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Martinsville, Virginia 24115
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AMP debt to be paid
Wednesday, May 14, 2014
Martinsville City Council on Tuesday approved a plan to pay off the city’s costs toward a discontinued power plant project using money that will be generated from a recent electric rate increase.
The vote was 4-1. Councilman Danny Turner, who frequently criticizes the city’s involvement with American Municipal Power (AMP), was the dissenter.
An increase in Martinsville Electric Department customers’ rates that took effect May 1 was designed, in part, to generate $200,000 in extra revenue annually to put toward the city’s “stranded costs” for the AMP Generating Station project in Meigs County, Ohio.
AMP, through which the city buys wholesale power that it distributes to electric department customers, terminated the project in 2009 after development costs suddenly rose sharply.
Martinsville owes a maximum of $903,391 toward the project’s stranded costs, recent calculations by AMP shows.
A report in the council’s agenda packet showed AMP aims to hold onto the site where the generating station was to have been built for the potential development of another power plant.
For that reason, AMP is giving the city a credit of $364,467, leaving a balance due of $538,924, the report shows.
The city still could be held liable for the $364,467 if AMP cannot redevelop the site itself or sell it to someone, the report states.
Under the plan approved Tuesday and suggested by city Utilities Director Dennis Bowles, Martinsville will pay AMP $200,000 of the $538,924 balance in the new fiscal year that will start July 1. It will pay another $200,000 in the next fiscal year and the remaining $138,924 in the following year.
If the city ends up having to pay the full $903,391, it will make $200,000 payments during each of the next four years and then pay the remainder in the following year, according to Bowles.
Noting that AMP continues to be involved in litigation regarding the ceased power plant, Turner indicated he thinks the city should wait until the suit is settled to determine whether the city needs to pay the money.
Paying it now will help reduce interest the city owes, Bowles said.
“I can assure you,” he told Turner, “that if the court case is resolved in the participants’ favor, the money will be returned to the city.”
Participants in the generating station include Martinsville and various other cities that are AMP members.
Bowles said that based on his experiences with the nonprofit organization, he believes Ohio-based AMP is trustworthy in its dealings with cities.
“AMP doesn’t try to hide things from its participants,” although certain matters between them that are considered attorney-client privilege and therefore cannot be discussed publicly, he said.
Speaking from the floor at the council meeting, city resident and city council candidate Ural Harris encouraged the council to ask Ohio’s attorney general to investigate AMP.
Mayor Kim Adkins said the council needs “to do some due diligence” first to see whether an investigation is warranted.