Pharos-Tribune

July 17, 2013

Questions remain that time will answer


Pharos-Tribune

---- — To say last month’s Logansport Utility Service Board meeting was not your typical meeting is an understatement.

For starters, members of the LMU union work force appeared before the meeting started to confront USB member Todd Miller. Then during the meeting, Miller raised his voice to criticize LMU Manager Paul Hartman, whom he alleged shared a private conversation about shutting down LMU’s generating plant on Race Street. Miller said the information the union had could only have come from Hartman, but Hartman denied that he had told the union anything about the conversation.

However the union members found out about the conversation is maybe not as pertinent to the future of the utilities as the point Miller made in the meeting. Simply put, LMU now has the capacity to secure all the power it needs for its customers from its interconnection with Duke Energy. Miller said his own projections indicate LMU could save millions if it shuts down the plant and keeps LMU workers on the payroll until a new plant is built.

If city officials would allow LMU to take that course of action, there obviously would have to be questions about what to do with the union workers until the plant is built. But that question is secondary to others, including the one Miller raised: Why not close the generating plant if it is draining LMU of its cash?

One advantage of taking that course is that affords LMU an opportunity to renegotiate its existing contract with Duke and securing either a lower rate or an earlier exit from its existing contract which is projected to raise rates over the next four years. Both those issues could potentially be renegotiated, and renegotiation also would allow the city to pursue lower wholesale rates from the Indiana Municipal Power Agency, AEP, Vectren or other utilities.

Local utility rates are an issue, not just for those of us who have our computers and air-conditioning cranked up this summer, but for industries. Former Indiana University Business Research Center Director Morton Marcus found in his own analysis of local rates that LMU’s two largest industrial electric customers would be saving $50,000 a month if LMU’s industrial rates were simply at the Indiana state average. Savings for those two companies alone over the course of a year would total $1.2 million that could be reinvested in those plants and work forces, or to pay off debt. That figure doesn’t take into account all the money other small businesses and industries would be saving if industrial rates were at the state average or lower.

How long this issue will play out is a question that may be answered over time, but the wholesale power and generating plant issues have been issues for more than a decade.

Meanwhile, the annexation of land south of the city to include the site of a new power plant begs other questions. One is “Does this mean the city has raised enough private financing to build a $450 million waste-to-energy plant on the site it has identified?” If the answer to that question is yes, then the next question is how much annexation will cost consumers on their electric bills, and if consumers would rather pay lower rates than annex property owners who have nothing to do with the power plant other than the fact that they live near the proposed site.

Another question is this: “If city officials don’t raise enough financing, will they build a natural gas power plant on the same site?” If the answer is yes, then why invest in the site at all given the fact that LMU owns a plant at Seventh and Race that faces $32 million in costs to shut down, according to LMU? Why not simply retrofit the generating plant with natural gas generation and save much of the costs of shutting down the plant?

Finally, the question for residents who have just been annexed into the city is this: “If a power plant is not built on the site that has been identified for the plant, will their annexation stand?”

These are questions that can only be answered over time, but they are intriguing questions that deserve public deliberation and discussion because of the impact they have.

Dave Kitchell is a columnist for the Pharos-Tribune. He can be reached at ptnews@pharostribune.com.