The report, "No Evidence of Turnaround at Prairie State " presents recent data from American Municipal Power and Northern Illinois Municipal Power Agency, two of the eight public agencies that now own Prairie State along with Paducah Power System. The report coincides with a growing public backlash against Prairie State, which was sold as a reliable, affordable energy provider by Peabody Energy to municipal power providers in 2012.
"We are seeing a groundswell of skepticism among residents and businesses in the communities affected by this exceptionally questionable deal," said Sandy Buchanan, IEEFA executive director.
Residents of the Chicago suburb of Batavia last month filed a class-action lawsuit against Indiana Municipal Power Agency, one of the public-utility owners of Prairie State, and several consultants. The suit alleges that Batavia "is bound, for at least decades, to an unaffordable and unreliable source of power that is draining the city's resources.
A Paducah city commission meeting this week included testimony on how a doubling in residential and business electricity rates has dealt a harsh blow to the economy of the city, which relies solely on Prairie State for electricity. In a presentation to the commission, Prairie State officials conceded that the plant has not lived up to expectations and that the electricity it produces is significantly more expensive than originally projected.
The plant has had a series of accidents and malfunctions since it opened in 2012, according to Interim Prairie State CEO Marc Gerken, who is also president of AMP. He told the commission that it will take at least three more years to stabilize operations at the plant, and rates would probably remain high until then. "This is nothing that we're proud of," Gerken said. Gerken also cited a series of problems caused by the characteristics of the coal that Peabody Energy sold Prairie State for use at the plant: "it's abrasive, high sulfur, and high ash."
Council members and residents were not placated by assurances from the Prairie State representatives that the plant - which is built on a "mine-mouth" model that relies on coal from an adjacent Peabody mine - would eventually produce as promised. "I'm not hearing an answer for what kind of relief we're going to have for our citizens and business in Paducah and the other cities that are impacted by this," said city commissioner Sandra Wilson.
In other developments:
+ Ray McLennan, the chairman of the Paducah Power Board, resigned and said in an email to city officials that the Peabody coal supplying the power plant, "seems to contain more rocks than we believed it would," and that, "this has contributed to several breakdowns."
+ The Paducah City Commission passed a resolution urging the Paducah Power Board to hire an independent expert to investigate the information on which the decision to invest in the Prairie State campus was made, and to hire an expert in utility matters to investigate current financial obligations.
The Institute for Energy Economics and Financial Analysis , based in Cleveland, OH, conducts research and analyses on financial and economic issues related to energy and the environment. The Institute's mission is to accelerate the transition to a diverse, sustainable and profitable energy economy and to reduce dependence on coal and other non-renewable energy resources.
