Danville continues partnership with AMP
- December 30, 2014
Danville is still on the hook for about $5 million to American Municipal Power Inc. (AMP) for a coal-power plant project in Ohio that was canceled in 2009. City officials say, however, the incident hasn’t hampered its partnership with AMP, a Columbus, Ohio-based nonprofit that generates, purchases and sells electric power to 129 owner-member utilities.
“When you’re in the business of building power generation, you’re going to run into difficulties in terms of rising costs,” says City Manager Joe King.
That’s precisely what happened with the AMP Generating Station project. Danville Utilities and other utilities had bought ownership in the planned 960-megawatt, coal-powered station in Meigs County, Ohio. AMP says the project was canceled when estimates by the project’s contractor, Bechtel, rose from $2.3 billion in May to $3.3 billion in November.
The city is still responsible for “stranded costs” and owes about $5 million, down from $5.5 million it owed in April. Danville may be cleared of what it owes for the project if AMP is successful suing Bechtel for $97 million in damages. A U.S. District Court judge ruled last year that AMP was entitled to a maximum of $500,000 because of a limitation of liability clause but recently agreed to ask the Ohio Supreme Court to clarify the law.
Jason Grey, interim director of Danville Utilities, says that the city has been making monthly payments to AMP to pay back the stranded costs. If the stranded costs of about $1 million per year continue, that will make up about 1 percent of Danville Utilities’ yearly budget.
King and Grey, however, continue to have a positive outlook on their partnership with AMP.
“We joined AMP in large part, so we could invest in our own [power] generation,” King says. “That’s why we got into this series of projects and right now we’re right about where we need to be in terms of having our own generation.”
Before joining AMP, Danville purchased 95 percent of its electricity on the open market. The partnership with AMP will allow Danville eventually to produce almost all of its own base-load power.
“The intent is to shield our customers from price fluctuations,” King says. “The cost of power fluctuates dramatically from one year to the next.”
The city is still participating in projects with AMP, including the Prairie State coal plant in Illinois, the Fremont Energy Center in Ohio and run-of-the-river hydroelectric projects on the Ohio River. Danville Utilities serves about 37,000 residential customers, 4,500 commercial entities and 100 industrial clients.