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Council to discuss ‘rate stabilization’
City seeks way to pay $826,104 power plant cost
Monday, October 8, 2012
More discussion of a proposed electric “rate stabilization” plan is on the Martinsville City Council’s agenda for Tuesday.
The plan, according to a council report, would set aside funds during the current fiscal year and the following one to stabilize projected future rising power costs and repay “stranded costs” for the American Municipal Power (AMP) Generating Station over a 42-month period ending Dec. 31, 2015.
Through AMP, an organization owned by its member cities, Martinsville buys electricity which it then distributes to city electric department customers.
AMPGS, a coal-fired plant that would have been built in Ohio, was canceled in late 2009 after contractors’ cost estimates suddenly increased sharply.
The city would have bought power produced at the plant via its involvement in AMP, which spent about $200 million on developing the plant.
Martinsville’s portion of the stranded costs is $826,104, according to city Utilities Director Dennis Bowles.
According to the report, wholesale power prices are projected to be lower through fiscal 2014, and implementing the plan would hold the city’s cost at $69.97 per megawatt hour.
Excess money that the city pays to AMP through a stabilized rate would go into a trust fund. The excess would produce funds to pay off the city’s share of the power plant’s stranded costs as well as keep the city’s wholesale power rate steady as actual rates fluctuate from month to month above and below the stabilized rate, the report states.
Council members began discussing the rate stabilization plan on Sept. 25 but postponed considering it for approval until they could get information from AMP regarding administrative and management fees for the plan.
According to the report, there are two fees. One is a yearly $500 fee for U.S. Bank to administer the trust fund. The other is a one-time fee of $2,000 that AMP will charge to recover legal and administrative expenses for setting up and administering the stabilization plan.
The council will consider the plan when it meets at 7:30 p.m. Tuesday at the municipal building on West Church Street uptown.
Other agenda items will include:
• Hearing a presentation on historic tax credits.
• Presenting proclamations pertaining to GED & Career Awareness Week, Domestic Violence Awareness Month and Extra Mile Day.
• Considering accepting art created by former city manager Don Edmonds for display in the municipal building.
• Hearing an update on recent projects of the Martinsville-Henry County Economic Development Corp.
• Considering routine-type budget matters.
• Hearing business from the floor.
At 7 p.m., council members will meet in closed session to discuss possible appointments to local boards and commissions, a personnel matter and a prospective business or industry that has not yet publicly announced its interest in locating in the area.