01-29-03: Mendon, Bremen may join $1 billion project

01-29-03: Mendon, Bremen may join $1 billion project

By TIMOTHY COX & SEAN RICE
The Daily Standard

    Two more Grand Lake St. Marys area communities are considering participating in an American Municipal Power of Ohio (AMP-Ohio) joint venture to develop plans for a new power plant that may ultimately cost about $1 billion.
    Village councils in Mendon and New Bremen on Tuesday both heard presentations from AMP-Ohio officials about joining together to build a new coal-fired, base-load electric plant. AMP-Ohio officials now are lining up support in member communities and plan to begin a two-year planning phase in April.
    New Bremen council members jumped at the offer after listening to Amp-Ohio President Marc Gerken's pitch, and passed the first reading of an ordinance to join the development phase of the project.
    Mendon council members could not vote due to lack of a quorum.
    The development phase would consider many issues, including the type of facility, cost estimates, location, governmental and environmental issues, fuel availability and price, financing and others.
    Development costs are estimated at $2.6 million to $3 million and would be shared by many of the 88 AMP-Ohio member communities. Mendon's share would be about $2,200; New Bremen would pay $20,000-$29,000. Reimbursement funds
    If a power plant eventually is built, participating communities would be reimbursed development fees, with the money being credited to construction costs, council members in both towns were told.
    A plant would not be built if the development plan shows power could be purchased cheaper than generating it, or if an existing viable plant could be bought, or if too few communities agree to participate in the project, Gerken said. AMP-Ohio officials want minimum participation of at least 500 megawatts, and expect the need to reach 750 megawatts.
    An AMP-Ohio study of local power needs shows Mendon drawing 440 kilowatts of power - or about one-third of the town's average daily use - from the new plant. New Bremen's use was estimated at 5,980 kilowatts. Both estimates are based on the projected power need when the proposed plant is completed in 2009.
    Gerken said many aspects of the project are still in the air, including who will own the plant. He said he is working on a tax classification change for the non-profit group within the Internal Revenue Service that would give AMP-Ohio members more choices.
    "We're also looking at this project as a tool to negotiate better supply contracts down the road," Gerken said. "Because there are people who won't want us to build this plant."
    Gerken said the for-profit energy companies are unable to get tax-free financing as AMP-Ohio can and the splitting of profits with shareholders makes the idea of a new plant inconceivable for the investor-owned utilities.
    "That's why we're looking at building base-load (a high-output plant for everyday use), because nobody's building them," Gerken said, adding that the new plant would pass all new Environment Protection Agency regulations.
    Mendon, New Bremen and other AMP-Ohio towns have participated in past joint ventures with electric cooperative members. The group bought the R.H. Gorsuch Station in Marietta in 1988, completed construction of the Belleville hydroelectric plant in 1999 and two years ago installed a series of diesel- and natural gas-fired peak-shaving generators across the state.
    Permitting through the Ohio Power Siting Board would take about two years and construction would take an additional two years, meaning any new plant would not go on-line until at least the fall of 2009.
    While Mendon officials could not vote on the issue Tuesday, Board of Public Affairs members Darrell Etgen and Karl Duff said their board will vote on the issue next month and expect to recommend passage to council.
    "Go for it!" Etgen said. "That's why we want to build a plant, so we don't have to raise electric rates."
    Duff said a meeting in Tipp City recently among AMP-Ohio members indicated that many of them appear poised to join the project. Columbus and Westerville are among larger cities that appear interested, Gerken said.

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