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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Monday, January 11, 2010
By MICKEY POWELL - Bulletin Staff Writer
A financial expert says Martinsville and other American Municipal Power (AMP) member localities should insist that the organization provide a full accounting of their costs toward a power plant project that recently was halted.
Martinsville’s prorated share of the coal-fired plant project in Meigs County, Ohio, has been estimated at $2.08 million. Thomas Sanzillo, a former acting New York state comptroller who now is a financial adviser, said the city now should get a breakdown of that money.
The sooner that is done, the better, he indicated, because the city might consider taking part in other power plant projects to make up for the Meigs County project.
“Leaving it out to speculation just leads to anxiety” if other projects are considered, he said.
Martinsville and other AMP member localities ceased the Meigs County project in November due to an approximately 37 percent hike in construction cost estimates during the past six months.
Sanzillo was New York state’s acting comptroller in late 2006 and early 2007. He also served two stints as the state’s first deputy comptroller.
New York’s comptroller is a state cabinet officer who audits government operations and oversees the state retirement system, information on the Internet shows.
Martinsville buys wholesale electricity through AMP, which is based in Ohio. AMP already has spent about $200 million on developing the Meigs County plant, officials have said.
Sanzillo said he examined a contract between AMP and member localities pertaining to the project at the request of Ohio Citizen Action, a consumer advocacy organization.
He said the contract seemed to have “insufficient protections” for localities in case the project did not come to fruition.
Now, “local governments are going to have to pick up” some of the costs, he said, and they should “press (AMP) for a clear accounting of all the cost” they will face and set a deadline for providing that information to them.
In doing so, he said, localities “should ask a lot of questions ... and try to work with AMP to whittle down the numbers” so they don’t pay for power they won’t get.
He said that having to pay for power that is not received would be “pretty serious” for localities “in the midst of a recession.”
Environmentalists oppose coal-fired electricity plants due to concerns about emissions, but Sanzillo said that is “a secondary concern” in this instance. He said the main concern is the cost factors that proved too high.
Other coal-fired projects across the nation were abandoned because “the cost of the plants skyrocketed” and they no longer were cost-effective, he said.
“A mistake was made” by AMP in deciding to develop a coal-fired project, Sanzillo said. He added that he and other financial experts “could have told them this beforehand.”
Martinsville has two options, according to city officials.
One is fully pulling out of its commitment to buy power that the Meigs plant would have generated. The city would pay AMP the $2.08 million, or what it has not paid already, over a 10- to 15-year period.
City Councilman Danny Turner said he understands a construction company might sue AMP over the Meigs County project. If that happens, he said, “we may not be able to get out” of the commitment.
“Two million is a lot of money,” Turner said. But he expressed concern that the city could end up owing more, such as if it has to pay money if a lawsuit results in a judgment against AMP.
The city’s other option is to participate in future AMP projects. Potential projects include retooling the Meigs County site to generate electricity by natural gas, additional hydroelectric projects on the Ohio River and/or a proposed natural gas power generation facility in Danville, officials have said.
Martinsville City Council on Tuesday will hear information on AMP projects that the city could participate in.
In deciding whether to take part in those projects, Sanzillo said council members “have to look at each project as it comes along” and decide if they think it is worthwhile.
Sanzillo and Turner recently had a phone conversation about AMP matters.
Turner said he is not necessarily against AMP.
“We’ve got to buy (wholesale) electricity somewhere ... from the cheapest broker we can get,” and that might be AMP, he said.
Rather, Turner said he does not think the city should be investing in power plant construction right now because in a decade or two, new technology might exist that could generate power at a lower cost. |
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