PCDI Board Briefed on Repowering Project Options

The monthly Prowers County Development Incorporated meeting on June 24th was highlighted by guest, ARPA General Manager, Rick Rigel who briefed PCDI board members on a brief history of events relating to present developments for the future of the Lamar Repowering Project.

Rigel has met with representatives from several municipal groups, as well as hosting a number of public meetings to inform the public about what may become of the inactive coal fired electric plant.  As a result of matters coming to a head for the Repowering Plant, the Lamar City Council will hold two meetings to gather recommendations and listen to concerns from Lamar residents.  One will be held at 6pm on July 2 at the Cultural Events Center and another has been set for July 8, which may be an executive session, and perhaps a decision on the part of the council to follow.

PCDI board members expressed concern that the high electric rates may hinder economic development in the community.  “Lance Benninghoff has been meeting with some interested business concerns, but when they start becoming aware of the Repowering Project situation, they show concerns about what they may have to pay for power,” said Rick Robbins, PCDI President.  Rigel fielded questions regarding how best to separate the $156M in bond indebtedness ARPA is faced with for the construction cost overruns for the coal fired plant.

The insurance coverage only goes up to $110M.  When asked about that, he stated that, ”When the recession hit the country before the last bond issuance, all those bond insurers went upside down, they lost their credit rating and there was no municipal bond insurance available for the last series of bonds.” Rigel said ARPA lawyers have determined that failure to pay on the bonds will only lead to receivership which takes rate setting decisions out of the hands of ARPA.  “Even if we were to set the rates so low that we couldn’t pay back on the bond loans, we’d still be brought into court for receivership action against us,” he explained, adding that the associated legal fees would just be passed back to the ratepayers.

Robbins spoke about the early, organic contract participating communities signed with ARPA stating they have to buy all the excess power they don’t use themselves from ARPA.  Rigel said yes, but there were some caveats attached to that agreement, because it would be generation that they would own at the time of the contract.

He stated that Lamar at the time had a 25 megawatt generator and one of the ‘carrots’ that ARPA held out in the project was that Lamar was going to put that generator into the project at zero cost, and lease all the northern property at about $2,500 a year.  The City did that because ARPA said some benefits would be the jobs, the competitive base load, the local control and reliable power.  Robbins asked Rigel, “Now that the project  a has been declared a failure, what steps are they doing to restore power generation capability?”

Rigel replied that ARPA hasn’t had any discussion with the City of Lamar about that power supply on a formal level, but has visited about new technology developments.  He explained, “This is a 1972 steam plant and it can’t be for peaking resources, it’s not good for emergency back because it takes 8 hours to be brought online.  It was design for baseload and for that facility, it has a high heat rate, not good for the environment.”  Rigel said that the turbine could function, but the boiler would give problems to the Light Plant as it leaks.  New permits would also have to be sought as the old one was vacated in light of the application for the coal fired plant.  Rigel also explained that there would have to be an asbestos abatement conducted on the 40 year old plant.

Discussion  also focused on what steps would be needed to take the bonding costs to the state legislature to file for bankruptcy on the project.  Rigel told the PCDI board that there would be numerous financial and legal costs associated with that effort, which would eventually fall back on the customers to pay, especially if the matter was denied by the courts.  One public hearing was held at the Lamar Community Building on June 25 and the final public meeting will also be at the LCB on Monday, June 30.

In other business, PCDI board members reviewed the LCC Foundation/PCDI golf tournament set for September 12 & 13.  The Foundation will benefit from the fundraiser.  Benninghoff said he’s still planning on a September seminar for business owners that will focus on employee and customer safety from an insurance liability viewpoint.  Another seminar being planned will be describing the basics of economic development within a community and how the three areas, though separate, are inter-related.  The next scheduled PCDI meeting is July 29 at their offices at the Cow Palace Inn.

By Russ Baldwin