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, February 27, 2008
By MICKEY POWELL - Bulletin Staff Writer
Martinsville will buy wholesale electricity from three American Municipal Power-Ohio power plant projects for 40 years despite heavy public opposition.
Following a public hearing at which both supporters and opponents voiced their opinions, Martinsville City Council on Tuesday approved documents to participate in the projects in separate votes for each project.
Each vote was 3-2. Vice Mayor James Clark and Mayor Kimble Reynolds Jr. were the dissenters on each vote.
AMP-Ohio is a nonprofit organization, owned by its member cities, through which Martinsville buys power on the wholesale market. It proposed that the city participate in — essentially, buy electricity from — coal-fired plants in Ohio and Illinois and a project involving three small hydrodams in Ohio.
All three projects, of which AMP-Ohio either will be the owner or part-owner, are either in the construction or permitting phase.
City officials and consultants have reasoned that Martinsville could save on wholesale power costs — which are expected to continue rising well into the future — by basically being a part-owner of the power plant projects through its membership in AMP-Ohio.
Council members who voted in favor of participating in the three projects indicated they think that despite the rising prices, Martinsville will pay less overall by buying power through a nonprofit organization than by buying it from energy companies that expect profits.
The AMP-Ohio projects “provide us the least amount of risk” and are “our lowest-cost solution,” based on projected cost figures the council has seen, said Councilman Gene Teague.
“We cannot afford to stick our residents with” high electricity rates due to high wholesale prices, especially since many Martinsville residents are older and/or on fixed incomes, said Councilwoman Kathy Lawson.
“Deep in my heart, I think this is the right answer,” Councilman Ron Ferrill said of the projects.
In declaring his support for taking part in the projects, Ferrill said he “probably could be accused of changing my mind.”
During a council meeting Jan. 22, Ferrill indicated he was against taking part in the projects due to public opposition.
“Evidently, the community doesn’t mind spending more money” than it has to on electricity, Clark said, alluding to the opposition.
Still, he voted for the city not to participate in the projects due to the opposition, he said.
Reynolds said he perceives that people do not have a “true comfort level” with a 40-year agreement with AMP-Ohio.
Despite rising wholesale power prices, the city estimates it will spend about $3.5 million per year for four decades toward the power plant projects.
Consultants have figured that only about $123,535 of the annual $3.5 million would go toward debt service on the power plants’ construction.
Reynolds also said he thinks new viable options for generating power, other than coal, will happen in the future. But “how fast, nobody knows,” he said.
On Jan. 22, the council considered voting on whether to participate in the power plant projects. No vote was taken, however, because no one on the five-member council made a motion to take part in the projects.
The lack of such a motion came after a public hearing that attracted many speakers, most of whom were in opposition to the city’s participation in the projects.
Officials recently revived the issue after the city’s consultants on electricity matters, GDS Associates Inc. of Marietta, Ga., suggested that the city take part in the projects. The firm originally made no such recommendation.
A GDS executive, Jack Madden, earlier this month said the recommendation was based on an updated feasibility study of the projects that shows capital costs. He said the study included information from contractors showing that construction costs are low enough to make the AMP-Ohio projects the city’s best option for obtaining electricity in the future.
That information was not available when GDS first examined the plants on behalf of Martinsville, according to Madden.
City Manager Clarence Monday formed a citizens committee comprised of people with experience in finance, utilities and/or property development to study whether the city should participate in any, or all, of the projects.
When it met Tuesday morning, the committee decided to recommend that the city take part in all three projects, said committee member Clark Eden.
Eden, a local developer, told the council that “all data presented by GDS ... projects that the long-term cost of power purchases would be lower if the city enters an agreement with” AMP-Ohio to participate in the projects.
“While it is clear that other options ... in the power industry exist, no viable alternative has been forthcoming,” he said.
Monday said city staff also recommended that the city participate in all three projects.
“It seems to be the best option ... the one that will provide the lowest power costs in the future” for the city, Monday said.
The city had expressed interest in possibly negotiating a contract to buy wholesale electricity from Appalachian Power Co. (Apco). Monday said the city has not heard from executives with the company since Jan. 18, but a company executive had told him Apco could not commit to selling the city any electricity right now, let alone propose a contract.
Eden said research he and the committee has done shows coal will be used to generate electricity “for the foreseeable future.”
AMP-Ohio’s coal-fired plants would be built to modern standards and emit “minimum emissions,” he said.
Ferrill said that to his understanding, “Apco’s equipment is extremely old. It’s going to be very expensive for them” to handle any new environmental regulations that might occur regarding emissions from coal-fired plants.
Such costs could be passed down to Martinsville, officials have said.
Lawson agreed. She said “the good part about AMP-Ohio is they are building new facilities with modern equipment” designed to greatly reduce emissions. |
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