Warren County Report

March 9, 2010

Yet another Front Royal solar flare up

AMP-Ohio interest in solar project draws challenges, accusations

By Roger Bianchini

What was expected to be a brief one or two minute update on the status of the solar power proposal at a March 1st  Front Royal Town Council Work Session turned into a lengthy blame game baring old  suspicions, grudges, and perhaps even a little alternative energy paranoia.

Perhaps it was only a coincidence that a scheduled annual evaluation of the town manager’s job performance was slated for a closed meeting at the session’s end.  But immediately after Town Manager Michael Graham informed council of a scheduled March 17, St. Patrick’s Day meeting of the AMP-Ohio Board of directors to discuss the regional municipal power association’s potential involvement in a proposed solar power project here, the pucks began flying higher and harder than in the magnificent USA-Canada Winter Olympic Hockey Gold Medal game.

“What does AMP have to do with it?”  Chris Holloway asked, firing a wrist shot to start things.  Perhaps Holloway failed to recall Graham’s Jan.4 work session report that AMP had been put in contact with Standard Energy representatives to discuss relative costs here versus in Danville where AMP had intentially explored a solar power project.

“We asked why not here? And they said they hadn’t been aware we were as far along in discussion of a solar power project here,” Graham told counsel of AMP’s interest on Jan. 4.

On March 1st Graham said that were Standard Energy and AMP-Ohio to agree to partner in the project any major financial commitment from the town would evaporate.  Things got testy between council and Standard Energy last November when the town was asked about an $18 million up front commitment on a long-term (14-year) purchase of solar power from Standard.  The town had initially been told that private sector investors would produce about $211 million to entirely finance development of a solar power field projected for the Avtex-Royal Phoenix Business Park in town.  The town’s partnership role was initially proposed as two pronged, accessing the regional PIM energy grid through the town’s electric department and becoming the sole purchaser of the power produced here for either its own use or resale at a profit.

When the town and new Standard Energy partners were waltzing around the notion of the town making a major up-front investment, council agreed to issue RFP’s (Request s for Proposals) to see who else and at what price other entities might be interested in bring in solar power to Front Royal.  That process is costing the Town $100,000 to pay a consultant to evaluate the submitted solar RFP’s due in by March 15.

“It seems backwards to me,” Carson Lauder said following Graham’s explanation of the status of AMP-Standard discussions.

“It doesn’t seem right to me either,” Holloway said, adding it appeared to be a sudden turn of events.  Holloway also questioned Graham’s role.

“You weren’t there?” he asked of the first meeting of AMP and Standard Energy.

Graham said he introduced the parties and left.

Déjà vu all over again

“Listen guys, there’s no conspiracy here,” Graham said as triangulated council crosshairs once again sighted him.  “AMP wants to develop a solar power project with whoever they want to.  It could be with SolAVerde, it might be, it might not… And the town will decide whether it wants to do it,” Graham said of how things ultimately proceed.

“It would be like our buying hydro power from AMP,” Graham added of the town’s subsequent involvement were it simply to be as a local facilitator as are some municipalities in Ohio where AMP coal or hydro plants are located.

However Holloway and Lauder continued to insist the AMP-Standard Energy discussion was undermining the town’s RFP process.  They found an ally in Town Attorney Tom Robinett.

“Council directed that this process would be put out to RFP period.  I do not recall AMP submitting a proposal to participate in the RFP process … and now they’re going to be able to submit a proposal… long after the deadline has passed,” Robinett commented.

“No, they’re not submitting a proposal,” Graham said.

“So AMP then is not going to do an RFP?  They’re going to propose something that is not responsive to the RFP that is completely different and if we accept it then all the money spent on the consultant’s evaluation would be wasted”, Robinett replied of his understanding of what was happening.

Hrbek responded that as an independent entity Standard Energy could enter into business negotiations with anyone it wanted to regardless of council’s decision to go to RFP’s.

“We wanted a better deal,” Holloway pointed out to initiating the RFP process.

“We had a company come to us looking to invest, and looking at us as an investor,” Shae Parker reminded council. “And we said well, before we invest with you let’s see if we can build the same thing -- trying to undercut that company – cheaper.  If they still decide to build something and we never accepted a bid, they can go and do that as I understand it.  That’s the whole market of free enterprise, capitalism.  It wouldn’t stop us if we like one of these RFP’s from another company to find our own land and go build it on our own.  But we can’t stop another company from doing business.—And we got the idea from them in the first place,” Parker pointed out.

“I think AMP is circumventing the RFP process,” Lauder said,  nonplussed by Parker or Vice Mayor Bret Hrbeks observations on the nuances of free market capitalism.

“I think I agree with Carson,” Holloway added.  “I think we should wait for all the RFP’s and everything because I think they’re just trying to get around it… For one thing, Mikes known about this for how long – when did you all have that meeting at your house…?

Graham replied the referenced meeting occurred on Dec. 5th at a DC hotel, later identified as the Hilton, after an earlier planned meeting at EDA offices at Royal Phoenix was cancelled.  The town manager said he introduced officials of both companies and left.

 

What’s the big deal?

At several points Graham summarized his perspective in an attempt to ally council fears.

“If AMP comes back in and they say regardless of the RFP – ‘Front Royal, we want you to buy 3 megawatts of solar power, do you want to buy it?’ … it’s a decision of council whether they want to go out and do the project themselves, buy it from an independent group of people, or whether they want to even entertain AMP.  We can say to AMP, we’re not interested, we’re doing our own.  It is purely council’s decision which direction they want to go.  We have two options now, instead of one… If we want to get one of the top three bids and it’s a better price and the financing works out the way you want it to, then go with them.  To be honest I don’t really care which way you go.”

Mayor Eugene Tewalt agreed and pointed to the benefit of the AMP option.

“If AMP comes in today and says ‘we’re going to build it and leave the town completely off the table,’ to me I don’t see why we’d even get involved in [the development process],” Tewalt said.

 

Blame game

But Holloway criticized the timing of the information coming forth and blamed Graham for wasting $100,000 plus of town money.—“I think it’s ridiculous.  If it was known back then there was a possibility of them coming and doing this we should have put it off because it was all in the works back them,” Holloway said.

“They could take it to their board meeting and absolutely vote it down,” Graham pointed out.

“If AMP intended to make a proposal at that time or at any later time, why didn’t AMP propose something in that RFP competition?” Robinett said, jumping back into the fray.

Graham replied they hadn’t progressed far enough along in their information gathering process to make a proposal.

“Well that means that they missed the deadline,” the town attorney reasoned.

“Okay, throw them out then.  Look guys, if you don’t want AMP to participate that’s fine,” a somewhat exasperated Graham said.

“I think it would be a great thing but they should have done it the right way,” Holloway countered of potential AMP involvement.

After ongoing sparring between Holloway and Robinett on one side and Hrbek and Parker on the other over the ethical and legal implications of AMP’s  alleged end run of the RFP process, Tewalt jumped in to defend the town manager.

“There’s one thing I want to get across here tonight—Mike’s hasn’t done anything wrong.  This council is the one that told Mike to put the RFP out.  So, don’t get on Mike because… ‘We didn’t know’ or ‘we didn’t have all the information.’ It seems to me like Mike’s being made the scapegoat tonight and Mike’s not the scapegoat.  Mike is telling you exactly what he heard today through AMP- Ohio.  If we’d known it three months ago maybe we wouldn’t have put the RFP out.  But the RFP’s gone out and comes back on the 15th of March.  What we do with it is up to us… We deal with them or deal with the RFP’s or decide on somebody different.  We can sit and argue all night—but it’s not Mike’s problem.  It’s our problem because we’re the ones who sent out the RFP and spent the $100,000… So let’s put it on our table, on our plate—it’s not Mike’s plate.  He’s given us the information that we needed and we ran with it thinking we did the right thing and maybe we didn’t do the right thing.  But we were following Mr. Robinett’s opinion to send out an RFP. So we did.  So let’s put the blame where the blame’s suppose to be. Whether it’s on Tom [Robinett] or on the council – and I thinks it’s on the council tonight because we’re the ones who told him to put it out.”

After that scathing mayoral appraisal. Lauder subtly changed the subject, asking why the town’s energy director and AMP board member wasn’t present to answer questions at the work session.

“The first reason he’s not here is because he didn’t think there was anything important to tell you,” the mayor shot back.  “All Mike was telling you was that AMP had consideration on the table with SolAVerde or whoever… He was just giving you the information he heard today from AMP-Ohio.  So why jump on Mike?’ an increasingly perturbed Tewalt replied.

“I’m not jumping on Mike,” Lauder said.

“I don’t think anybody jumped on Mike,” Holloway added.

“Well I think we have. And whether we did or didn’t that’s your opinion,” the mayor replied sharply.  “But the point is Joe Waltz is on vacation and he thought it was going to be something simple tonight and I did too.”

First mistake, Mr. Mayor—Never in River City and certainly never with this council is anything simple.

 

AMP who?

The town became a partner in the AMP- Ohio municipal network about three years ago during the previous council’s tenure when it committed to a 50-year contract on the purchase of coal fired power and an investment in existing and planned coal fired power plants in the Ohio Valley.  Town Energy Director Waltz  brought the municipal partnership to the town’s attention as a potential hedge against long term upward market pricing trends.

AMP is also involved in developing sustainable energy sources and the town has purchased some hydro power, 5 megawatts in Phase One of AMP’s hydro expansion along the Ohio River, and is currently negotiating the purchase of 2.7 megawatts more hydro power in Phase Two of AMP’s hydro projects (at least they have dams that work).

The goal of the AMP partnership is to insure members of lower, long term energy rates from a diversifies portfolio mixing carbon and sustainable energy sources as a hedge against traditionally rising market prices and sharp fluctuations in any one power source.