Sierra Club report says coal plant bad deal

by PAUL MORTON

Associate editor

A report issued last month by the Sierra Club seems to indicate Oberlin dodged a bullet when council decided not to participate in a new "clean coal" power plant.

In October, 2007, city council approved participating in the American Municipal Power Generating Station, a 960-megawatt, "clean" coal-fired electric plant proposed to be built in Meigs County on the Ohio River. Of the four council members who voted to participate, only Ron Rimbert was re-elected to council in November of that year.

The new council voted on Feb. 19, 2008, to rescind the city's participation. The vote on each of the three readings was 4-3, but a vote to elevate the ordinance to emergency on third reading passed 5-2.

Despite provisions in the city charter and in the body of the ordinance saying five votes were necessary for passage, law director Eric Severs said the ordinance passed by the final 4-3 vote. He said the 5-2 vote on emergency fulfilled the charter requirement.

Now the report, "New Insights Into the Proposed American Municipal Generating Station," seems to indicate the withdrawal was a wise choice. The report says increased costs for the plant, changing market conditions, and new and potential environmental legislation make AMPGS a bad deal for participating communities.

According to the report, the original cost of the plant was projected to be $1.5 billion in May 2006, when it was first proposed. In October 2008, a revised feasibility study by R.W. Beck, prepared in advance of negotiating a target price with the engineer-procure-construct contractor, estimated the total bond amount at $3.94 billion.

The report said AMP's assumptions for demand for electricity have proven to be faulty. AMP had assumed in 2006 demand for electricity would grow at a rate of about 1.6 to 1.8 percent a year, but sales of electricity in Ohio in 2006 were lower than any year since 1993, and they continue to decline.

"Starting in 2008, the recession caused a dramatic change in Ohio's energy picture," the report said. "According to preliminary data, electric sales were down in 2008, and 2009 will probably see massive further drops in sales, although year-end numbers are not yet available. Year-to-date Ohio electric sales are down 14.5 percent."

The report says energy demand is likely to fall even further as the result of federal appliance efficiency standards enacted as part of the 2007 Federal Energy Bill and Ohio Senate Bill 221, which gave Ohio one of the strongest energy efficiency standards in the country.

Senate Bill 221 requires electric utilities to make energy efficiency savings of 0.3 percent this year, increasing to 2 percent in 2019, with cumulative energy efficiency savings of 22 percent by 2025. It also requires the state to derive 12.5 percent of its electricity from renewable energy sources.

Those provisions, the report said, will cause utilities to abandon dirty coal plants as overall demand continues to drop and alternative energy sources come on line. And any form of federal climate legislation will likely accelerate that trend.

The report says those factors taken together will make AMPGS a very bad investment for communities that have agreed to participate, including Cleveland, Amherst, and Wellington, driving the cost of electricity from the plant higher than spot market prices for electricity. It calls on AMP to abandon the project, but Oberlin Municipal Light & Power System director Steve Dupee said the organization is unlikely to do so.

"I can't speak for AMP or the communities that are participating, but I assume they feel it's still a viable project," Dupee said.

AMPGS is expected to replace the Richard H. Gorsuch Generating Station in Marietta, which will be decommissioned when the new plant comes on line. That is now expected to be in 2014.

That decommissioning and the expiration of several long-term power supply contracts in 2013 are expected to leave the city of Oberlin with a need to replace 13 megawatts of baseload electricity. The city is issuing a request for proposals to purchase electricity from renewable energy sources.

And while the report says participants will pay higher prices, Dupee, who represents the city on the AMP board of trustees would not say the city was lucky to have gotten out when it did.

"I don't think we dodged a bullet," Dupee said. "Our focus is not on market generation, but landfill gas generation. That's why we're issuing this RFP, to see what projects are out there and whether they are a good fit for Oberlin."