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Coaching Power Plant Management Through Crucial Contract Negotiations

The Client

With a 1633 MW capacity, Midland Cogeneration Venture (MCV) is the largest natural gas-fired combined electrical energy and steam energy generating plant in the United States. In addition to generating enough electricity to power 1.1 million households, MCV also sells electricity and steam to Corteva Agriscience and Dow Silicones.

The Challenge

Initially, MCV was focused on assessing its control system service life, considering obsolescence issues. Meanwhile, MCV’s existing long-term service agreement was set to expire in 2026, but its power purchase agreement extended to 2030. As a result, MCV needed to renegotiate its long-term service agreement with the original equipment manufacturer (OEM). The stakes were high. MCV would be locked into the LTSA for the next 10 years, so it was crucial to ensure the terms of the agreement were fair and sustainable. MCV recognized the need for a subject matter expert to help them evaluate and renegotiate the existing LTSA to last until CY2030.

The Solution

With 30 years of experience working with this specific technology, Siraj Taj, Owner of ST Power Services, served as the technical and commercial advisor to MCV. ST Power Services assessed the overall health of MCV’s assets and specifically the gas turbines. Coaching the leadership team throughout the LTSA negotiations, ST Power Services was able to identify existing gaps in the contract and add some flexibility to benefit MCV. Risk management was a crucial part of the contract negotiations. The contract the OEM proposed sought to shift risks onto MCV. ST Power Services instead proposed a risk-sharing model that included an annual contingency plan, to be partially funded by the OEM. The terms of the final agreement were technically and commercially favorable to MCV while extending the OEM support to increase coverage. After the contract was successfully renegotiated, ST Power Services continued to work shoulder-to-shoulder with MCV to manage the LTSA and to ensure the terms of the agreement were carried out.

The Bottom Line

"ST Power Services coached our approach with the OEM and allowed us to lead, guide, and push negotiations to streamline the process. ST Power Services exceeded our expectations, and we made the right decision hiring them."

– Thomas J. Harrison

Midland Cogeneration Venture,

Manager of Energy Supply & Marketing and Special Projects

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