PZU Committee meets with AMP about City's electric bill
By Matt Echelberry
“We’re here tonight to do some fact finding and get questions answered, in order to better understand how the City of Galion is being billed,” stated Tom Fellner, chair of the Planning, Zoning and Utilities Committee. He called a special meeting on Feb. 19 and invited representatives from American Municipal Power, Galion’s power supplier, to go over the electricity billing issued by the company.
The meeting lasted nearly two hours. Audience members asked numerous questions and the four members from AMP who attended spared no details in providing answers. Some of the citizens in attendance were confused by the meeting agenda; it was not intended to be a forum for customer billing, but rather to better understand the breakdown of the City’s electric bill.
AMP representatives took time to explain some terms associated with the meeting’s topic, such as congestion and transmission charges. They also went into detail of how excess power is credited to a municipality or overuse of power is penalized.
Bob Trippe, Chief Financial Officer for AMP, stated the utility industry has changed dramatically over approximately the past 15 years, evolving into a “very sophisticated operation.” In particular, the creation of regional transmission organizations changed the dynamics of how energy is bought and sold.
Throughout the meeting, various power supply projects the city has invested in were discussed. Galion’s power supply portfolio includes: Fremont Energy Center, Blue Creek Wind Farm, NYPA (hydroelectric power) and Prairie State Energy Campus.
Trippe indicated that AMP is a “project based organization because the volatility of the wholesale market has increased. Since about 1998, AMP decided it could better serve its members by building its own power generation assets.
Andrew Blair, AMP’s director of billing, added: “We strive for a diversified portfolio for our membership.” Available projects include wind, solar, bio gas, hydro, etc., which are available to all AMP members. Blair referred to it as a “cafeteria plan,” which allows each municipality to select which projects to become involved with.
The main project discussed was Prairie State, a coal-fired generation plant located in Southern Illinois. City Council member Roberta Wade had several questions about the billing for that specific project, including debt service payments and demand charges.
Jim Hooves, from AMP’s finance department, explained that the finance schedule for Prairie State was based on when the plant was predicted to go online, with a planned five-year construction period. In the planning process for the project, bonds were issued to the power suppliers that invested and capitalized interest of those bonds was used for construction payment.
According to Hooves, $19.8 million was the first principle payment made, which was on Feb. 15, 2013 (divided between the more than 200 municipalities that invested in the project). He emphasized that participants like Galion did not make any interest payments during construction, but the AMP Board and Participants Committee decided to collect early for principle payments, hence the charges to the city in March, April and May of last year.
Wade also asked if there are any excess bond proceeds from the project.
Trippe replied, “There are some excess proceeds and we are now working to determine what to do with them. It will be subject to federal regulations and what the Board and Participants Committee want to do.”
Tom O’Leary, another audience member, noted that Galion bought 10 megawatts of power from Prairie State, which he said is a significant percentage of its baseload power.
Planning, Zoning and Utilities Committee member Gail Baldinger said, to the best of his recollection, when city officials negotiated the contract, the majority of that share was to replace the megawatts lost after the cancellation of the AMPGS project in Meigs County.
AMPGS was another projected that came under discussion due to the stranded costs associated with the cancelled project. Trippe said that there are stranded costs, but that has not been included in billing to participants. The litigation against the project contractor is still ongoing, so AMP is not recovering any costs as of this point, and Trippe concluded that they were not in a position to speculate on what would happen.
After a lengthy discussion on financials, O’Leary indicated that he appreciated the information. “I think one of the overall frustrations among citizens is being able to get this kind of information…There’s a lack of understanding about the financing.”
“That’s why we try to make ourselves available to meetings like this,” Trippe said. “Anyone is welcome to attend board meetings, they are open to participants…The Participants Committee for each project is required to meet at least once quarterly and site tours can be scheduled at the generating facilities.”
Fellner emphasized that the perceived lack of information may not be entirely AMP’s fault. “We [City Council] delegated things for convenience in the past…now we don’t have a knowledge base. It’s part of Council’s responsibility to participate and stay in the loop with all of this,” he said.
Trippe encouraged Council to attend more of the regular meetings, which is when he said a lot of questions do get answered. “Galion is a valued member of AMP and we appreciate your membership.”
However, some citizens brought up other topics that evening. Paula Durbin asked if participants in Prairie State would be liable for fines if there are any EPA concerns in the future.
AMP representatives were unaware of any such concerns, but if any fines are implemented, then all participants would be liable.
Near meeting’s end, Don Faulds stated: “AMP stands to lose nothing if Prairie State fails. All costs would be passed back to the consumers.”
Fellner called the meeting to a close just under the two hour mark. The exact transcript of the meeting is available, by request, at the City Municipal Building.
Amercian Municpal Power, Inc. (AMP) is a nonprofit leader in wholesale power supply for municipal electric systems. Founded in 1971, it manages and supplies competitively priced, reliable wholesale power to member municipal electric systems. AMP owns and manages a diverse array of power resources, allowing members to select the sources that best meet their unique needs. AMP also provides a wide range of additional services on a cooperative, nonprofit basis for the mutual benefit of all member communities. For more information, visit its website at www.amppartners.org.