Largest Remaining Investor Still Stuck In Plant Washington Boondoggle

At the February 16 meeting of its Board of Directors, Snapping Shoals EMC had a chance to do the right thing and end its involvement in developing two new coal-fired power plants in Georgia. It did not.

Snapping Shoals Electric Membership Corporation (EMC) is one of 42 rural electric co-ops in the state, and provides power to about 95,000 meters in an area southeast of Atlanta. It is a member of a dwindling consortium of these EMCs known as Power4Georgians (P4G), which came together in 2008 to plan construction of coal-fired Plant Washington; its twin, Plant Ben Hill, was added to their plans later. Four EMCs pulled out of P4G in 2009, citing economic concerns and financial risk due to EPA’s upcoming public health regulations. Former consortium leader Cobb EMC, under new leadership after frustrated members replaced four of ten board members in a November election, voted in January 2012 to follow suit and exit the plan.

It is unclear if and how Snapping Shoals and the other three remaining EMC partners will be able to proceed, and whether they’d have to shoulder a larger financial burden to cover Cobb EMC’s former 40% stake in the project. Snapping Shoals has already contributed about $9 million, or roughly $100 per member, without any evidence of proper accounting to show how the money has been spent by P4G’s chief, Dean Alford. Alford’s company, Allied Energy Services, received a no-bid contract to develop the coal plants.

Photo Credit: Laura Moon, Marietta Daily Journal

A Snapping Shoals EMC member formally requested to attend the February 16th board meeting and invited Cobb EMC member and former utility generation planning executive Mark Hackett to speak on her behalf. (Because EMCs are co-ops, customers are considered member-owners with the right to participate in decision-making and elect board members.) Mr. Hackett reported that while he was only allotted ten minutes on the agenda, the board seemed interested in his presentation and listened for about half an hour. The focus of Mr. Hackett’s presentation was the use of financial pro forma statements to assess economic impacts and risk for projects like Plant Washington. He pointed out that, according to Cobb EMC spokesman Sam Kelly, pro forma statements have not been developed to assess Plant Washington even though this is standard industry practice. He also compared Plant Washington to his estimate of the current power demand of the consortium EMCs and showed that it seems likely that Plant Washington exceeds the base load power needs of its EMC participants.

“If you build a power plant that provides more baseload power than you need, it’s like buying a fancy car that you hardly ever drive. You’re stuck paying the note without getting the benefit…and for a coal plant that note is very expensive. If the plant is being built purely on the speculation that all of its excess power will be sold in the bulk power markets, the project places a great deal of risk on the captive owner/customers of the consortium EMCs. Stockholders in merchant power companies have the choice to invest in these risky investments. EMC customers have no such choice,” he said.

Hackett reflected that his presentation seemed to be the first time board members had heard from an engineering perspective other than Mr. Alford’s.

“I’ve never met a project developer who won’t tell you his project is great for you, and you need to do it. These guys need another perspective, and I hope I was able to raise some questions that will encourage them to dig a little deeper. I believe if the consortium EMCs would conduct a study with an independent consulting firm they would see that there are much more economical power supply options with lower risk for their members that they could pursue instead of Plant Washington.”

Snapping Shoals and the other three EMCs who are still clinging to the coal plant project (Central Georgia EMC, Washington EMC, and Upson EMC) indicate that they will be considering their involvement over the coming months. Their boards meet monthly. We encourage anyone who pays an electric bill to one of these EMCs to call your CEO and local board member. Ask them to pull out of Power4Georgians and invest in clean energy solutions like energy efficiency and solar power instead!

 

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1 Comment

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Kudos to the Snapping Shoals EMC member and Mr. Hackett for bringing a new perspective to the EMC board. It sounds like this is a big step in the right direction even if they haven’t revisited their commitment.


Comment by John D. Wilson on February 22, 2012 11:25 am


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