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

April 8, 2015 / admin / Comments Off

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.

link to full map

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

Category: American Municipal Power (AMP), Illinois Municipal Electric Agency (IMEA), Indiana Municipal Power Agency (IMPA), Kentucky Municipal Power Agency (KMPA), Missouri Joint Municipal Electric Utility Commission (MJMEUC), Northern Illinois Municipal Power Agency (NIMPA), Peabody Energy / Tags: American Municipal Power, Bowling Green, Celina, Cleveland, coal, Columbia, Danville, Fitch Ratings, Hamilton, Martinsville, Ohio, Peabody Energy; Paducah, Piqua

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

April 7, 2015 / admin / Comments Off

‘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 facilities new 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.
link to full article

Category: American Municipal Power (AMP), Peabody Energy, Prairie Power Inc. (PPI) / Tags: American Municipal Power, Batavia, Bechtel Corp., coal, Lively Grove Mine, Peabody Energy

The Truth About Prairie State Energy Campus (Part 1): Failing, Year by Year.

April 6, 2015 / admin / Comments Off

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.

Link to original post

Category: American Municipal Power (AMP), Peabody Energy, Prairie Power Inc. (PPI) / Tags: American Municipal Power, coal, Illinois Municipal Electric Agency, Indiana Municipal Power Agency, Kentucky Muni Power Agency, Lively Grove Energy, Missouri Joint Municipal Electric Utility Commission, Northern Illinois Municipal Power Agency, Peabody Energy, Prairie Power Inc., R.W. Beck, Southern Illinois Power Cooperative

Five companies show interest in Danville Power & Light

March 23, 2015 / admin / Comments Off

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.'”…

Full article

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

Category: American Municipal Power (AMP), Peabody Energy, Prairie Power Inc. (PPI) /

U.S. Illinois Power Plant at Center of Midwest Rate Fights

February 9, 2015 / admin / Comments Off

By Julie Carr Smyth, ABC News – “High electric bills and environmental skepticism in towns across the Midwest are causing customers to wonder if they’ve been duped as power suppliers work to recoup investments in a financially troubled Illinois generating plant and coal mine.

Rate increases and equipment breakdowns were the opposite of what dozens of municipalities that invested in the Prairie State Energy Campus were promised: low-cost, reliable energy for decades to come.

Now, customers in Galion, Ohio, have threatened ballot action. They want the city to repay overcharges they allege were amassed to mask high electricity costs from the Washington County, Illinois, project.

In Batavia, Illinois, another group of customers filed class-action litigation alleging city-paid consultants misrepresented financial risks associated with the complex, constructed by coal producer Peabody Energy.

The municipal power provider in Paducah, Kentucky, contemplated bankruptcy after its customers blamed its decision to invest in Prairie State for some of the state’s highest electricity rates.

When Prairie State’s 1,600-megawatt generating operation, mine and landfill went on line in 2012, its development had cost $4.9 billion — more than twice the original estimate. That forced rate hikes and fees called power adjustments in many of the 217 municipalities and 17 electric cooperatives that invested in the project.

Prairie State’s defenders say it was expensive because it’s one of the country’s cleanest, most efficient power plants. As one of the few coal plants built in the U.S. in 30 years, it faced unanticipated costs in meeting tough, modern carbon emissions standards proposed by the Environmental Protection Agency that have vexed older coal-fired plants….

On Wall Street, the unbreakable nature of the take-or-pay contracts has been viewed as the strength of the Prairie State deal. However, the U.S. Securities and Exchange Commission has been investigating the financing deal after complaints from members of Congress and local officials across the region.”

Full article

Category: American Municipal Power (AMP), Illinois Municipal Electric Agency (IMEA), Indiana Municipal Power Agency (IMPA), Kentucky Municipal Power Agency (KMPA), Peabody Energy /

Neither the Fine Print Nor a Review by Moody’s Shed an Honest Light on Prairie State’s Dark Finances

December 18, 2014 / admin / Comments Off

Prairie State Energy Campus

By Tom Sanzillo, The Institute for Energy Economics and Financial Analysis

Ratings-agency reviews this week of new debt offerings associated with Prairie State Energy Campus, and the fine print in the bond offering itself, simultaneously illuminate and obscure the financial and operational failures of the power plant in southern Illinois.

The reports by the ratings agencies — one by Fitch Ratings, the other by Moody’s — take very different views of Prairie State’s tangled finances, and of its prospects for recovery.

Both agencies see the municipalities that are stuck with high rates for Prairie State electricity most likely continuing to pay those rates. The question is for how long.

Fitch takes the deeper, more serious look, peering into the books of 21 participating Ohio communities and finding weakening finances. Moody’s, by contrast, skips the local research and concludes everything is fine. So, stable is the outlook at Moody’s; negative is the view at Fitch.

Fitch, much to its credit, holds Prairie State to its original electricity-price estimates, and notes that those estimates have long been vastly exceeded, implying that the customers who are tied into long-term contracts with the plant simply cannot continue to see rates keep going up. Fitch finds that high rates are already draining local cash reserves and hurting municipal credit ratings. Moody’s, to its discredit, concludes that the high cost of Prairie State electricity is competitive, and it takes no note of the deteriorating financial condition of customer cities.

Debt documents submitted for review by AMP Ohio, the largest participant in the Prairie State portfolio and the link between Prairie State and many member communities, are also supposed to shed light on Prairie State’s dark finances. But they don’t. The documents put 2014 rates for electricity at $73.66 per megawatt hours and assert that they will drop in 2015 to $71.38 megawatt hour. These numbers are presented by AMP after an almost incomprehensible explanation of how various internal subsidies are being used to depress rates that would otherwise be even farther off the chart than they are now. While it’s clear that the rates Prairie State is charging are not based on the real cost of electricity from the dysfunctional plant, it would take a team of auditors to figure out the full truth behind AMP’s many tangled cross-subsidies.

As for the rates being competitive, nothing could be further from the truth. The communities tied to Prairie State — if they weren’t locked into such ill-advised contracts — would be able to get electricity off the open market for about half what they’re paying for Prairie State’s. Prairie State’s rates for electricity are captive, to put it bluntly, not competitive.

Moody’s relies nonetheless in its review of the new bond offering on a vague standard of competitiveness that muddies the kind of clear and concrete information investors deserve. Crucial facts that go overlooked include that Prairie State produces electricity at far above market prices and far above the original estimates used to encourage local governments to sign on.

Fitch—again to its credit—is worried about shrinking cash reserves of member municipalities now and in the future. Moody’s—again to its discredit—seems to suggest a simplistic way forwarding in which communities presumably cut other services to keep up with electricity-rate increases.

Meanwhile in Illinois, some of the same people who put out the Moody’s report on Prairie State have incongruously placed the municipality of Batavia, Illinois, on a negative credit watch due in no small measure to its exposure to the Prairie State plant. Citing rate pressure from Prairie State debt, Moody’s outlook for Batavia is decidedly negative.

Moody’s notes, too, that Batavia’s trouble is rooted also in off-balance-sheet debt, something Batavia is trying to correct — and a problem faced by every community in the Prairie State consortium. If those many debts were brought onto the books, significant numbers of communities would violate state debt standards.

The people are restive, and at least some officials and their citizenry are starting to wonder. Residents of Batavia have started litigation. The SEC has subpoenaed AMP and Peabody Energy. Paducah has fired the head of its power agency and brought in new board members.

Any truly independent look at Prairie State would raise eyebrows. Yet last year, when several elected officials from AMP communities asked Ohio Attorney Genera Mike Dewine for an investigation, he demurred. Dewain and Moody’s are in the same camp, it seems, the one that can’t be bothered with hard questions.

Tom Sanzillo is IEEFA’s director of finance.

Category: American Municipal Power (AMP) /

Painesville City Council talks AMP-Ohio agreement

November 30, 2014 / admin / Comments Off

PAINESVILLE – “Painesville City Council members again discussed the arrangement that the city has with a power company that provides access to higher streams of energy during peak times.

Debate surrounds the price negotiated between the city and American Municipal Power Inc. in the power purchase agreement the city entered into in 2007.

Ward 1 Councilman Andrew Flock said at the presentation given by AMP-Ohio that the agreement, which runs 30 years, set the price at roughly $48 per megawatt hour….

Earlier this year, business leaders in Batavia, Illinois filed a class-action lawsuit against the power companies who persuaded the city to buy into the Prairie State project, according to reporting by the Kane County Chronicle and The Chicago Tribune….

Flock, as in previous meetings, suggested that council draft a resolution asking for a letter to be sent to the Ohio Attorney General to see if he could look into the deal. He said there are too many questions left unanswered regarding the projects AMP-Ohio brings to its members….

“I think what (council) wants is a monthly presentation as we go forward on those levelization costs,” McHugh said. “At some point the AMP members are going to decide that we can’t keep supporting this. The plant’s going to have to stand on it’s own.”

By Elizabeth Lundblad, The News-Herald

full article

Category: American Municipal Power (AMP) /

Former Galion law director says refund issue will be on ballot

November 14, 2014 / admin / Comments Off

GALION – “Tuesday’s town hall meeting in Galion was all about the city’s electric rates, and predictably there was no shortage of energy.

The charge was led by Don Faulds, Roberta Wade, and John Smella. These Galion residents have been at the forefront of the AMP/Prairie State issue since the beginning. They held a public meeting at the Galion Public Library Tuesday night in an attempt to share their information with the broader Galion public.

They were joined in presenting by Andrew Flock, Neocles Leontis, and Sandy Buchanan who have similar stories to tell about AMP/Prairie State from other communities.

The tenor of the meeting was education and unity for the residents of communities footing the AMP bill, and unity among the constituent communities as they look to confront the issue.

wade o'leary press conference Wade in particular promised an issue forcing the city to refund overcharges would be going on the ballot after the first of the year. Wade indicated the reasons for the proposed ballot issue are intertwined with the wider AMP/Prairie State story; but the specifics have to do with the government of the City of Galion.

This lawsuit would seek to restore to the residents of Galion some $4 million in what Wade claims are overcharged electric rates. In what Wade termed the “money grab of 2009,” the group says that a Power Cost Adjustment (means through which electrical rates are adjusted) grossly overcharged the residents of Galion until 2012. They added that during this period the electrical fund balance went from approximately $3.5 million to $7.5 million, and that this rate adjustment was done in an underhanded fashion.

Wade cited her time as a member of City Council in this era, which was also when the city tried to double sewer and water rates. These measures were carried out in the light of day, and as such were defeated by Wade and other members of council. Wade alleges the PCA was not done in such open circumstances and this is how it got through.

‘We know the PCA overcharged you,’ Wade said, ‘You’re owed a refund for that money you were overcharged, it’s that simple.’…..

Flock is a city council member in Painesville, and AMP customer; Leontis is a professor at Bowling Green State University, and Bowling Green is an AMP customer; and Buchanan is an executive director with the Institute for Energy Economics and Financial Analysis. Flock and Leontis outlined how their respective communities have dealt with similar situations in regard to their power. Buchanan spoke of other constituent communities who have begun to take action against the group.

Of particular encouragement was the story of Marceline, Mo. This city had a mayor that swore, ‘I’m not going to let this destroy our community.’ This mayor was able to work a deal with AMP to settle out of the contract. This apparently was enough to inspire Paducah, Ky, to attempt something similar.

‘If they succeed in making a deal, every other city should make a deal,’ Buchanan said.

The meeting ended with plans for another meeting after the first of the year, tentatively for Jan. 20. Wade reiterated her commitment to the proposed ballot issue regarding the PCA funds, as well as an allusion to ‘other’ ballot initiatives. Wade stated that she has received feedback from the community that all they do is talk. She made it quite clear that the time for action has now come.”

by Gary Ogle & Andrew Walsh, Crawford County Now

Full article

Category: American Municipal Power (AMP), Northern Illinois Municipal Power Agency (NIMPA) /

Report cites continued operating issues, expensive electricity at Prairie State

September 26, 2014 / admin / Comments Off

snlfinanciallogo “An environmental research group on Sept. 26 pounced on recent operating performance data for the coal-fueled 1,600-MW Prairie State Energy Campus, saying the plant continues to underachieve and produce expensive electricity.

The Institute for Energy Economics and Financial Analysis, or IEEFA, which frequently supplies economic testimony against coal projects, said in a report dated Sept. 22 that the Illinois plant achieved a 64.1% capacity factor through the first eight months of the year, below the 78.5% capacity factor that the owners projected. The performance did represent an increase compared to the 58% capacity factor in 2012 and the 60% capacity factor in 2013.

IEEFA cited data from American Municipal Power Inc., or AMP, and the Northern Illinois Municipal Power Agency, two co-owners of the plant. IEEFA said AMP’s average cost of power from Prairie State during the first eight months of 2014 was $76.07 per MWh, not including transmission or congestion costs. IEEFA said that total is 40% more than it would have cost AMP to purchase the same amount of energy and capacity from the competitive PJM Interconnection LLC wholesale markets. The disparity is even larger for the Northern Illinois Municipal Power Agency through July, IEEFA said.

IEEFA said a Prairie State executive told the Paducah (Ky.) City Commission that it will take at least three more years to stabilize operations at the plant. The executive also cited a series of problems caused by the characteristics of the coal produced at the Lively Grove mine for the plant, IEEFA said. Coal producer Peabody Energy Corp. owns a 5% interest in the plant.

‘There is no evidence that Prairie State has made or is on the verge of making a significant turnabout in terms of operating performance or costs or that the cost of power will be below market prices at any time in the foreseeable future,’ IEEFA said in the report. ‘Instead, the cost of power from Prairie State will continue to be much more expensive than buying power from the competitive wholesale markets for many years.’

Prairie State, one of the last coal-fired plants built before federal greenhouse gas regulations made coal plants much more difficult to pursue, is the target of a class action lawsuit alleging Indiana Municipal Power Agency, another plant co-owner, and various consultants misrepresented the cost of the plant’s power….”

By Darren Epps, SNL Financial

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Category: American Municipal Power (AMP), Kentucky Municipal Power Agency (KMPA), Northern Illinois Municipal Power Agency (NIMPA) /

Report: No evidence of a turnaround at Prairie State

September 25, 2014 / admin / Comments Off

No Evidence of a Turnaround at Prairie State (pdf)
By David Schlissel, Director of Resource Planning Analysis

PS report