It took 16 months longer and $40 million more than expected, but Lakeland Electric’s new “next generation” power facility is officially up and running.
The McIntosh Reciprocal Engine Plant on the northeast shore of Lake Parker passed its final performance test on April 11 and is now contributing 120 megawatts of power to Lakeland Electric customers, General Manager Mike Beckham said Friday.
He shared the news during a presentation to the city’s Utility Committee.
What: The new plant has six high-efficiency, reciprocating internal combustion engines that can be modified to use hydrogen fuel if that becomes financially viable.
It is now one of eight power generation sources in Lakeland Electric’s portfolio. Its 120 megawatts make up about 14% of the utility’s roughly 845-megawatt capacity.
Timeline: Construction of the MREP facility began in August 2022. The plant was expected to come fully online in December 2023. However, supply chain issues, a train derailment, inflation and other challenges delayed the project.
Beckham said the first three engines were commissioned in December. The next three were turned on in early February.
It took a couple of months of testing and adjustments to get all six running at the same time.
“It’s just been a long, hard road to get here,” he said. “I was thrilled when they completed that run.”
Beckham said there will be a ribbon-cutting ceremony in a few weeks, but the utility is still paving some roads at the site. “It’s kind of a mess, so we decided to wait.”
Cost: The municipal-owned utility originally budgeted $145 million for the project, which included $18 million for contingencies. That figure was revised to $174.4 million in June 2023.
However, the final cost came in at $185 million, LE spokeswoman Cathryn Lacy said Friday.
Bond issue: The utility issued $70 million in municipal bonds in 2023 to help cover the construction overruns as well as costs associated with a catastrophic outage of Unit 5 that lasted four months.
The new bonds extended the city’s previous $131.8 million “Energy System Revenue Bonds” that were issued in 2022 with a maturity date of 2048.
Debt dilemma: The bonds enabled the utility to keep customer rates steady. However, they brought Lakeland Electric’s debt ratio to about 53%, limiting its ability to borrow if any more unforeseen problems arise in the near term.
City Finance Director Mike Brossart explained that the utility needs to stay below a debt ceiling of 55% to maintain its favorable rating.
That could be a problem if McIntosh Unit 5 fails again.
Keeping an aging ‘workhorse’ running: Unit 5 is the utility’s “flagship unit” and most cost-effective baseload generator, but it’s nearing the end of its lifespan.
It has been offline since late February for scheduled maintenance and is expected to come back on May 18, said Tory Bombard, assistant director of production.
Lakeland Electric is counting on keeping it running until at least 2032 and hopefully 2035, Beckham said. However, if it fails before then, he said the utility is unlikely to replace it with another power plant — partly because the political and economic climate is uncertain.
“Conventional power plants like Unit 5 take four-plus years to plan and build, and are very expensive and risky,” Beckham said.
Instead, the utility might buy a stake in another utility’s plant or enter a long-term power purchase agreement, he said.
Buying power: During outages or when it needs more energy than it can produce, Lakeland Electric buys power through the Florida Municipal Power Pool under short-term purchase agreements.
Lacy said the utility is spending about $25.5 million to buy more than 650,000 megawatts of power during the Unit 5 repairs. But that figure would have been about $4.1 million higher without the new power plant, she said.
Cindy Glover is a reporter for LkldNow, a nonprofit newsroom providing independent local news for Lakeland. Read at LkldNow.com.
