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Turner backs power plant probe
Wednesday, September 11, 2013
By MICKEY POWELL - Bulletin staff writer
A Martinsville City Council member has joined forces with local government officials in Ohio to ask that state’s attorney general to investigate an Illinois power plant that provides some of Martinsville’s electricity.
Danny Turner recently told his fellow council members that he thinks the Prairie State Energy Campus was “a horrible investment” for Martinsville. He said he has “problems believing” information the city received and used in deciding to participate in the plant by buying electricity it generates.
The council voted in February 2008 to take part in Prairie State. Turner was not a council member then — he was elected the following May and took his seat the following July.
Martinsville receives about 15 percent of its electricity from Prairie State, a coal-fired plant that started operating last summer, months behind schedule. The plant has been controversial due to the delay and because construction costs rose significantly over time to about $5 billion.
“Construction costs exploded straight up,” Turner said, explaining why he is concerned. “It seemed like at every turn, the price escalated.”
Turner said officials had been told that prices for natural gas, another fuel source for electricity production, would rise while coal prices would decline when in reality, the opposite happened.
Officials maintain that prices they were provided were only projections.
“I think people in the know (about the project) knew that natural gas was going to be the prevalent” fuel source of the future, Turner said.
If that occurs, Prairie State “won’t make it 10 years” before it is obsolete, but the debt that participants owe toward its construction “will go on,” he said.
“I want local officials to come out and say they were wrong” about their decision to participate in the power plant, he added.
American Municipal Power (AMP), an organization in Columbus, Ohio, through which Martinsville buys wholesale electricity, owns 23 percent of the plant.
The Galion City Council in Ohio recently voted to ask Ohio Attorney General Mike DeWine to launch an investigation into Prairie State.
Of utmost concern is whether cities that chose to participate in the plant received accurate information from which to make their decisions, council President Don Faulds said in a report in The Columbus Dispatch.
Turner and three council members from Ohio cities, including Galion, sent a letter to DeWine in March, urging him to “investigate any potential fraud or misrepresentations” that led cities in Ohio and seven other states to enter into “long-term contracts to invest in electric generation” at Prairie State.
In the letter, the council members express concern that the localities have construction debt toward a plant that is seeing operational problems and is producing power “at a price at least 50 percent over what was promised.”
The letter also mentions concerns as to whether localities were provided accurate information about the plant before it was built and whether the project was “transparent and above-board.”
The other questions dealt with issues affecting only Ohio municipalities.
“The idea that AMP has not been ‘transparent and above board’ regarding Prairie State is an insult to the 20 current AMP member municipalities on the AMP Board of Trustees, 14 of which are in the project,” Kent Carson, AMP’s senior media relations/communications director, wrote in an email to the Martinsville Bulletin. The newspaper was seeking AMP’s response to the letter’s claims.
Also, Carson wrote, it is an insult to “the 15 participating AMP members that are on the participants committee for the project who have often met to be updated and to guide AMP’s participation in the project, as well as the vast majority of the 60 participants who also have met regularly to be updated” and help guide the project.
Carson said AMP had no further comment.
Martinsville Utilities Director Dennis Bowles said that in talks he has had with Prairie State and AMP officials, “they’ve been very forthcoming” and did not seem to hold, or want to hold, anything back.
“I trust what they’ve been reporting,” Mayor Kim Adkins said.
Bowles said the city is not entirely pleased with Prairie State, though, since the plant has not yet reached its full production capacity due to operational problems still being identified and fixed, resulting in higher power costs.
A feasibility study projected that Prairie State’s electricity prices would be about $42 a megawatt hour. A megawatt hour is the power consumed if 1 million watts are used for an hour.
Martinsville was paying about $60 a megawatt hour as of March. Bowles said that has since increased to as high as $85, but in August the price was about $77. He said he expects costs to drop as the plant reaches higher operating capacity.
But “we were never promised any certain price,” Bowles emphasized.
“I think (power from) the plant will be a good value and a good resource for us in time,” he said. “We’ve just got to give them time” to fix problems that occurred unexpectedly.
Martinsville City Council itself has not asked for an investigation into Prairie State. Although his letter indicated he is a councilman, Turner recently told council members that he personally was requesting the investigation.
If the letter had represented opinions of the entire council, it would have been printed on city letterhead, he said.
The Ohio Attorney General’s Office received the request signed by Turner but has not received the Galion council’s investigation request, Kate Hanson, a public information officer for that office, said to her knowledge.
Hanson said it is premature to speculate on how the office will handle that request until it is received and reviewed.
“It’s not common for the Ohio Attorney General’s Office to receive such requests” from localities, she said, because it is a state agency usually concerned with state matters, not local ones.
Bowles said he does not know why other localities are unhappy with Prairie State because he does not work for them. He speculated, though, that they may have agreed to buy more power from the plant than they could afford.
He noted that Martinsville has diversified its sources of electricity to include power generated from coal and water, as well as methane given off by trash at the former city landfill.
Generating some of its own electricity and buying the rest from various sources has helped Martinsville control its power costs by not relying too heavily on a single type of power, according to Bowles.
“Those other cities having problems” may have “failed to do that,” he said.
That includes Batavia, Ill., another Prairie State participant, which signed up for more electricity than it needed and will be selling the excess at a loss for years to come, according to a recent article in the Chicago Tribune.
“In retrospect, we should have focused on a little more diversity in our portfolio” of power sources, Gary Holm, Batavia’s public works director, told that newspaper.
The U.S. Securities and Exchange Commission (SEC) has been investigating the involvement of another company, Peabody Energy Corp., in Prairie State.
Peabody owns about 5 percent of Prairie State, but it proposed the plant and led its development, according to published reports.
Bowles said he did not know the status of that investigation.