Just found some more Love!
It was reported today:
THE SECURITIES & EXCHANGE COMMISSION SERVED PEABODY ENERGY WITH A SUBPOENA RELATING TO THE PRAIRIE STATE ENERGY CAMPUS.
I've spent a lifetime looking for you.
Painesville seems to be stalled on it's quest to find a new city manager.
Maybe they should send a call out to this guy. He above all seems to understand the situation many communities find themselves in. I believe that he understands what a toxic mess our as well as many other city officials have put us in.
The question I have is in the year 2025 will we have solved our energy issues without coal? And if we have what are we than going to do?
Here is the city manager's letter to his city council.
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Letter from City Manager Lewis to the Marceline City Council
MARCELINE - Small Communities are constantly reviewing their financial position and
monitoring their budgets in order to maintain financial stability. The City of Marceline is no
different. We use our budget as a working document to monitor our revenues and
expenditures daily. The City of Marceline has a small operating budget of approximately $8
million, and we especially review large expenditures that affect our financial stability. Due
to these constant changes the City has concluded from our own projections to date, the cost
for 4MWfrom Prairie State will exceed our funds by the end of this FY 2012-2013.
Our calculated projections are as solid as any we have received from Consultants,
Advisors, MPUA, or Prairie State. All the information that has provided to the City of
Marceline since 2004 has led us and prior administration to believe that Prairie State is a
good investment and that very well could be the case in 15 to 20 years. On November 10,
2005MPUA and Prairie State stated their experts’ project Natural Gas to skyrocket and
Coal will drop… However, the opposite has occurred, and projections indicate it will
remain this way for an additional 10 to 15 years…. Unfortunately, the City ofMarceline
with its small $8million dollar operating budget cannot sustain this for two years, let alone
10 years. After discussing this with multiple consultants, one had suggested we would
need to raise our electric rates in order to cover the loss.
Let me make this perfectly clear… This IS NOT a solution, we cannot, nor will we even
consider recommending the possibility of an electric rate increase. This would hinder the
City’s ability to compete with other municipalities State wide for any economic incentive
for future growth and development. And, most importantly larger businesses (Walworth,
Hurt Fab, 8760, Moore Fan, School District, and all small businesses) would be under
distress. The following information is based on all documentation pertaining to Prairie
State, MJMEUC and MPUA through public record of open minuets from 2004 to present:
On May 18, 2004 former City Manager Liz Cupp gave an overview of the PS project. PS
was partnering with Peabody Energy to build a power plant scheduled to go online in 2009.
The power plant is to sit on a coal mine with a lifespan of 40 years, with no transportation
charges, and municipalities have an option of buying into the plant with a letter of intent due
by July 2004.
On July 20, 2004 Duncan Kincheloe from MPUA gave a presentation on PS to construct
two 1500 MW coal fired generators on the mouth of a coal mine located in IL. MPUA/
MJMEUC was contacting their members for involvement in this project, and stated
contracts must be in place by September 2004.
On August 17, 2004 former City Manager Cupp outlined the proposed contract for base
load power, and iterated that the deadline for MG allocation was September 30, 2004. The
contract is for the life of the power plant, with municipalities being owners of the plant and
sharing expenses; On September 15, 2004 in a called special meeting, John Grotsinger of
MJMEUC/MPUA gave a brief overview of the draft power purchase contract. The contract
was based on the life of the plant, with a cost of 3.2 cents per KW, and stated on August 3,
in a Memorandum that projected power costs would be between $32 – 35 per MW… A
commitment agreement will provide financial assistance funded by MJMEUC, interest
accruing, and with no payment due until the plant is online in 2009. Costs associated with
the project before the end of 2004 are $24,000, with additional costs being incurred
monthly during the construction process. MJMEUC advised they would amend the
contract to include a withdrawal clause before construction begins in October 2005; On
September 21, 2004 An Ordinance authorizing execution of a unit power purchase
agreement between MJMEUC and the City, for the purchase and sale of energy from PS
was voted on by three councilmen present… On June 19, 2007 another ordinance was
passed for an amended and restated unit power purchase agreement between the City and
MJMEUC for the purchase and sale of energy from PS; December 18, 2007 Marceline
Citizens question what would happen if PS does not pan out.
PS was to be online in 2009, then it was pushed back to 2010. When I took over in 2011 I
was told that it would be the end of 2011 or first of 2012… Here it is 2013 and these units
are just now coming online, but with multiple delays, and break down of equipment. PS
was to be online by 2011/2012 and the risks for these delays are being forced onto all
municipalities. MJMEUC/MPUA including PS was adamant and guaranteed that ALL
associated costs including future EPA regulations had been calculated for and had been
included in the original price of the 1.5billion dollar project… Now, the cost has risen to
over 4 billion. As I confirmed to date from our consultant, No operating permit has been
issued or drafted for PS. The Units if and when operating will be operating under the
original construction permits. Since 2004 the City of Marceline has spent a total of
$1,044,334 of taxpayer money, and received revenue from the 4 MW in the amount of
$174,346 as a revenue credit.
As of last week the City is projected to spend $1,708,300 in this year’s fiscal budget for the
contractual agreement of 4 MW from PS…. The City is projected to receive revenues from
the sale of 4MW on the MISO spot market in the amount of $344,713 in this year’s fiscal
budget…. That is a LOSS of $1,363,587 in public funds…. Today, PS costs are higher and
benefits are lower, and are expected to remain this way for the next 10-12 years.
This is a substantial loss of public funds that cannot be sustained… Over the past two years
I have made budget cuts in order to maintain our balanced budget. Now, we are currently
operating our utility funds in the red which I do not agree with, and will be working with
department heads to find more cuts… However, even with more cuts and layoffs, that
amount still would not be enough to offset the substantial loss of revenue… Despite the
intentions of others who viewed this as a good investment. Due to cost over runs and near
doubling of price per MW, the financial loss hinders the City’s budget and our ability to
provide full services to the community. If we continue this current path, it will lead the City
into financial instability… Hence, my conclusion of the City’s investment of Prairie State is
that of a
toxic asset in which the City does not physically own, nor does the City have any
control over Prairie State. It is with that, I make the recommendation to the City Council to
pursue all avenues for eliminating any further public funding or increased risk of Prairie
State.
Luke Lewis City Manager Marceline Missouri We might even get a new law director in the process.