Article published November 26, 2009
NORTHWEST OHIO MEMBERS
Electric supplier pulls its plan for $4B power plant
By TOM HENRY
BLADE STAFF WRITER
The power-supply company AMP-Ohio said yesterday that it is pulling the plug on a massive coal-fired power plant it had planned to build in southeast Ohio for 81 member communities that invested in it, nearly a third of which are in northwest Ohio.
The communities include Bowling Green, Napoleon, Bryan, Clyde, Deshler, Edgerton, Elmore, Genoa, Montpelier, Oak Harbor, Haskins, Holiday City, Pemberville, Pioneer, Sycamore, Woodville, and at least nine other small and midsize towns.
All are left scrambling for other sources of electricity to make up for what they had expected to get from the plant beginning in 2013.
Rising costs were cited for the decision made Tuesday following three hours of meetings in Columbus among AMP-Ohio's board of trustees and representatives from its member communities, which includes 126 cities, towns, and villages in Ohio, Michigan, Pennsylvania, Virginia, and West Virginia.
American Municipal Power-Ohio is a nonprofit wholesale power supplier founded in 1971 to negotiate electric rates for its member communities.
It had promised electricity at below-market rates from the plant that was to be built along the Ohio River near the West Virginia border.The plant was to generate 1,000 megawatts of electricity - more than FirstEnergy Corp.'s Davis-Besse nuclear plant in Ottawa County and nearly five times the power of AMP-Ohio's Belleville hydroelectic plant along the Ohio River.
AMP-Ohio cited a 37 percent increase between its contractor's May and November estimates.
When the project was announced in October, 2005, the cost was pegged at $1.2 billion.
The total capital cost as of May was $3.074 billion, said Kent Carson, AMP-Ohio spokesman, Some documents listed it at $3.3 billion.
Either way, the latest increase equated to $800 million.
AMP-Ohio decided Tuesday it was better to cut its losses and terminate its contracts, Mr. Carson said.
The plant was in the early stages of construction in Meigs County's Letart Township.
It was expected to generate 1,600 temporary construction jobs, and 165 full-time operators.
One of the world's largest contractors, Bechtel Power Corp. of San Francisco, was hired in January to oversee construction.
Bechtel has 42,500 employees and is involved in more than 22,000 projects in 140 countries.
In June, the project received a $30 million bridge loan from Gov. Ted Strickland and the Ohio Air Quality Development Authority.
It qualified for the money because it could have helped advance state efforts to promote cleaner types of coal energy.
The $30 million came from federal stimulus dollars the Obama Administration earmarked for Ohio.
AMP-Ohio now will spend the next several months investigating converting the project to a natural gas combined cycle facility that could also used biomass or another form of advanced energy technology as its fuel, Mr. Carson said.
But any such redesign will likely mean a scaled-down version of the plant, he said.
"This [latest] 37 percent increase was unexpected," Mr. Carson said. "There's no way anybody could have anticipated this."
Environmentalists disagree.
The Natural Resources Defense Council, the Sierra Club, Ohio Citizen Action, and the Ohio Environmental Council said cost overruns are exactly what they warned communities about when urging them to reject AMP-Ohio's plan in 2007 and 2008.
Activists cited the nation's shift away from coal combustion and other carbon-intensive forms of electricity production in an era of climate change, as well as fluctuating costs of the energy market and untapped efforts to conserve electricity.
They noted that plans for coal-fired power plants have been scrapped elsewhere for those and other reasons.
"We all hope that AMP can come back with a plan for clean energy generation and locate it in Meigs County," Nachy Kanfer of the Sierra Club in Ohio said. "As Ohio moves beyond coal, it's the southeast portion of the state that is in greatest need of assistance in making that transition."
Bowling Green was an investor community despite its emergence as a promoter of renewable energy efforts.
Politicians have lauded the city for installing the state's first wind turbines, jokingly referring to the city at times as "Blowing Green."
But it had few options as it neared the end of a 20-year agreement on fixed electricity costs it had with FirstEnergy Corp.
Thirteen other communities were part of that agreement, which expired at the end of 2008
Bowling Green got 30 of the 60 megawatts provided by the agreement.
A megawatt is roughly enough electricity to power 1,000 homes outside of nonpeak summer usage.
Kevin Maynard, Bowling Green's utilities director, said markets have changed for the better over the past couple of years.
"We started seeing some longer-term fixed offers that we hadn't been seeing for a few years," he said.
Mr. Maynard said he is not sure if Bowling Green would be part of a redesigned Meigs County project.
He said he has some concerns about the fluctuating prices for natural gas.
"It's going to depend to a large extent on how that project looks," he said. "We're just going to have to take a look at the economics of it."
AMP-Ohio has no idea how much a redesigned project would cost, Mr. Carson said.
The company's decision to scrap the coal-fired power plant also means The Andersons of Maumee won't get access to a cheap feedstock it could have used to make fertilizer less expensively.
AMP-Ohio had planned to use a newer pollution-control technology developed by Powerspan in New Hampshire to help control emissions of sulfur dioxide, mercury, and particulate matter from the coal-fired power plant.
The Andersons had agreed in 2007 to crystallize and sell the ammonia sulfate waste generated by the Powerspan process as fertilizer.
Contact Tom Henry at:
thenry@theblade.com
or 419-724-6079.
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