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Long-term power plant contracts saddle AMP communities with high electricity prices

September 21, 2020
David Schlissel
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Key Findings

Long-term contracts with American Municipal Power (AMP) have stuck 83 communities across 41 counties and five states with high electricity prices for the next half century.

CPP paid at least $106 million more for power from two projects (the Prairie State and hydro plants) between 2012 and 2019 than it would have paid from wholesale PJM (regional) markets.

Executive Summary

Customers of American Municipal Power’s (AMP) member communities (and one joint action agency) in Kentucky, Michigan, Ohio, Virginia, and West Virginia are paying high prices for electricity provided through long-term contracts with American Municipal Power (AMP).

The costs of power from the Prairie State coal-fired power plant in Southern Illinois and the Combined Hydro Project on the Ohio River have far exceeded the projected costs that AMP presented to its members when it urged them to sign 50-year “take or pay” contracts for these facilities in 2007.

Sixty-eight communities signed long-term contracts for Prairie State,1 and 79 signed contracts for the Combined Hydro through AMP. Because each community has different needs for power, and because contracts for the two plants constitute different proportions of each city’s power supply (see Appendix), the overall effects of these costs are felt differently in each community.

The Institute for Energy Economics and Financial Analysis has estimated the cost burden of these plants for AMP’s largest member utility, Cleveland Public Power (CPP).

IEEFA estimates that CPP paid at least $106 million more for power from these two projects (the Prairie State and the hydro plants) between 2012 and 2019 than it would have paid to purchase the same amounts of capacity and energy in the wholesale PJM (regional) markets. CPP has a 24.88 megawatt (MW) share of the Prairie State plant and a 35MW share of the combined hydro plants. The actual amounts that other AMP members paid above market prices depends on their respective MW shares of the two projects.

AMP communities would do well to examine their own invoices and power costs to determine the burden and upward pressure that these projects have placed on their own electricity rates.

1Paducah, KY, and Princeton, KY, which participate in the AMP Combined Hydro Project, also participate in the Prairie State coal plant through the Kentucky Municipal Power Agency.

Press Release: Long-term contracts with American Municipal Power (AMP) saddle local communities with high prices

David Schlissel

David Schlissel is an IEEFA analyst with 50 years of experience as an economic and technical consultant on energy and environmental issues. 

He has testified as an expert witness before regulatory commissions in more than 35 states and before the U.S. Federal Energy Regulatory Commission and the Nuclear Regulatory Commission.

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