(Columbus) American Municipal Power Inc. (AMP) today announced plans for the likely conversion of the American Municipal Power Generating Station (AMPGS) project currently under development in Meigs County, Ohio. AMP will explore developing the project as a natural gas combined cycle facility supplemented with market purchases and pursue future enhancements for the project, such as biomass or another advanced energy technology.
A total of 81 AMP member communities in Ohio, Michigan, Virginia and West Virginia are participants in the project, which has been under development approximately six years as a pulverized coal (PC) facility with ammonia scrubbing emission control technology.
The AMP Board of Trustees and AMPGS Participants determined it was in the best interest of the member participants to give termination notice to the engineer-procure-construct (EPC) contractor, emission control and other equipment vendors on pulverized coal construction and equipment. The decision was the result of a November 2009 unexpected approximately 37 percent increase in the EPC contractor’s indicated capital cost for the project including air emission control vendor costs. This 37 percent increase over the indicated capital cost estimated in May 2009 made pursuing alternatives, including conversion to natural gas combined cycle and taking advantage of current power supply offers, the best economic decision.
The likely conversion will allow AMP and its members the option of utilizing the current project site and benefitting from the development work performed thus far should that be the best option for participants. Project participants will have the option of securing needed replacement power from softened wholesale power markets.
“We’ve been able to diversify our members’ power supply portfolio with our share of the coal-fired Prairie State Energy Campus (Illinois) scheduled to be online in 2011-2012 timeframe and additional hydroelectric generation,” explained Marc Gerken, AMP President/CEO. “The conversion of this project from coal to natural gas combined cycle would reduce capital costs and fit well into AMP’s carbon strategy. With AMPGS, we found ourselves in the unique position of having a project that was solid from the participant, permitting and policymaker support perspective, but the new target price resulted in price projections with little or no margins compared to market power, calling into serious question the project’s economic benefit to participating communities.”
“AMP has always firmly stated that we would recommend halting the project if the economics did not favor our participating communities, and a 37 percent target price increase was not acceptable, especially with the softened commodities market for plant equipment and materials, coupled with the softening in the wholesale electric market. Converting the project to a combined cycle plant would allow us to further diversify our portfolio and meet needs for intermediate generation,” stated Gerken.
In making the decision, AMP leadership recognized the strong environmental position of the coal-fired AMPGS project and the support from project participants and policymakers. However, those factors were not able to offset the economic considerations.
“Contrary to what the activist groups who have opposed this project will assert, this conversion is not the result of their opposition efforts, our position in upcoming permit appeals, or load loss by our members (as the project is designed to reduce existing market exposure rather than to address growth),” said Gerken. “This project compared favorably to the market until the most recent target price in November.”
“We’re grateful for the support for the AMPGS project that has been displayed by local, state and federal policymakers,” said Jolene Thompson, AMP Senior Vice President of Member Services and External Affairs. “Their stalwart dedication has been a critical factor in the project achieving so many milestones. Governor Strickland and the various state agency officials have been both responsive and responsible in their policymaking, and we look forward to working with them as we pursue this conversion and future advanced energy options.”
“We own a valuable electric generating site in Meigs County and will be considering that site for the natural gas combined cycle facility,” explained Gerken. “We look forward to continuing our relationship and discussions with the people in Meigs County who have been so positively engaged in the project over the past four years. We want to extend our appreciation to the property owners, Meigs County Commissioners, Letart Township Trustees, Village of Racine officials, Meigs County Economic Development Office, Chamber of Commerce, CIC and local residents for their efforts to bring jobs and investment to the region.”
