Batavia residents share concerns about power plant project
By Linda Girardi For Sun-Times Media February 26, 2014 10:38AM
The Prairie State Coal Plant is in Washington County in Illinois. | Mike Solley ~ Sun-Times Media
Updated: March 28, 2014 8:45AM
Aldermen in Batavia got an earful this week about the city’s investment in a coal power plant and the impact it will have on residential electric bills.
Residents packed the City Council chambers to bring their concerns about the city’s decision to invest in the Prairie State Energy campus in downstate Illinois, and a proposed 10 percent rate hike on electricity bills.
Aldermen invited residents to the informational meeting to explain some of the complexities involved in their decision-making and the current pressure on rates due to the cost of power and the Prairie State plant.
City officials have said the financial impact of the partnership with the plant has been significant due to the higher than anticipated construction costs and the economic downturn, which has forced the city to sell excess power at a loss.
Gary Holm, public works director, said prior to 1997, ComEd was the city’s provider of energy.
“We knew a decade later, ComEd would no longer be supplying our energy and communities began to explore other options,” Holm said.
Holm said Batavia joined Geneva and Rochelle in 2004 to form the Northern Illinois Power Agency and a year later formal action was taken through the agency to invest in the construction of Prairie State. A number of other cities, including Naperville, also became involved in the project.
He provided a series of chronological events, which included Batavia’s decision to increase its “entitlement share” in the project from 50 to 55 megawatts.
“One of the owners dropped out,” Holm said. “The economy was booming and our loads were projected to increase,” he said.
By the fall of 2009, staff began to communicate concerns about the plant’s potential financial impacts. In 2012, consultants were retained to dispose of a portion of the city’s entitlement share and subsequently looked at options for the sale of power.
But by January 2013 the city received no interest in long-term contracts and the bids for a short-term contract were not competitive, so Batavia suspended the sales process. Holm said in March 2013 the city retained a firm to assist with legislative-legal matters on the state level.
“One idea we were pursuing was retail sales, but that was suspended. We are to this day exploring legislative-legal options,” Holm said.
Holm said the initial construction of the power plant and mine was estimated $3.9 billion, but the final construction cost grew to $4.9 billion. He said Batavia’s contractual share of the debt service for the project is $15 million a year through 2040.
Holm said the city’s power purchase costs have increased from $31 million in 2012 to about $33 million in 2013. In 2014, those costs are projected to increase to about $39 million.
Holm said currently the city sells Prairie State power back into the market at a loss, but eventually there will be a “cross-over” when Prairie Plant’s power costs decrease and the city will sell power back into the market at a profit. “The range is 2016 to 2040,” Holm said to gasps in the audience.
The audience was informed a day may arrive when capital improvements will be needed and necessitate additional bonding, and then balked at the $5,000 monthly fee the city is paying for a lobbying firm to address legislation concerning the electricity issue. City officials said while transparency is important, legislative matters require some level of confidentiality before a bill is introduced.
“Our commitments are fixed, we are buying above market and our residential electric rates are not sufficient to fund our obligations,” resident Steve Lemke said. “You have got to raise rates, but make sure you get it right and don’t have to come to us again and don’t mess with the sales tax.”
Resident Betsy Zinser said the city needs to move toward “full disclosure” about Prairie State’s operating and financial performances.
“You all have signed confidentiality agreements, yet this secrecy harms us,” she said.
Zinser said the secrecy helps coal-company Peabody and Prairie State.
“It allows Peabody to tell a false success story that gives them political strength in our state legislature, goodwill in the public eye and limits your ability to seek help and find solutions,” Zinser said.