AMP OHIO NEGOTIATES IN BAD FAITH WITH CLEVELAND

Submitted by Jeff Buster on Sat, 02/23/2008 - 17:24.

 
Committing to American Municipal Power's proposed Meigs County pulverized coal generator for 50 years is a death trap for the City of Cleveland - and AMP knows it. 
 

Attending the Cleveland City Council subcommittee on CPP all day yesterday brought things to my mind that wouldn’t have aligned in my head if I hadn’t sat and listened to the back and forth for hours.       AMP OHIO is negotiating with Cleveland in BAD FAITH.    

 

Each of the individuals in the photo above are “salespersons” for the proposed new 960 megawatt pulverized coal fired generator to be built by AMP Ohio in Meigs County, Ohio. From left to right the salespersons are   John Bentine (Attorney in charge of writing the contract which Cleveland has signed) AMP CEO Marc Gerkin,  Pam Sullivan, AMP vice president for marketing, and April Bott  ( environmental permitting attorney for the project site).  Both Mr. Bentine and Ms. Bott work for Chester, Willcox, Saxbe, llp of Columbus, Ohio.

 

When you are dealing with a salesperson – or anyone for that matter – you look for truth and consistency in their interactions with you and in their “story”.  When someone on the street tells you he needs $5.00 for a bus to get home to his kids, you ask him where he lives.  From his answer you can tell if he is a panhandler, or someone unfortunate who has lost his wallet.

 

After listening to the AMP representatives at the Cleveland City Council last December and yesterday,  I believe it is prudent to pay attention to the “truth and consistency” in what I heard.  Following are a few specifics which make me believe that AMP’s entire presentation is untrustworthy and premised on bad faith sales tactics. 

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1. FIFTY (50) YEAR TERM OF CONTRACT.

 

I believe the unusually long term of the proposed contract with CPP is a trap.   I believe that coal companies – recognizing that the end is near for coal because of CO2/global warming, have/are lobbying AMP officials to coax, cajole, persuade, and entice as many municipalities as AMP can hustle to enter into a preposterous and unprecedented 50 year power supply contract.    I believe that AMP has colluded with, and been influenced through personal coal contacts and coal lobby connections to develop a never heard of before 50 year contract.  I believe this is coal lobby strategy because similar un-precedented 50 year contracts for coal have popped up all over the United States, including this one in Utah’s proposed Intermountain Power Project 3  in the last year.    You think these rushed-through-town-council-contracts for 50 year commitments with dirty coal across the country are just coincidence?   Or are these similar rushed contracts big coal lobby directed collusion?

 

No convincing reason for the 50 year contract term was explained by the AMP salespeople.

 

And AMP  won’t tell which cities are now in the plan and which are  out.  AMP is keeping their cards to their chest, even though each one of the Municipalities who join the AMP proposal have to pass legislation in their public municipal bodies.  AMP forces The City of Cleveland to guess what the enrollment is.

 

AMP also hangs out bait – telling the City Council members yesterday that AMP has had calls from non AMP members who are interested in signing on for an allotment from the proposed plant.  So Matt Zone asked whom those calls came from – and the AMP CEO responded that that had to be confidential.  AMP is trying to scare Cleveland into the mindset that if Cleveland doesn’t stay signed up, then Cleveland is going to be left out of a good deal.   That is another scummy sales tactic and is out of place between a Muny co-op and the Muny’s biggest member, Cleveland.

 

2.         COST ESCALATION

When I attended the AMP hearing in Cleveland last December, the cost of construction for the Meigs power plant was just about 2 billion.  Then the City of Cleveland signed up for 80 megawatts.  Yesterday the projected cost of the power plant was 3.9 billion.  You can find a graph down the page here at Ohio Citizen Action showing that over the last two years the projected cost of the AMP Meigs plant has escalated over 2 million dollars per day. 

 

With this type of blatant cost spiraling, is AMP the type of “manager” that Cleveland should commit to in a 50 year contract? 

 

No. 

 

 

3.            GLOBAL WARMING MAY SHUT PLANTS THAT CAUSE GLOBAL WARMING

I learned (from the Council’s ION consultants  presentation led by Brian Walshe)  that one of the risks of this plant is that it  relies on only one mode of coal delivery – barges on the Ohio River.  

 

That brought up another issue.  Water.  This past summer a few nukes in the South East had to step down their power levels because of inadequate cooling water caused by the drought in Georgia and elsewhere.  Bill MacDermott links up the low water nuke story here on Realneo.  

 

So I asked at the hearing: how do you know the Ohio River will have enough water in it to cool the power plant in 10, 20, 30, 40 years?  The Aral Sea dried up over just a few decades.  What will happen to the Ohio River?   AMP assured the Council that AMP engineers had this contingency figured out – just like the nuclear engineers who built the Lake Norman, North Caroline nuke  (referred to by Bill MacDermott)  had the water levels figured out.

 

 

4.         COAL ‘FEED PLAN’  - WHERE DOES THE COAL COME FROM?

 

Every coal-fired power plant has boiler and exhaust scrubbing equipment that is designed specifically for a particular “blend” of coals.  The blend of coals come from geographically different surface or dug mines.   The proposed  AMP Ohio Meigs County 960 mega watt generator will burn lots of coal over its proposed 50 year contract with the City of Cleveland.  Besides the pollution that the power plant will create, there is also considerable environmental damage and pollution from the mining which produces the coal. 

 

So why isn’t there a coal “feed plan” yet for this power plant.  The AMP reps were asked by Council members why there wasn’t a feed plan.  AMP passed it off as a task they just hadn’t gotten to yet – well if they don’t have tentative commitments for coal for 50 years, how are they able to predict the cost of the plant or the power?

 

 In fact AMP’s delay in defining its feed plan is intentional bad faith strategy.  Here’s why: If the people who lived where the coal is to come from were aware that their area was slated to supply AMP, some of those people, like Elisa Young  , would come to Cleveland (and the other cities and towns AMP is trying to seduce) and testify in objection to the new plant.  

 

By intentionally delaying the ”feed plan”, AMP prevents public objection from those who will be negatively impacted by the coal mining.  Once AMP has enrolled and contractually committed Cleveland and others to build the 4 billion dollar plant, any objection from those who will be negatively impacted by the coal mining will be swimming against the tide.

 

That is a dirty way for AMP to do business.

 

5.            PROJECTING A “SAVINGS” FOR CLEVELAND – WHEN THERE IS NO CERTAINTY AND GREAT RISKS.

 

 Everyone of the presenters – CPP (who were not persuasive), AMP, and ION (whose report said “this is the riskiest time in history to commit to coal”) - had lots of power point graphs. The AMP officials and the CPP officials each supported their sales pitches that the Meigs plant is a good idea and will save CPP customers about 11% over 50 years.  But this purported “savings”  is complete  speculation.  None of the cost projections even went out past 2032.  Why? Because statisticians agree that cost projections out more than 25 years are just whimsy, and not statistically supportable.    If the savings are certain, then provide an insurance policy supporting the certainty. 

 

6.    “DIVIDE AND CONQUER” –AMP’S INTENTIONAL PIECEMEAL COMMITMENT STRATEGY

 

The entire AMP process with Cleveland has been underhanded.   First they get the City Council to approve a contract – saying the City can back out by March 1, 2008.  That’s the same tactic that is used by scamming salespeople. Sales people tell you sign up now, you can back out in 30 days and get your money back, but the sales people only use this tactic because they know that life gets in the way; many people don’t actually want what they bought, but don’t get around to canceling their contract. 

 

Telling Cleveland that they have to sign up or possibly lose out on cheap power is a scare tactic.

 

That’s the position in which AMP has placed its CO-OP member, the City of Cleveland. AMP  claimed in December that it couldn’t get contractors like Bechtel and Fluor to bid EPC contracts (engineering, procurement, and construction) without contractually binding  commitment from AMP members for at least 750 mega watts of the proposed plant.   I don’t believe AMP because no EPC contractor was being asked for a fixed bid price and a bond – merely back of the envelope costs.

 

7.         BIG COAL HAS TARGETED MUNICIPAL ELECTRIC, NOT INVESTOR OWNED ELECTRIC. 

 

I learned that electrical companies which are investor owned are not presently forging ahead with coal plants (because of concerns about profitability in this uncertain regulatory atmosphere)  while some municipal owned co-ops like AMP are going ahead – and the reason is financing.   A muny is backed up by municipalities, which can’t declare bankruptcy, while investor owned power generators (like Calpine) can file bankruptcy. 

 

There is a huge warning flag here.

 

 

8.         AMP'S "GREEN" CLAIMS ARE HYPOCRISY

Even AMP’s publicly projected image is in Bad Faith.  Amp’s home page image is a lie.   Amp is 99.9 % a coal- fired utility – so why is one of the Bowling Green Vestas wind turbines  showing up at AMP’s logo on AMP’s web site.   AMP was not even the inspiration behind the Bowling Green wind turbines.   The inspiration for the turbines in Bowling Green, Ohio  was Daryl Stockburger, the head of Bowling Green Municipal power along with Fletcher Miller.     But AMP steals the wind turbine image for their home page. 

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 Each of these little untruths about AMP begins to build a larger picture of AMP and convinces me that AMP lacks integrity.      

 

I don’t trust AMP or any of the individuals in the photo above.   They are not working for the best interests of the City of Cleveland.  Rather, they are working for bonding companies, corporate financiers , EPC contractors and for the coal lobby.

 

 

 

 

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What happens next?

And what should concerned citizens be doing?

21 CLEVELAND COUNCILORS- MONDAY 11 MUST WITHDRAW

Friday's Cleveland City Council Public Utility Sub Committee met with AMP, CPP, and ION and the public in the meeting I have described at the top of this post.    Mr. Zone did what I thought was an excellent "public meeting" job of chairing the hearing.   But I believe Mr. Zone will support the AMP contract. 

Matt Zone is the Chair of the Public Utilities Committee.  Zach Reed is vice chair. The other members are listed on the Cleveland web site here

 

At the all day hearing Friday February 22, 2008 the committee members in attendance (all day) were Zone, Reed, Cummins, Westbrook, Polensek, and for most of the day Kevin Kelley, and for a portion of the day Phyllis Cleveland.  Joe Santiago and Martin Keane didn’t show.   Matt  Zone announced that he had invited every Councilor, and said he was disappointed that more Councilors did not attend.

Mr.Cummins, Mr. Westbrook,  Mr. Reed, and Mr. Polensek were impressive in their focus and intensity and earnestness.   Their constituents are getting their tax-money's worth.  I was proud and excited to be in the room with the keen and sincere level of discussion they raised. 

 

SO WHAT NEEDS TO BE DONE?  On MONDAY, FEBRUARY 25TH 11  OF THE 21 CLEVELAND CITY COUNCILORS MUST VOTE TO WITHDRAW FROM THE AMP CONTRACT.

 

I believe that a majority of the Public Utilities Committee will vote to withdraw.  But Mr. Zone is a persuasive chairman, and I believe Mr. Zone will vote to stay in the AMP contract. And Mr. Zone's support will cause other Councilors to support the project. 

 

One of the rationales for going with coal that Mr. Zone enunciated went like this:   the plant will be built whether or not Cleveland participates. 

 

I don’t believe that is relevant, or true.

 

In an attempt to dissuade Mr. Zone that the plant was inevitable, during the public testimony session of the hearing I presented the analogy to Mr. Zone of a firing squad.  There are 10 men with rifles shooting the prisoner.  Each of the ten riflemen assuages his conscience that it is not he who is killing the prisoner - whether or not there were 10 or 9 or 8 riflemen the prisoner would be killed.  

 

At a minimum, call/email/visit your City Councilor and ask that he/she vote to withdraw from the AMP 50 year contract.   Point out that Oberlin just withdrew, that Westerville,Ohio withdrew, that the AMP strategy is a rush to a terrible judgment for Cleveland.

 

Point out that Cleveland is unique among AMP members because CPP service area (grid) exists side by side with First Energy’s service area (grid)  Customers in Cleveland can/will buy power from the least expensive provider. 

 

If, at any time during the 50 year contract period, CPP’s price for power exceeds First Energy’s price, customers will migrate from CPP to FE.  But CPP can’t back out of the power contract with AMP.  So CPP will be forced for 50 years to buy more expensive energy from AMP with the only place it can be sold is to the City of Cleveland.  This was discussed at the hearing and was one of the key risk issues which ION described to the Committee. 

 

In every other community served by AMP, the co-op member is the sole provider of power in that geographical area.  So if the  AMP price goes up, the customer still has no choice and cannot migrate. 

 

Plan on attending the full City Council meeting on Monday February 25 at 7:00PM

ALL GLOBAL WARMING IS LOCAL - WE CAN MAKE A DIFFERENCE IN CLEVELAND, OHIO ON MONDAY FEBRUARY 25, 2008!  FORCE CPP AND  CLEVELAND TO BE GREEN!  TAKE ON THE CHALLENGES OF NEW ENERGY TECHNOLOGIES.  DUMP COAL. DUMP AMP

Matt's logic is flawed

I've heard Matt espouse the same position, that the plant will be built regardless of whether Cleveland participates or not. This may or may not be true, but it's a silly argument, or justification, and I wouldn't be a good friend to Matt and to the community if I didn't point that out. Fatalism is no excuse for piss-poor decisions. And, without long-term commitments based on scaring the beejeebers out of the politicians and the electorate, would AMP get the financing and bond issuing it needs? They need us way more than we need them.

What is at the crux of the issue is whether nor not this is--

--a morally proper decision to make, to support an industry that beggars and poisons our neighbors in Meigs County and contaminates our environment in other locales as well?

--a good business decision to make, to support an industry that is dying, and to lock in our community to the pricing commitment for 40-50 years, whatever that is, to indenture future generations to provide support for the AMP investors? A 5-7 year lock-in would be acceptable, but the AMP folk won't get the financing they need with so little a commitment-- or no commitment.

--a sound political decision to have made, once the whole thing gets into cost overruns, extra charges, excuses, lies, and shape-changing.

 

We need to, as a community, tell these con men to take a hike. We can't afford this sort of nonsense any more.