Feb 14, 2008: New R.W. Beck feasibility study shows AMP-Ohio costs out of control
CLEVELAND -- In January, the R.W. Beck engineering consultant firm completed an update to its feasibility study for the
controversial proposed AMP-Ohio Generating Station showing the projected costs continuing to climb out of control.
On Tuesday, Ohio Citizen Action obtained
a copy of the new study through an Ohio Public Records Law request.
Here it is: American Municipal Power Generating Station
Initial Project Feasibility Study Update, R.W. Beck, January, 2008, 3.57 MB pdf.
Each AMP-Ohio community considering whether to buy into this proposed plant needs to know what is in this document.
Even if a city council has already voted, they should take another look at what they are buying into, since they can still back out of the deal by
February 29.
You will find, among other things, that --
1.The total cost of the project including financing expenses is now $3.391 billion (page 7).
Since the projected cost of the plant was $1.2 billion in October 2005, that means that the construction cost of AMP-Ohio coal plant has
been rising by $2 million a day -- every day for the last two years.
Further, there is no guarantee that the cost increases are over. R.W. Beck has confirmed that 'the final cost will not be determined until
early 2009' (Ivan Clark, Principal and Senior Director,
R. W. Beck, testimony,
Ohio Power Siting Board, January 4, 2008, page 26, 4.88 MB pdf).
The projected construction cost of the plant is now $2.949 billion (page 7). This is a a $400 million increase over Beck's estimate
seven months earlier, in June 2007.
Projected construction costs
Full page cost chart with sources.
2. The cost of power from this plant to participating communities will be at least 8% higher than R.W. Beck's projection in June 2007.
And that's in Beck's "base case", i.e. the best case. Beck now acknowledges that federal carbon dioxide reduction legislation could drive this
cost far higher, possibly as much as 38% higher than Beck's projection last June, which communities have relied upon in making their decisions
to buy into the plant.
Cost/megawatt to participating municipal utilities
2015
2020
2025
2030
20 yr ave
Jun 2007 study
$64
$75
$83
$92
Jan 2008 study base case
$69
$81
$89
$98
Increase over Jun 2007 study
$5
(8%)$6
(8%)$6
(7%)$6
(7%)$6
(8%)
Jan 2008 study high carbon dioxide case
$79
$100
$118
$134
Increase over Jun 2007 study
$15
(23%)$25
(33%)$35
(42%)$42
(46%)$30
(38%)
Jun 2007 study data includes carbon dioxide control costs.
Jan 2008 study data comes from Figure 3, page 21.
Jan 2008 high carbon dioxide control cost data comes from Figure 4, page 22.
3. R.W. Beck's new construction cost projection assumes that "All construction permits [will be] approved by March 2009" (page 2).
This is highly questionable, since the air permits are likely to be challenged and draft water permits haven't even been issued as of Feb 2008.
If any legal proceedings lead to reversal of permits, construction could be halted or permits would have to be reworked, leading to delays and
significant extra costs.
4. "... it is unlikely that a full fixed-price contract can be cost effectively negotiated with an EPC Contractor" (page 9).
The Engineer-Procure-Construct Contract represents the large majority of construction costs.
5. See Beck's list of "moderate to high risks" of this plant (pp. 22 - 23).
Full coverage of AMP-Ohio Generating Plant proposal.