Owensboro Municipal Utilities to move into MISO, signs transitional contracts with Big Rivers and NextEra

Owensboro Municipal Utilities officials told the Owensboro City Commission that the utility will migrate its power supply from the LG&E and KU control area into the Midcontinent Independent System Operator (MISO) market, with a transition beginning in early 2027 and a long-term supply contract with NextEra Energy starting June 1, 2027.

"We are in the process of making some significant changes to the way we provide power to the city here in about 2 years," Tim Lyons, general manager of Owensboro Municipal Utilities, said during the presentation. Lyons said OMU's contract with Big Rivers Electric expires Dec. 31, 2026, and that OMU expects to be a MISO market participant effective March 1, 2027, with a short-term Big Rivers supply contract running Jan. 127May 31, 2027 to assist the migration.

Lyons said OMU conducted an integrated resource planning process beginning in 2022 and issued a request for proposals in 2023 seeking capacity and energy options, including combined-cycle natural gas, and examined economics, risk and flexibility. "Throughout the evaluation process ... it was apparent that ... it would be beneficial for Owensboro Municipal to move from the LG and E system to the MISO system," he said.

Lyons said OMU has arranged for Big Rivers to purchase certain transmission assets from LG&E so that OMU can establish an interconnection into MISO. "OME agrees to move into MISO upon the closing sale of the assets, and we are proposing the closing date of the sale will be March 1 of 20 27," Lyons said.

OMU also announced a long-term power supply agreement with NextEra Energy through 2034. "With NextEra Energy Marketing as OMU's energy provider, we provide extensive knowledge and operational experience," Jack Sullivan, senior director of originations for NextEra, said. Sullivan described NextEra as an experienced wholesale-market participant and said NextEra serves public power customers in the MISO footprint.

Officials outlined timing and customer impacts. Lyons said the short-term Big Rivers agreement covers service during January and February 2027 while OMU completes migration steps, and that OMU expects to begin participating fully in MISO on March 1, 2027. The NextEra contract is scheduled to begin June 1, 2027.

OMU officials warned customers that power prices have been increasing nationally and said part of the utility27s planning assumes some rate pressure. Lyons cited an example projection in which residential rates move from about 13.4 cents per kilowatt-hour to roughly 15 cents in the next 12 months. He said OMU plans a two-step approach: an Energy Cost Adjustment (ECA) change in the fall followed by a cost-of-service review and potential base rate adjustment in spring.

OMU described expected benefits from joining MISO: broader access to capacity and energy sources, greater transmission planning and flexibility, the ability to tap competitive wholesale resources and options for integrating renewables. Lyons said OMU27s goals are to preserve reliability and manage overall costs for customers.

The presentation also summarized OMU27s recent infrastructure funding awards and operational statistics: OMU serves about 27,000 electric customers, more than 26,000 water customers and is approaching 6,000 telecommunications customers; it cited approximately $4 million in city/county/state funds for Hillcrest area water improvements, about $1.3 million for a river port waterline upgrade, roughly $1 million for an economic development waterline upgrade, $1.7 million for a transmission tower replacement and near-90% funding for a $600,000 reconductoring project. Lyons said the combined electric and water projects total "over $8,000,000 in funds." He also noted awards such as the American Public Power Association RP3 platinum status and American Water Works Association recognitions.

Commissioners asked about infrastructure capacity for future large industrial customers and cybersecurity and grid reliability. Lyons said OMU believes it has distribution capability for roughly 2020to2030 megawatts of growth and that partnering with a larger market participant and access to MISO27s transmission planning improves reliability. Lyons said if a very large customer sought on-site generation, OMU would explore options with potential partners.

Lyons and Sullivan fielded questions about rate impacts, grid resilience and how flexible contracts would accommodate local growth. Lyons said OMU intends to use contract flexibility to support commercial and industrial development and to mitigate customer impacts where possible.

Lyons closed by reiterating the timeline: a short-term Big Rivers contract Jan. 127May 31, 2027, MISO market entry on March 1, 2027, and the NextEra contract beginning June 1, 2027. He and a NextEra representative remained available for questions after the presentation.