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, March 11, 2010
By MICKEY POWELL - Bulletin Staff Writer
It could be more than a year before Martinsville officials learn how much the city owes toward the development of a coal-fired power plant project in Ohio that was discontinued in November.
American Municipal Power (AMP) spent roughly $200 million on developing the project, which was canceled due to high cost estimates by contractors. Martinsville’s prorated share of the cost was estimated at $2.08 million.
City Manager Clarence Monday said he understands it could be 12 to 18 months before AMP can determine what the city’s exact share will be.
“I doubt if we will have that information within a year,” said Mayor Kathy Lawson. “That is my gut feeling. When you’re involved with lawyers and litigation, it usually is a slow process.”
Other cities and electrical cooperatives that are AMP members and were taking part in the project also have not found out exactly how much they owe, Monday said.
“We’ve made our feelings known (to AMP officials) that we’d like to have that information as soon as possible,” and the organization has pledged to provide the data as soon as it can, Monday said.
But he and Lawson said they understand AMP cannot give the city an exact figure yet due to ongoing litigation between AMP and a contractor involved in the project, plus efforts to determine if the site would be suitable for a plant that generates electricity with a fuel other than coal.
Martinsville City Councilman Mark Stroud said that is “a fair statement.”
Both Monday and Lawson said they have heard little about the litigation and referred questions about it to AMP. Kent Carson, the organization’s director of communications, did not return phone calls Wednesday.
Councilman Danny Turner said the city’s $2 million estimate was determined based on the city being responsible for about 1 percent of the $200 million.
But he fears the city ultimately will be held accountable for more — maybe as much as $6 million — because AMP borrowed $520 million for the project and commitments were not received for all shares in the project, he said.
AMP is a nonprofit organization based in Ohio and owned by its members. Martinsville buys wholesale power through AMP. That power then is sold and distributed to customers of the city electric department.
Stroud indicated that AMP officials have not given city council members a reason not to trust them.
Still, when a construction project does not come to fruition “for reasons beyond our control,” it is cause for concern, he said.
The discontinued project would have been built in Meigs County, Ohio. If it had been built, Martinsville would have paid its share of development costs through purchases of power generated at the plant, Lawson said.
As a result of that arrangement, the city currently is not awaiting any bills from AMP, she said.
“We haven’t been invoiced, and we haven’t paid anything,” Monday added.
“It’s premature to say we made a bad decision” by agreeing to take part in the Meigs project, he said, and “it’s incorrect to look at it from the perspective” of how much the city has to pay someone and when.
According to city officials, Martinsville has two options:
• Participation in future AMP projects, including a possible retooling of the Meigs site.
• A complete withdrawal from its commitment to buy the power that the project would have produced. In that case, Martinsville would pay the $2.08 million, or whatever amount is determined that the city owes, over a 10- to 15-year period through the city’s costs for electricity bought through AMP.
Monday indicated that city officials do not expect to have to suddenly write a large check to pay for Martinsville’s share of the Meigs expenses.
“AMP has already said it will work with localities so they will not have to pay (anything they owe toward the project) all at one time,” but through their costs for electricity they buy from the organization, Monday said.
Furthermore, the extra expense would not necessarily mean the city would end up paying more for wholesale power, he said.
He said it is possible that prices for power could drop in the future, either on the wholesale market or when buying it from the generation source, such as if new forms of energy are developed that are cheaper than current ones.
If the city’s wholesale electricity costs were to increase, there are various options for paying the additional expense, Monday said. They include using reserve funds, reducing other budgeted expenses and, yes, a tax increase, although he indicated the latter is an option nobody has mentioned.
Whether the city chooses to participate in other AMP projects will depend on what the projects are and how the city would benefit, Lawson said.
But “I don’t see us walking away” from the city’s commitment to AMP, she said. “If we walk away, where are we going to get our power from?”
Because AMP is involved in a lawsuit and Martinsville is a member of AMP, “we probably can’t get out” of the commitment now, Turner said.
Lawson said the council is not withholding from the public any information about the discontinued power plant project or how much the city eventually may have to pay toward its development costs somehow.
As the mayor, “I can assure you that I have never withheld information (on any issue) that was prudent to our integrity” as a council, she said.
Vice Mayor Kimble Reynolds Jr. and Councilman Gene Teague could not be reached for comment. |
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