Report Urges Muni Market to Provide Relief to Prairie State Municipalities

BY YVETTE SHIELDS, Bond Buyer – CHICAGO – “Underwriters and investors in billions of debt sold to finance the Prairie State coal-fired energy plant should come together to discuss relief for local municipalities burdened by the plant’s higher energy costs.

That’s the position struck by an environmental group that promotes renewable sources of energy and is among the toughest critics of the nearly $5 billion Illinois-based coal plant. Nine joint power agencies and energy cooperatives purchased an ownership stake in the plant by issuing billions in debt….

As the project’s costs increased, so did the costs passed along to local governments and utilities. The cost of power is significantly higher than originally expected and nearly double current prices on the open market, according to Fitch Ratings. Local utilities are on the hook due to stringent take or pay contracts to purchase power signed with their participating JPA’s, which afford investors strong protections.

‘Prairie State was, and is, a crippling deal for the municipalities that signed on. Those who have gained from it—all those Wall Street bankers, high-priced lawyers, well-paid accountants, and insatiable investors—should be compelled to join the public dialogue on finding a solution,’ according to a four-part report from the Institute for Energy Economics and Financial Analysis.”

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Utility seeks purchaser for excess power

By David Zoeller,  Paducah Sun – PADUCAH – “Two months into the job as general manager of Paducah Power System, Gary Zheng estimates he has put 5,000 miles on his car.

That’s not a reflection of a long commute to and from the office; it’s the distance he is traveling in search of a solution to PPS’ financial troubles that will ultimately bring relief to its ratepayers.

Paducah Power’s rates are the highest in the state due mainly to the past poor performance of the Prairie State Energy Campus, the utility’s chief supplier of power, and the utility’s large debt as an owner/investor in the Illinois coal-fired power plant project.

Paducah Power’s rates are the highest in the state due mainly to the past poor performance of the Prairie State Energy Campus, the utility’s chief supplier of power, and the utility’s large debt as an owner/investor in the Illinois coal-fired power plant project.

The rates sparked outrage in the community and led to the resignation of two PPS officials, including Zheng’s predecdessor, last September. In November, the board enacted a rate recovery plan designed to stabilize its finances, as well as freeze and ultimately lower its Power Cost Adjustment.

The board has obtained surety bonds to free up cash reserves, hired a new portfolio manager to better market its assets like the peaking plant, and refinanced a portion of Kentucky Municipal Power Agency’s 2007 bond issue to finance the investment in Prairie State. KMPA is the joint agency comprising Paducah Power and the Princeton Electric Plant Board.

A key element of the rate recovery plan going forward is selling some of PPS’ excess power capacity. That is the main reason Zheng has been spending so much time on the road.

‘I’ve put 5,000 miles on my car. It doesn’t mean it will produce results, it only means we’ve got to try,’ Zheng said, regarding his search for purchasers of the utility’s excess power. ‘People are not going to approach us, we’ve got to approach them.’

Zheng is meeting with as many utilities as he can, hoping to find a buyer. There are no preconditions in his talks, he said, and all possibilities are being considered.”

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The Truth About Prairie State Energy Campus (Part 4): There Are Ways Out of This Bad Deal

A Solution That Requires All Parties to Contribute and That Allows an Honest Assessment of the Plant’s Viability …

TOM SANZILLO and DAVID SCHLISSEL, IEEFA

Sanzillo-Schlissel 040915For most of the history of the more than 200 towns and cities tied today to the failing Prairie State Energy Campus, households and businesses were charged reasonable rates for the electricity they used.

That all began to change when Prairie State came along in 2012, and the financial fallout has been especially horrific for communities with outsize stakes in the coal-fired plant. Towns and cities that have been hit the hardest also include those who agreed to deals that require them to buy more power than they need, a wrinkle that was pitched from the outset as a way for these municipalities to make money, not lose it.

Natural gas is abundant and inexpensive today, renewable energy is on the rise, and power prices are low in regional power markets, which are where these towns and cities should be buying their electricity—instead of paying double the market cost for power from Prairie State. The plant is producing absurdly expensive electricity, and through deals like those it has with cities like Paducah, Ky., its managers and investors have pushed ratepayers into bearing the brunt of Prairie State’s failure.

The town that has suffered the most is probably Paducah, and the heart of Paducah Power’s problem—which is true of dozens of Prairie State communities—is that it is saddled with far too much Prairie State debt. Shocking as it seems, Paducah, population 25,000, is responsible for $416 million in Prairie State debt. It all happened, in Paducah and elsewhere, because utilities were sold a bill of goods promising stable, low-cost power—a promise that has not been kept and that will probably never be met.

The rate-reduction plan Paducah Power rolled out last year in feeble response to the debacle crystalizes the problem. The “relief” provided by the plan will be small, temporary and costly in the long run. Debt refinancing undertaken in Kentucky and some of the other Prairie State states will merely push costs onto future ratepayers.

ALL PARTICIPANTS, WALL STREET INCLUDED, SHOULD JOIN IN THE PAIN

What to do?

In Paducah, local utility executives and some of the city’s elected leaders want citizens to shoulder the burden themselves. Some of that desire comes from time-honored community pride. This sense of civic responsibility is being warped and distorted as
Peabody Energy, Bechtel Corp., various investment bankers, assorted bond dealers, bondholders and several law firms continue to profit from what was plainly a mistake.

These players can afford to share the pain. The bondholders who own the debt weighing on Paducah alone have assets worth a combined $6.7 trillion. The overall municipal debt associated with Prairie State, by comparison, is $5 billion.

Three of those bondholders—Invesco, Franklin Templeton and Nuveen Investments—hold two-thirds of the Paducah debt. They and their subsidiaries are worth $2.4 trillion. Peabody, even with its recent dismal financial performance, is worth $1.3 billion. Bechtel, which billed for the cost overruns, is one of the largest companies in the world, with annual revenues approaching $40 billion.

The underwriters for the bonds—those who engineered the deal and collected big fees on it—included marquee and extraordinarily wealthy Wall Street names like Hilliard Lyons, J.P. Morgan & Co., Wells Fargo, Raymond James Securities and Edward Jones.

The communities that were talked into taking a stake in Prairie State took a chance, to be sure, but so did the other players. Public power projects, by design, have many stakeholders so that the risk is distributed equitably. That principle needs to be put into action here. Indeed, the way forward in communities hobbled by Prairie State is to implement a debt-relief plan that requires all parties to contribute and that offers an honest assessment of Prairie State’s operational viability.

While workouts like these are rare, they do occur. Just over the past couple of years or so, Jefferson County, Ala., and the city of Stockton, Calif., have gone through bankruptcy proceedings in which bondholders in each case ended up forgiving some of the principal debt that was hobbling these communities.

In the 1990s, Troy, N.Y., renegotiated lower interest payments with bondholders to avoid bankruptcy, and the distressed Washington State Public Power Supply System worked out a deal in which bond investors received between 10 and 40 cents on the dollar.

IN HERMANN, MO., AND BATAVIA, ILL. LAWSUITS DEMAND REMEDY

The 2,500-resident town of Hermann, Mo., has the right idea: Last month it sued the state consortium that brought it into the Prairie State fold, seeking a refund of its $37.5 million in Prairie State debt and asking to be excused entirely from the ill-conceived and ill-executed deal.

The Prairie State plant is not producing affordable electricity, even though that’s what its many member towns and cities were supposed to get for making a commitment to the plant that in many cases is slated to run through 2041. Even Fitch Ratings acknowledges that the price of the Prairies State’s electricity will far exceed market price for the foreseeable future—even if and when its managers figure out how to properly run the plant.

And residents and small businesses in Batavia, Ill., filed a class action suit under Illinois fraud law last year, saying that the agencies and consultants who sold their town on Prairie State should be forced to pay damages.

Prairie State was, and is, a crippling deal for the municipalities that signed on. Those who have gained from it—all those Wall Street bankers, high-priced lawyers, well-paid accountants, and insatiable investors—should be compelled to join the public dialogue on finding a solution.

They would prefer of course to pretend this is none of their concern, but they all can better afford to take a haircut on the deal than the people in affected towns and cities can afford to continue paying through the nose to keep their lights on.

The idea that residents and businesses alone should bear all the costs of a mutual mistake is hogwash.

Tom Sanzillo is IEEFA’s director of finance.

David Schlissel is IEEFA’s director of resource planning analysis.

 

The Truth About Prairie State Energy Campus (Part 3): A Crippling Burden to Its Many Towns and Cities

That Giant Sucking Sound? An Ill-Conceived Power Plant Sapping the Economic Vigor of Communities Far and Wide …

SANDY BUCHANAN, IEEFA

Imagine, if you will, the small-business pillars of a town shutting their doors suddenly because they can’t pay their bills. Households having to choose between paying their heating bills and buying groceries. Bigger businesses, universities and hospitals being forced to cut jobs and programs so they can keep their lights on. Rating agencies raining pain on municipalities by downgrading their credit, which drives up the cost of living for residents of all stripes.

Sounds like a chapter from the Great Recession of 2007-2009. Which, of course, is what it could be—but it’s also a description of the consequences that people in towns and cities across the Midwest (and into part of Virginia) are suffering as a result of their decision to buy into the Prairie State Energy Campus, a project developed by Peabody Energy.

Peabody proposed the 1600-megawatt coal-fired power plant, which sits adjacent to its Lively Grove coal mine in Southern Illinois, about 10 years ago. Company executives told municipal electricity agencies that the price of electricity from the plant would be less than market prices. Local governments in more than 200 communities in eight states bought into the deal, many of them signing 30- and 50-year contracts.
A few towns and cities were convinced by Prairie State pitchmen that the price of electricity from the plant would be so low that they could sell it on the open market and make money. It was a tantalizing proposition: Cheap electricity and a profit to boot.

But the promise never materialized—plant construction ran $1 billion over budget, and operating failures since it opened in 2012 have pushed the price of the electricity it produces through the roof. Every community that bought into Prairie State has had to figure out how to adjust electric rates to account for generation prices that are often twice as high as market prices. Those municipal governments that were talked into believing they could sell some of their share of the electricity have taken an even bigger bath.

ON THE HOOK, NO MATTER HOW POORLY THE PLANT PERFORMS

Communities in Ohio, Missouri, Illinois, Kentucky, and Virginia have been particularly hard hit because they signed “take-or-pay” contracts with their umbrella municipal electric associations, which issued some of the bonds that paid for the $4.9 billion project. These communities pledged their electric revenues to pay back the bonds, and are now on the hook to pay for the plant no matter how expensive it is or how poorly it performs. They’re also obligated to pay a portion of the share of losses from other participating cities if those municipalities default.

These many contract provisions, which made the deal so attractive to the bond market are the very provisions that cause the most hardship for consumers. In a report on Prairie State issued on March 9, Fitch Ratings concluded that the plant has favorable “long-term fundamentals” because member communities will have to pay for the cost of power regardless of how high it goes.

Here’s how some of the towns and cities that own some of the largest shares of the plant are suffering from an investment that was supposed to bring them savings:

  • In Paducah, Ky., which owns the single largest municipal share of the plant (104 megawatts) even though the town’s population is barely 25,000, electricity rates have skyrocketed, and businesses have closed shop because they can’t pay for their electricity. Customers pay the highest power bills in the state, and Western Baptist Hospital estimates that its annual electric bill has soared by $800,000. A Fitch Ratings review in November 2014 said Paducah Power System, the local entity that bought into Prairie State, had only two weeks of cash on hand.
  • Batavia, Ill., the second-largest municipal stakeholder in Prairie State (55 megawatts) has had to raise its electric rates and increase its sales tax to keep up. The town required a $7.5 million subsidy from the state to protect its largest electric users, and citizens and small businesses filed a class action lawsuit last August against the firms that told the city it should join the deal. The city has also formally requested Illinois Attorney General Lisa Madigan to conduct a formal investigation into how this debacle occurred.
  • Columbia, Mo., the third-largest owner (50 megawatts) relies—unlike Paducah and Batavia—on Prairie State for only a portion of its electricity but recently has had to raise rates nonetheless, and residents are urging the City Council to hold hearings on the economic consequences of its long-term tie to the plant.
  • Danville, Va., which has a 49.76-megawatt share, is having such severe problems with its electric rates that it is trying to sell its municipal power agency to a private company. Complicating this is the fact that Danville and nearby Martinsville pay higher transmission and “congestion” costs for Prairie State power than many other member communities because they are located so far from the plant.
  • Bowling Green and Hamilton, Ohio, each have a 35-megawatt stake in the plant and both are suffering because of it. Bowling Green has raised its electric rates by 25 percent over the next five years to cover the cost of Prairie State’s electricity (and American Municipal Power’s very expensive hydroelectric plants). The situation has placed tremendous strain on Bowling Green State University, the town’s biggest electricity customer, and Fitch has cited Hamilton as being under “financial stress and considering rate hikes.”
  • Cleveland, Ohio, (24.8 megawatts), Piqua, Ohio, (19.9 megawatts) and Celina, Ohio (14.9 megawatts) are all noted for being at risk because of their exposure to Prairie State. Cleveland in particular is in jeopardy because Cleveland Public Power is the only municipal utility in the state that competes house-to-house with private utilities. If the utility’s rates become higher than its major competitor, FirstEnergy, it will most likely plunge into a financial spiral. Standard and Poor’s downgraded Cleveland Public Power’s bond ratings to “negative” last year, and an independent consultant hired by the city said its high-priced fixed contracts for electricity must be remedied.

A ‘TOXIC ASSET’ BEYOND THE MEANS OF ANY COMMUNITY

This list—damning though it is—doesn’t include the many other towns and cities—small communities, especially—that have been economically hammered by Prairie State, among them Hermann, Mo., which just last week filed a lawsuit that may serve as a model for others to follow.

There’s also the bit of history surrounding the town of Marceline, Mo., which set a precedent in 2014 by negotiating an exit from its deal with Prairie State, calling the plant a “toxic asset” it couldn’t afford.

In fact, no municipal member of Prairie State Energy Campus can afford it. To borrow a phrase from H. Ross Perot—that giant sucking sound you hear is the sound of Peabody Energy, investment bankers, bond brokers, accountants, lawyers and bondholders siphoning money from hundreds of thousands of ratepayer’s pockets.

Tomorrow: A Workout Is Not Out of the Question

Sandy Buchanan is IEEFA’s executive director.

www.ieefa.org

 

The Truth About Prairie State Energy Campus (Part 2): Its Coal Isn’t Cheap

‘Annual per ton operating costs of the mine remain higher than those originally assumed …’

TOM SANZILLO, IEEFA

Among the many claims made to dozens of communities across the Midwest and South to induce them to sign onto the Prairie State Energy Campus deal was that it would be supplied by cheap coal from a mine across the street.

Here’s the truth: The coal from Lively Grove Mine isn’t as cheap as Prairie State’s creators and supporters led member cities and towns to believe (we describe our findings in a research memo we posted today).

American Municipal Power in Ohio, Prairie State’s biggest participant in the deal, acknowledges in very recent refinancing documents that “annual per ton operating costs of the mine remain higher than those originally assumed.”

That part is factual enough. The original 2013 budgeted cost of production for Lively Grove coal was $14.44 per ton and the actual cost of production in 2013—the latest figures available—was $18.98 per ton.

This was no small miscalculation, representing a 31 percent understatement.

THE LIVELY GROVE MINE ADVANTAGE IS A MYTH

In presentations by Prairie State officials to member-utility representatives in Cleveland and Batavia, Ill., coal from Lively Grove Mine was touted in cost-favorable terms compared to other coals on the market. That’s because those official cost-of-production figures didn’t include the debt service required to buy and build the mine, an omission that exaggerates any purported cost advantage.

Perhaps Prairie State executives rationalize this omission by the fact that their business model puts state authorities and local governments on the hook for the mine’s debt service while Prairie State itself accounts separately for production costs.

Still, there is no central public ledger that logs both costs. This is an eccentricity, to put it mildly, by industry standards. When coal producers sell coal to a utility or power generator, they typically include in their market price both the cost of production and debt. What Prairie State is doing, by contrast, is an industry anomaly.

This failure to adjust for debt-service costs—by both Prairies State representatives and the consultants representing the respective states and communities—has robbed local officials of any chance to clearly compare Prairie State power costs with those of other generation facilities, particularly other coal-generating facilitiesnew chart

HOW MUCH DOES PRAIRIE STATE’S COAL REALLY COST?

When you include debt service in the acknowledged and over-budget $18.98 price per ton of the coal that Prairie State Energy Campus burns you get a much bigger number than plant proponents will acknowledge: $26.29.

And when you compare the true price of coal from Lively Grove Mine with market prices from competing mines, there’s almost no difference, especially between nearby high-quality Illinois Basin coal and the lower-quality stuff Lively Grove Mine produces. It pans out to about a 1 percent divergence, by our calculations, which is to say Lively Grove Coal is not the big money-saver portrayed in Prairie State’s presentations to member utilities.

Similar lower-quality Powder River Basin coal is only slightly more expensive, which means that Lively Grove isn’t producing coal at any substantial savings even over what it would cost if it were shipped in from Wyoming.

In fact, coal from other Illinois Basin mines, even Powder River Basin mines, actually costs less when you factor in the plant’s operational losses in its first two years and the difficulties the plant has had burning the coal (the low quality of the Lively Grove coal has been cited by plant managers themselves as one of the reasons for Prairie State’s poor performance).

WHY THE TRUE COST OF PRAIRIE STATE’S COAL MATTERS

Electricity from Prairie State Energy Campus costs its member towns and cities roughly twice that of electricity that can be purchased on the open market.

The project has been a mismanaged boondoggle from the beginning. Its construction costs came in substantially over budget, its mine-mouth model does not live up to cost-advantage promises, and it has serious operational problems.

Add to all this two more things: Its tangled finances have never been independently audited and no financial consultant and no local utility administrator has yet sorted out all the many clarifications that member utilities need to help them understand why electricity costs from Prairie State Energy Campus are so out of control.

This much is known:

  • Peabody Energy was paid for the mine and for its development and is still being paid to manage it;
  • Bechtel Corp. was paid for the construction costs, including the overruns;
  • Many investment banks, lawyers and accountants were paid to underwrite the bonds that made it all possible;
  • Hundreds of thousands of households and businesses across the heartland are now paying much more for electricity than they should.

Tom Sanzillo is IEEFA’s director of finance.
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The Truth About Prairie State Energy Campus (Part 1): Failing, Year by Year.

The Plant Doesn’t Run Like It’s Creators said it Would, and Its Electricity Is Overpriced

DAVID SCHLISSEL, IEEFA

Prairie State Energy Campus failed in 2014 — as it failed in 2012 and 2013 — to provide the reliable, low-cost electricity that Peabody Energy, American Municipal Power, and its other promoters promised when they persuaded more than 200 communities around the Midwest to sign long-term contracts to buy power from the plant (we’ve documented these failures in detail in a recent research memo posted here).

The Prairie State promise went like this: the plant would operate at 85 percent capacity, providing a reliable source of electricity to its many member towns and cities, and it would provide electricity at competitive prices.

The ugly and undeniable truth that has emerged over time, however, is that Prairie State Energy Campus has done neither. Its failure can be documented year by year in two ways: by its capacity-factor performance and by its disastrous record in living up to its promise of providing low-cost electricity.
Schlissel 040615
Because the cost of Prairie State electricity is so high, many of the municipal power agencies that issued the $5 billion in bonds for the plant have been under pressure from the communities to make the price more palatable. One way to do this is by refinancing the debt and pushing the payment of the principal into the future, and some of the major municipal power agencies involved did so in late 2014 and early 2015.

These refinancings, combined with better plant operating performance in early 2015, pushed the price of Prairie State electricity down some in January and February—by about 15 percent across American Municipal Power communities, for instance, from the same time period in 2014. However, the market price of power has gone down too, which means Prairie State power is still relatively expensive.

Prairie State Energy Campus has nine owners that sell its electricity to member communities: American Municipal Power (23.26 percent), Illinois Municipal Electric Agency (15.17 percent), Indiana Municipal Power Agency (12.64), Missouri Joint Municipal Electric Utility Commission (12.33 percent)

Prairie Power Inc. (8.22 percent), Southern Illinois Power Cooperative (7.9 percent), Kentucky Muni Power Agency (7.82 percent), Northern Illinois Municipal Power Agency (7.6 percent), Peabody Energy subsidiary Lively Grove Energy (5.06 percent).

POOR PEFORMANCE AND HIGH PRICES

Here’s the main two-part breakdown of the plant’s performance from mid-2012, when it opened, through 2014:

  • Failure to operate at promised capacity factor. When it was promoting Prairie State to communities in 2007, AMP cited a study by R.W. Beck, its consultant, to assert that Prairie State would immediately operate at a sustained average 85 percent annual capacity factor. Capacity factor compares how much power a plant actually produces with how much it would have produced if it had run full time at full power over a particular period of time. The higher the capacity factor, the better the plant is operating and the more power it is producing. (The plant’s owners made the same 85 percent claim in the documents used to sell bonds to investors.) The plant’s actual performance in 2012, 2013 and 2014 has fallen far short of the owners’ promises. Prairie State has operated at less than 64 percent capacity since it opened in June 2012, and in 2014 it operated at less than the 78 percent capacity than the owners forecast.
  • Failure to provide either low-cost power or transparency into true costs. In 2014, Prairie State’s operating costs were more than $13 million higher than its owners forecast. The bad-for-ratepayer combination implied here and above—higher costs and lower-than-budgeted generation—means the plant’s actual operating costs in 2014 were 18 percent higher than forecast. AMP has shrouded this fact from customers by relying on accounting practices it calls “rate stabilization and levelization” that defer some of the current true cost of the power from Prairie State. AMP also hides the true cost of Prairie State power in another way: by blending the high cost of Prairie State power with the cost of less expensive “replacement power,” which it buys on the open market when the plant is not operating as well as it was supposed to.

TOWNS AND CITIES WILL NEVER RECOVER MILLIONS IN ALREADY LOST COSTS

Even if Prairie State were to begin to operate finally as well as its owners have been promising since at least 2007, it will remain a lingering albatross around the necks of participating communities.

Towns and cities ensnared by the project will never get back the tens of millions of dollars they have paid since 2012 for the high cost of Prairie State electricity. And for decades to come, should they choose to continue their current relationship with Prairie State Energy Campus, they will continue to pay higher prices than necessary. This would mean increasingly uncompetitive electricity rates; deferred investment in maintenance and new projects; layoffs; and pressure to use other taxpayer resources to finance this mistake.

Over the rest of this week, we’ll be posting further commentaries and research that explore some of the rock-bottom problems with the plant and that detail how the municipal economic damage has reaches far and wide. We’ll note also that any impetus for finding the light at the end of this tunnel will most likely come from someplace other than Prairie State Energy Campus itself.
David Schlissel is IEEFA’s director of resource planning analysis.

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Mo. town sues joint agency over payments to cover cost of Prairie State plant

By Matthew Bandyk, SNL Financial - MISSOURI –  “The town of Hermann, Mo., became the latest municipality to revolt against the Prairie State coal-fired plant, when the town filed a lawsuit asserting breach of fiduciary duties by the Missouri Joint Municipal Electric Utility Commission, or MJMEUC, one of the owners of the plant.

Hermann claims that MJMEUC is unfairly forcing the town to help pay for debt from bonds issued by MJMEUC to finance Prairie State’s construction. The bonds were first issued at $550 million in 2007, followed by another set of $80 million bonds in 2010. The utility’s debt is now about $1.5 billion, the lawsuit said. About $800 million of that long-term debt comes from the Prairie State bonds, according to an audit of MJMEUC reflecting its finances through the end of 2013.

The Illinois plant, one of the last conventional coal-fired plants built before U.S. EPA rules and lower natural gas prices helped to make such facilities economically difficult to build, saw its construction costs soar by more than $2 billion from the start of the project until its completion. Several of the municipal utilities that signed long-term contracts for Prairie State’s power have since complained that they have ended up paying more than they expected….”

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Five companies show interest in Danville Power & Light

By Denice Thibodeau, The Register Bee  - VIRGINIA – “Representatives from five electric utilities said they are interested in acquiring all or part of Danville Power & Light on Monday — if the Danville Utility Commission decides to sell it.

AEP/Appalachian Power, Dominion Virginia Power, Mecklenburg Electric Cooperative, Duke Energy and Central Virginia Electric Cooperative representatives attended a meeting at the Municipal Building to get a short overview of DP&L’s assets, power supply and customer base.

Jason Grey, interim director of utilities, told the group the book value of the utility is $180 million and, despite drops in population in recent years ‘our energy consumption has remained the same.'”…

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Danville, VA is the largest AMP participant in Prairie State, at 49.76 MW.

Hermann takes legal action to leave energy consortium

The Advertiser Courier –  MISSOURI – “Hermann today made good on its pledge to take legal action to get out of a consortium of nearly three dozen Missouri cities that purchases electricity for resale to their residents and businesses.

The lawsuit filed Thursday morning in Gasconade County Circuit Court aims to have a court allow Hermann to leave the program administered by the Missouri Joint Municipal Electrical Utility Commission. That program involves the purchase of electricity through the Missouri Public Energy Pool (MoPEP).

Hermann officials argue that the cost of being in the program is too great and steadily increasing. Officials cite high utility bills as one factor in a population loss seen in recent years.

The cost of the energy program most recently prompted the Board of Aldermen to approve a 150-percent increase in the monthly meter fee charged to residents and businesses. The meter fee for residents was bumped from $12 a month to $30 a month.”

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City leaders, GRO Missouri urge new look at power plant contract

Amanda LaBrot, KOMU 8 Reporter - COLUMBIA – “City leaders and GRO Missouri want the city to reevaluate its long-term contract with a major coal burning power plant.

Columbia signed a 40-year contract with Prairie State Energy Campus, in Marissa, Ill., in 2006 to provide the city with coal- generated energy. The city buys about a quarter of its energy from Prairie State, and Councilperson Ian Thomas and Gretchen Maune of GRO Missouri said they had some concerns.

‘It’s a 40-year contract. That’s a long time to keep using coal power with global warming and everything else,’ Maune said.

Thomas said, ‘In addition to locking us into burning fossil fuels for the next forty years, thereby undermining our ability to transition to clean energy, this contract gives us no ability to negotiate the price of the energy we purchase.’…

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