows:
Hardy Roberts, Chairman
Rickie W. Williams, Vice Chairman
Kevin Kizzee, Secretary
The Members, Paducah Electric and Princeton Electric, are each located in the western portion of the Commonwealth of Kentucky, and are located on the northern fringe of the territory historically served by TVA. Paducah Electric and Princeton Electric were created in 1945 and 1958, respectively, and are each governed by a five-member Electric Plant Board. Members of the Electric Plant Boards serve staggered four-year terms and are appointed by the mayors and approved by the City Commissions of the respective communities in which they serve. However, the Electric Plant Boards are separate and distinct political subdivisions of the Commonwealth of Kentucky and act independently of their respective City governments.
Both Members have approved respective Power Sales Agreements with KMPA to purchase a portion of their respective electrical requirements from KMPA’s share of the electric power and energy to be generated by the Prairie State Energy Campus. At the present time, Paducah Electric is entitled to purchase 83.9% of KMPA’s share of the Project and Princeton Electric is entitled to purchase the remaining 16.1%. Each of the Power Sales Agreements is a “take or pay” agreement under which each Member has agreed to pay for its portion of KMPA’s share of the Project at rates sufficient to enable KMPA to recover all of its costs incurred with respect to the Project. The Members are obligated to pay for their respective portions of the Project whether or not the Project is complete, operable, or operating and whether or not the Project’s output is suspended, interrupted, interfered with, reduced, curtailed or terminated in whole or in part.
From time to time, in the event that one or both of the Members do not require the full entitlement of their respective shares of the Project’s output, KMPA will make an effort to sell such unused power and energy in the energy marketplace. However, KMPA is not obligated, except to its Members, to sell power and energy under long-term or forward contracts, and any failure of KMPA to sell such power and energy in the energy marketplace shall not relieve the obligations of the Members to pay for their respective portions of the cost of the Project, including debt service on the Bonds.
BREAKDOWN OF KMPA’S PSEC POWER SUPPLY
PPS General Manager and KMPA General Manager
- Power Supply and Sales Analyst for PPS’ generation portfolio and power marketing
- Director of Finance and Administration 1998-2017
- Board member of American Municipal Power and Prairie State Boards
KMPA Chief Financial Officer
- KMPA CFO since 2009
- Formerly at Deloit Touche Tohmatsu
- Over 20 years experience in public power
- Former Chair of the Prairie State Finance Committee
Princeton Electric Plant Board General Manager
- Princeton Electric GM since 2016
- KMPA Assistant GM since 2016
- Professional Engineer in Kentucky
KMPA and PPS Board Chair
- PPS Board Member since 2011
- Owned and operated LeakePrinting Company and Flagship Printing Company from 1970 to 2008
- 29 year member and former Chairman of the Paducah Cable Commission Authority
KMPA Board Vice-Chairman
- Princeton representative on KMPA Board since 2005
- Certified Public Accountant
- Member of Kentucky Society of CPAs and the AICPA