Resource and Risk Management services include oversight for all of MMWEC’s power generation interests as well as services to manage the financial and other risks facing municipal utilities.
These strategies reflect Member risk tolerance levels and are structured to meet system-specific portfolio goals.
MMWEC is the operator and principal owner of the Stony Brook Energy Center, which includes approximately 527 megawatts of electric generation, a natural gas pipeline, oil storage tanks, electric transmission lines and other facilities. There are 34 supervisory and bargaining unit employees in the power plant with administrative staff providing support for code/regulation compliance, environmental and safety compliance, major overhauls, equipment upgrades, equipment life assessments, training, pipeline management, transmission line oversight, and dispatch support.
MMWEC is the operator and principal owner of the Stony Brook plant, responsible outage planning and maintenance, among many other activities.
MMWEC owns approximately 696 megawatts in four New England power plants, including Stony Brook, Seabrook Station in New Hampshire, and Millstone Unit 3 in Connecticut. A variety of contracts supplement Members’ power supply needs. Oversight of these resources requires expertise that is core to MMWEC’s infrastructure, including plant operations and maintenance, engineering, wholesale power transactions, financial management and accounting.
In addition, MMWEC manages and operates the Berkshire Wind Power Project, a 12 turbine, 19.6 megawatt wind farm atop Brodie Mountain in Hancock, Massachusetts. Berkshire Wind is owned by the Berkshire Wind Power Cooperative, which consists of MMWEC and 16 municipal utilities.
Power Portfolio Management
Portfolio Management is professional and personal at MMWEC. Staff provide structured analyses of each system’s current and future resource mix, including generation, power contracts and other resources. The purpose is to identify, quantify and mitigate risk, promote resource diversification and portfolio optimization, which all lead to customer satisfaction and lower power costs. In order to stabilize and/or reduce power supply costs, staff also monitors fuel input prices, forward power markets and resource utilization rates, all in close coordination with individual Member utilities.
Bulk Power Cost Studies
Production cost simulations are performed to develop long-term Power Cost Projections, involving forecasts of projected load, Locational Marginal Prices (LMP), fuel prices and other variables affecting power costs. These studies are an essential tool for municipal utilities in developing local budgets.
This activity involves monitoring various commodity markets to identify value opportunities and implement portfolio strategies. Staff executes, records and confirms physical and financial power transactions to provide price certainty and reduce price volatility. Hedging and other contractual arrangements reduce risk exposure, optimize resources and enable Members to meet budgetary mandates. Enabling Agreements are executed to minimize counterparty risks.
Financial Risk Management
MMWEC provides a wide range of financial expertise and services to help its Members and Project Participants manage their financial affairs and risk exposures in a cost-effective manner. In addition to its Enterprise Risk Management initiative, some of these services include debt, investment and cash management; financial analysis and planning; project financing and accounting; and budgeting, financial reporting and compliance services. These services are employed in managing the approximate $500 million in outstanding MMWEC bonds as well as other financial resources for MMWEC, its Members and Project Participants.
Chicopee looks to MMWEC's risk and counterparty management services when purchasing power in bulk. MMWEC's ability to manage the financial risk associated with large purchases of energy gives us greater liquidity as well as financial security in wholesale power markets.
Jeff Cady, Manager
Chicopee Municipal Lighting Plant