PZU Committee meets with AMP about City's electric bill

By Matt Echelberry

Inquirer Reporter

“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.

Matt Echel­berry — Staff

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.

[/media-credit] Rep­re­sen­ta­tives from Amer­i­can Munic­i­pal Power take audi­ence ques­tions dur­ing the spe­cial meet­ing of the Plan­ning, Zon­ing and Util­i­ties Com­mit­tee. The four rep­re­sen­ta­tives were (from left): Jim Hooves and Mag­gie Gibbs from the AMP Finance Depart­ment, Direc­tor of Billing Andrew Blair and CFO Bob Trippe.

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.

Posted by Matt Echelberry on Feb 22 2013. You can follow any responses to this entry through the RSS Feed. Both comments and pings are currently closed.