Energy analyst questions BG deal for electric

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A group of citizens and outside consultants believe Bowling Green ought to investigate and consider
exiting long-term electric power contracts they say could cost the city and its customers tens of
millions of dollars by 2021.
Citizens for a Liveable Future, made up of local residents, brought David Schlissel, of the Institute for
Energy Economics and Financial Analysis, to Bowling Green Thursday to meet with local groups and for an
evening program at the First Presbyterian Church.
During an afternoon visit to the Sentinel-Tribune, Schlissel went through his presentation, with three
members of the local group – Jennifer Karches, Lisa Kochheiser and Neocles Leontis – along with Sarah
Batke, energy program organizer of Ohio Citizen Action, and Sandy Buchanan, executive director of IEEFA.

Their primary concern is the Prairie State Energy Campus in southwest Illinois with which the city has
contracted, through American Municipal Power, to purchase a large percentage of its electricity for the
next 40 years. The group is also concerned about long-term contracts for hydro power, also being
purchased through AMP.
Schlissel said in the next seven years the Prairie State power could cost the city and its customers $48
to $54 million more than power that could be purchased from wholesale markets or AMP’s Northern Pool, of
which the city is a member. He cited cost overruns in plant construction, problems with start-up
operations, questioned the amount of coal and quality of the coal in the mine where the plant is
located, and the potential for additional costs in federal carbon dioxide tax. He suggested the carbon
tax could add 10 percent to the cost of the Prairie State power.
"It is unreasonable to expect that no price on carbon dioxide emissions will be adopted at any time
within the 40 years," Schlissel said.
He suggested the city could take several steps to find alternatives to Prairie State:
• Prepare an Integrated Resource Plan to determine the appropriate portfolio of supply-side and
demand-side resources.
• Have a goal to do as much energy efficiency and renewables as are technically and economically feasible
with as little natural gas as is necessary. He noted that solar and wind prices are declining.
• Issue a request for proposals for power from a natural gas combined cycle plant and evaluate prices
offered by suppliers.
• Do more aggressive energy efficiency.
• In the short-term make power purchases from PJM markets of the AMP Northern Pool.
Schlissel said the city could have been misled by AMP in 2007 when it was given what he said was a short
time to decide on the Prairie State project, a coal plant in Meigs County, Ohio, that was eventually
canceled, and hydro projects. He questioned whether the consultant hired by the city to do rate studies,
Sawvel Associates, was truly independent because it had also been a consultant for AMP.
Schlissel said that Peabody Coal, which developed Prairie State, had warned in 2007 that a
"hot" labor and equipment market had led to increases in the cost of new coal plants. He noted
that by 2010, when a fixed price contract was signed, the estimated cost of Prairie State had increased
by 25 percent to $4.9 billion.
To date, Marceline, Mo., is the only town to get out of its Prairie State contract. Last August the town
of 2,500 people agreed to pay $22,000 a month for 45 months to exit the agreement. The town had a
contract for 4 megawatts of power. Bowling Green has contracted for 35 megawatts. It was estimated
Marceline would save $6 million.
It was also noted the U.S. Securities and Exchange Commission is looking into the issue but those
investigations are not public until concluded.
Schlissel said the city could decide to do nothing and pay the contract, the city could investigate to
determine if it had been misled and investigate options to withdraw from the contract or talk to other
AMP communities that have Prairie State contracts.
"I do not see any negatives to investigating getting out," Schlissel said. Maybe some people
will get embarrassed. The responsibility is to protect the rate payers. If the city can’t get out, at
least it was tried. I think people would like to see public officials try to protect them,"
Schlissel said.

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