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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Thursday, December 18, 2008
By GINNY WRAY - Bulletin Staff Writer
The cost of one of the AMP-Ohio power stations in which Martinsville will participate has increased more than 10 percent, but City Manager Clarence Monday said it still is the right move for Martinsville.
According to a report in The Daily Standard newspaper in Celina, Ohio, an October feasibility study put construction costs at $3.25 billion for the Meigs County, Ohio, power plant, up from an initial estimate of $2.9 billion.
It stated that the primary reason for the hike is rising costs for commodities such as steel and labor.
The final cost of the plant will be split among AMP-Ohio’s 81 member communities through customer bills, the newspaper reported. Martinsville Mayor Kathy Lawson said the city was not given figures on that impact.
Also, the start date for the plant has been pushed back six months to 2014, The Daily Standard reported. Construction is set to begin next year, it stated.
Monday said Martinsville Electric Department Superintendent Dennis Bowles attended a meeting where that information was discussed and returned with a report on it.
Monday said the full impact of rising costs are not known yet.
But he said there is a “safety net” built in all the projects. Once the final figures are in, the AMP-Ohio board decides to “go or no go” on the project, Monday said. Localities, including Martinsville, have a say in that through the board, he added.
In February, Martinsville City Council agreed to buy wholesale electricity from three AMP-Ohio (American Municipal Power-Ohio) power plant projects for 40 years, despite heavy opposition to the idea.
The city estimated it will spend about $3.5 million a year for the 40-year span of the contract toward the power plant projects. Consultants figured that only about $123,535 of the $3.5 million would go toward debt service on the plants’ construction.
AMP-Ohio is a nonprofit organization owned by its member cities, through which Martinsville buys power on the wholesale market. Martinsville agreed to participate in — essentially buy electricity from — the coal-fired plant in Meigs County, the Prairie State Energy Campus coal-fired plant in Lively Grove, Ill., and hydroelectric plants along the Ohio River.
Monday said the Prairie State project is under construction. He was not sure of the status of the hydro plants, but he said he has not heard of any setbacks on either of those projects.
During the debate on the city’s contract last winter, city officials and consultants said they believed the city could save on wholesale power costs by basically being a part-owner of the power plant projects through the AMP-Ohio membership, and that the city will pay less overall by buying power through a nonprofit organization than from profit-making energy companies.
Monday said there could be a good side to the delay in the Meigs Plant. The cost of some power being purchased has fallen slightly, while other power rates have risen slightly.
The city does not know the net effect yet, he said, and will consider that in the spring during city budget discussions.
Monday added that he still feels the AMP-Ohio package “was the better way to do. Think about what’s happened on the power market now,” he said, pointing to recent rate increases approved for Appalachian Power Co. totaling about 30 percent.
“Our power rates are very close to AEP (American Electric Power, the parent company of Appalachian) right now,” Monday said. “Apco’s message is the power industry is changing down the road” and it needs to build more assets to meet demand at the same time as its costs are rising.
“Our long-term strategy is to get ahold of our power costs,” Monday added.
Lawson agreed.
“When you’re buying (power) from basically yourself, you’re not paying overhead and profit. In a capitalistic world, somebody’s making a profit, and typically there are some jobs that pay very well. When you have a coop (cooperative) owned and operated by municipalities,” that is less likely, she said Wednesday. |
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