February 8, 2015 Read More →

AP: Ratepayers Feel ‘Duped’ by AMP/Peabody Coal Deal

“Towns across the Midwest” are challenging the notion that they are locked into a costly long-term electricity deal with Prairie State Energy Campus, the southern Illinois coal-fired plant that has proven both expensive and unreliable.

In an article published nationally today, the Associated Press notes that dozens of municipalities through the American Municipal Power cooperative are being damaged by “‘take or pay” contracts that obligate investors to pay for their full contracted share of power — whether or not they receive it — for 50 years. Many customers now feel duped.”

The article, by Julie Carr Smyth, notes that a lawsuit has been filed, a ballot referendum has been proposed and bankruptcy has been discussed. It has an AMP spokesman saying the plant, which went on line in 2012, is “a solid long-term investment.”

Excerpts:

  • “On Wall Street, the unbreakable nature of the take-or-pay contracts has been viewed as the strength of the Prairie State deal. However, the U.S. Securities and Exchange Commission has been investigating the financing deal after complaints from members of Congress and local officials across the region.”
  • “Michael Childress, lead attorney in the Batavia suit, said Peabody and the Indiana Municipal Power Authority staged a “road show” across the Midwest in 2007 to sell the idea of investing in a plant. He alleges the project was conceived as a long-term vehicle for Peabody coal.”
  • “Jennifer Karches, a concerned citizen in Bowling Green, Ohio, said stabilizing rates now only pushes the financial impacts of what she sees as a poor investment into the future. ‘I don’t know if I want to say it’s dishonest, but a lot of people don’t realize what’s going on,” Karches said. “It just boggles my mind that we’re invested in this totally outdated, polluting operation. My husband said it: it’s like investing in whale oil at the turn of the century.’

 

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