Martinsville Bulletin, Inc.
P. O. Box 3711
204 Broad Street
Martinsville, Virginia 24115
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| City may invest $3.5 million a year for 40 years |
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Sunday, December 9, 2007
By MICKEY POWELL - Bulletin Staff Writer
American Municipal Power-Ohio is proposing that Martinsville invest in three power plants it is considering building — an investment that ultimately could cost the city $140 million.
City Manager Clarence Monday said he thinks such an investment would not prompt the city to raise electric rates, but neither would it necessarily result in city residents and businesses paying less for power.
Investing in all three plants would obligate the city to spend $3.5 million a year for 40 years, Monday said. That totals $140 million.
AMP-Ohio officials predict the debt would be offset by the potential savings from lower wholesale power costs, he said.
However, AMP-Ohio is “making an educated guess” based on the history of rates for wholesale electricity, Monday said.
The city’s interest in investing in the plants, he said, stems from “trying to anticipate what’s going to happen on the open market. Chances are that it’s (wholesale power prices) going to increase,” but there is no guarantee that the city ultimately would save money by investing in the plants.
“Time will tell if it’s a good deal or not,” he said.
Martinsville City Councilman Ron Ferrill said the city is “getting jerked around a lot” on the wholesale power market. “Whatever the market will allow is what they (electricity producers) charge.”
The city council has scheduled a special meeting at 7:30 p.m. Dec. 20 to hold a public hearing on whether the city should invest in some AMP-Ohio projects “to potentially stabilize and control future (wholesale) electricity rates,” according to a release.
“Further analysis and public input will be considered before any action is taken by city council,” Monday said.
AMP-Ohio, based in Columbus, Ohio, is an agent through which the city has bought wholesale power since February 2006. The city electric department then supplies that power to its customers.
Martinsville is considering partnering with AMP-Ohio and up to 85 other cities to build and operate three power plant projects and use the power generated by those plants.
The city would be contractually obligated to buy a certain amount of power produced at those plants over a certain period of time, Monday said. Reached at home Saturday, he said the city knows how much power it must buy over what period of time, but he could not immediately recall the figures.
The proposed power plant projects are:
• A coal-fired generating station in Meigs County, Ohio, on 1,600 acres with about 4,700 feet of frontage along the Ohio River. Monday noted the river frontage will help the plant receive coal supplies.
The plant’s estimated cost is $2.9 billion. AMP-Ohio expects to bring half of the plant’s capacity online in 2012 and the rest a year later, said Monday.
• Another coal-fired plant, the Prairie State Energy Campus, to be built in Lively Grove, Ill. The project already has the needed permits, Monday said.
He said a coal mine is at the site, so there would be no transport costs. The coal reserve is estimated at 30 years, he added.
The plant’s estimated cost is $3.1 billion. It would partially come online in 2011 and get up to full capacity the following year, Monday said.
• Hydroelectric plants that would use three dams already in place along the Ohio River at Cannelton, Smithland and Willow Island. Monday said the three dams combined would not produce as much power as either coal-fired plant.
Yet they would be less expensive to build — roughly $833 million for all three — and operating costs would be less, he said.
Construction is expected to start in March and the hydro plants are to be put into service in 2012, he said.
The city council could opt to invest in all three plants, invest in one or two or not invest in any of them, according to officials. Monday said there could be opportunities to invest in other plants in the future.
Martinsville’s annual debt service would start in 2013 if it invests in those power plants, he said, adding that the city has contracts in place for buying power through 2012. As a result, the city knows how much it will be paying for wholesale electricity through that year.
If the city invests in the projects, Monday said, “AMP-Ohio predicts our costs, even with debt, are going to be lower than on the open market.”
But the city could “take a chance” on market prices eventually falling, he said.
Ferrill said to his understanding, though, that is not likely to happen.
He indicated that he would vote for investing in the projects.
“In all likelihood, this looks like a way to see some stability” in prices, Ferrill said. “I don’t know of any other way.”
Councilwoman Kathy Lawson said she is not inclined to vote for it because $3.5 million annually for 40 years is “a huge sum of money.”
At the least “it bears a huge amount of consideration,” she said.
Lawson said she thinks that with Martinsville currently buying power for less than market rates, adding debt to electricity purchases “would not be a good situation,” and she is afraid a rate increase for city customers eventually may be needed.
Mayor Kimble Reynolds Jr., Vice Mayor James Clark and Councilman Mark Anderson could not be reached for comment Saturday. |
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