Martinsville Bulletin, Inc.
P. O. Box 3711
204 Broad Street
Martinsville, Virginia 24115
276-638-8801
Toll Free: 800-234-6575
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Wednesday, December 19, 2007
By MICKEY POWELL - Bulletin Staff Writer
If Martinsville invests $3.5 million a year on power plants through AMP-Ohio, that would supply only about one-third of the city’s power needs, city officials said Tuesday.
Martinsville needs about 44 megawatts of electricity a month, which usually is enough to cover peak periods, according to city electric department Superintendent Dennis Bowles. A megawatt is 1 million watts.
The three power plant projects the city is considering would be able to supply 15 megawatts to Martinsville, so the city would have to buy more power on the wholesale market through other arrangements with AMP-Ohio, he said.
This fiscal year’s city budget includes about $12.4 million for the purchase of wholesale power.
American Municipal Power-Ohio (AMP-Ohio) has asked Martinsville and about 85 other cities to invest in the plant projects to try to lower future costs for buying wholesale electricity. In Martinsville’s case, the investment would be $3.5 million annually for 40 years.
Bowles and City Manager Clarence Monday said Tuesday the total $140 million that Martinsville is considering investing includes the cost of buying electricity generated at the plants as well as the construction debt.
A city release issued Dec. 7 stated that the city “would obligate itself to approximately $3.5 million in annual debt (for 40 years) beginning in 2013 when the projects start producing power.”
Bowles and Monday agree that is the case because the city would obligate itself not only to help pay for construction of the plants, but also to buy electricity produced at the facilities.
AMP-Ohio “wants a commitment that we’re going to buy the power we say we’re going to buy,” Monday said.
Because the “agreement is to purchase the power for 40 years ... you can call it a debt,” said Bowles.
However, “it’s not like we’ve got to purchase power and then finance the debt” separately, Monday added.
If the Martinsville City Council approves the investment, most of the money would actually be spent to buy power, Bowles said. Only a “small percentage” of the money would go toward debt service, he said. He could not remember the exact percentage.
The city would pay from 4.8 cents to 6.6 cents per kilowatt hour for power — including debt service — from the plants, Bowles said, adding the prices could go up “a little more” if plant operations and maintenance costs rise.
“We’ve got contracts out now where we’re paying 5.5 cents to 5.8 cents” per kilowatt hour, he said. City contracts for buying wholesale power are in place through 2012.
AMP-Ohio projects that the city should start to see lower wholesale prices by 2018, he said.
One project, the Prairie State Energy Campus in Illinois, now is being built. The other two would be in Ohio. One is in the process of getting necessary regulatory permits and the other is out for bids, according to AMP-Ohio.
If any project Martinsville invests in is not started or finished, the city still would be partly liable for any developmental costs, such as permit fees, and debt interest incurred up to that time, Bowles said.
Kent Carson, AMP-Ohio’s director of communications, agreed. But he said those costs would be a small amount compared to $3.5 million. |
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