A power plant system (110) produces utility grade electrical AC power from gaseous or liquid hydrocarbon fuels using a fuel cell stack (186) employing ion exchange membranes. The fuel is desulfurized, mixed with water, heated and vaporized before being introduced into a reformer (168). The reformer (168) produces a hydrogen-rich gas (51) which is then directed through a series of heat exchangers (164), shift converters (172) and a selective oxidizer (142). The processed fuel stream is combined in the fuel cell stack (186) with a pressurized oxidant stream to generate DC power. Oxidant pressure is supplied by compressors (130, 134) driven by turbines using heated system exhaust gases. The DC power is converted into utility grade AC power (195) using an inverter (210) augmented by a battery peaking unit (212) for rapid load following. The water generated in the fuel cell stack (186) is recycled and used to cool the fuel cell stack and to humidify the fuel stream and oxidant stream prior to their introduction to the fuel cell stack (186).