Tuesday, September 23, 2014

Towns facing cost spikes trying to get out of deal that financed electric generating plant

Cities and towns in Illinois, Kentucky and other states are probably regretting their decision to own part of a power generating plant. High electricity costs have led the complete shake-up of the Paducah Electric Plant Board, including the resignation on Monday of the chairman, who was the last remaining member from the board that originally made the deal. "It's probably the most serious problem for Paducah since the Great Flood" of the Ohio River in 1937, Mayor Gayle Kaler said.

The other Kentucky town in the deal is Princeton. The towns "entered into a contract with Prairie State Energy campus," Mychaela Bruener reports for WPSD-TV in Paducah. "The Prairie State power plant in Southern Illinois provides power to Paducah Power. The Peabody Coal project was supposed to lower electric rates. However, the costs at the Prairie State plants have increased from $1.4 billion to nearly $5 billion during the past decade." That has resulted in skyrocketing monthly bills that are 50 percent higher than what customers with other services are paying.

Last month Joe Marconi, a businessman in Batavia, Ill., a suburb of Chicago, filed a class-action lawsuit in Kane County Circuit Court over the city's investment in the Prairie State Energy Campus, Eric Schelkopf reports for the Kane County Chronicle in St. Charles, Ill.

"In 2005, the Northern Illinois Municipal Power Agency, of which Batavia is a member, agreed to a long-term power contract to purchase electricity from Prairie State," Schelkopf writes. Rate hikes have caused residents this year to "see a 6.5 percent increase in their electric rates, plus a $4-a-month increase to the customer charge. In 2015, residents also will see a 6.5 percent increase in their electric rates." Marconi told Schelkopf, "We filed it because the electric rates in this town are so high. Our main objective is to get Batavia out of the contract they signed with Prairie State. They misled us." (Read more) UPDATE: For an an analysis of the problem by the Institute for Energy Economic and Financial Analysis, click here.

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