The MSU Power Plant began burning natural gas instead of coal last week after prices for the fuel remained lower than university officials expected.
Bob Ellerhorst, director of utility services at the power plant, said the university rarely burns gas as an economic choice.
“We’re burning some natural gas because natural gas prices are really soft today,” he said. “Traditionally, gas is more expensive than coal over the long run. But you get these spikes like right now, when it’s cheaper.”
Although usually cheaper, coal releases more carbon dioxide emissions than natural gas.
While only 7 percent of MSU’s fuel comes in the form of gas, Ellerhorst said the university diversifies its energy portfolio through short- and long-term agreements in order to ?defend itself against volatile markets.
“We try to take advantage of the market,” Ellerhorst said. “But nobody avoided the run-up in energy prices that occurred over the past two years. Everybody’s been exposed to it.”
Through varied-length contracts, the university buys the majority of gas and coal it will need in the future. For example, of the 250,000 tons of coal the university uses per year, 220,000 tons comes from termed contracts. These purchases secure the energy MSU needs for its functioning supply.
“Sometimes the long-term contracts are favorable for us, sometimes they’re not,” Ellerhorst said. “You win some, you lose some, but on the average it works out for the best because it gives you a regular supply.”
However, some fuel is purchased as the market changes, such as the natural gas being burned now.
“You’re still at the mercy of the coal market or natural gas,” said Fred Poston, MSU vice president for finance and operations.
In 2007-2008, the plant burned coal for 93 percent of its fuel. Ellerhorst said that number will probably be lower this year.
Ellerhorst said the plant will burn gas until the end of the month, but no decisions for February have been made yet.
Poston said because MSU produces most of its own energy to power the campus, it’s less susceptible to changes in the energy market than other universities.
Terry Link, director of MSU’s Office of Campus ?Sustainability, said along with playing the market for advantageous fuel prices, the ?university has to make changes to reduce energy consumption on a long-range scale.
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