Wednesday, June 8th, 2011
Council OKs ordinance to buy electricity
By William Kincaid
CELINA - Council members this week authorized the city to purchase 7.5 megawatts of electricity from a natural gas-fired generation plant in Fremont being operated by American Municipal Power (AMP).
Council members suspended the rules and passed the ordinance as an emergency measure on its second reading. It included the approval of councilman Ed Jeffries, who previously voted no.
Jeffries said he changed his mind after learning the deal was financially advantageous for the city.
Celina Planning and Community Development Director Kent Bryan said the electricity purchase includes a secondary benefit as it will reduce the city's "sunk costs" - or financial commitments - to a coal plant planned in Meigs County that was scrapped due to escalating costs.
Bryan said the city won't know its final sunken costs until pending litigation between AMP and a contractor involved in the coal plant is settled, which he said could take years. Celina and 80 other AMP communities that committed to the Meigs plant are responsible for $144 million in expenditures made before plans were scrapped.
AMP - a nonprofit organization that manages and supplies wholesale energy to 128 member communities - is expected to purchase the Fremont plant for $465 million from FirstEnergy Corp. on July 1.
The deal will only go through if AMP can sell 90 percent of the plant's expected produced power to its members.
"It will be close," Bryan said, adding the deadline to commit has been extended from June 15 to June 30.
The estimated price of a megawatt from Fremont is $52.32 to $53.25 between 2012 and 2014 and $57.06 to $66.15 between 2015 and 2020. A power sales agreement would last 35 years, and the city would essentially own about 1 percent of the plant.
The 7.5 megawatts authorized by council members this week would be used as intermediary power, electricity needed Mondays through Fridays from 7 a.m. to 11 p.m., Bryan said.
The city's daily average power usage is 30 megawatts, with peak hitting as high as 45 megawatts in the summer.
The Fremont plant is almost complete and could provide a long-term source of power for Celina, according to Bryan, who earlier this year said the natural gas power source is considered somewhat environmentally sound. The plant is expected to produce 707 megawatts.
Bryan said the plant's purchase price is $300 million cheaper than the estimated cost AMP received to construct a similar plant in Meigs County on the site of the abandoned coal plant.