CPV seeks Md. OK to finance St. Charles plant

Firm tells House committee it needs long-term contracts

Friday, Sept. 11, 2009

However, the project manager for the proposed 640-megawatt plant told the House Economic Matters Committee on Wednesday that the more-than-$500 million construction cost can only be financed if the Maryland Public Service Commission authorizes its pending request.

"You need the financing in order to construct the project," said Joseph G. Atwood, vice president for Competitive Power Ventures. "If you don't construct the project, you can't realize the savings."

During the legislative briefing on the electricity market structure, Atwood outlined the Silver Spring-based company's vision for CPV St. Charles, which would generate enough electricity to power 600,000 homes, relieve pressure on Maryland's congested energy grid and reap billions in economic gains.

The PSC has already signed off on the project itself, but CPV officials submitted a petition in July to order utilities to enter into 20-year contracts to buy power from the Charles County plant.

But the PSC has never authorized long-term contracts and some lawmakers expressed concern about such a lengthy commitment that would lock in prices, regardless of market conditions.

CPV is willing to consider a shorter duration, Atwood said, but noted that a shorter-term contract would cost more, similar to a mortgage. The company wants to "provide maximum benefit to the customer," he said.

The request for mandatory long-term contracts is "simply representatives of the market failure we have right now," said Maryland Energy Administrator Malcolm D. Woolf.

In addition to saving consumers hundreds of millions of dollars per year in reducing by 30 percent the amount of power Maryland imports, Atwood said the new plant is environmentally sound and would pump millions into the local economy and tax coffers. He highlighted the use of recycled effluent water from a nearby treatment facility to cool the plant.

CPV estimates that 350 jobs will be created during construction. Upon completion, which is currently slated for June 2012, the plant will employ 25 workers, Atwood said.

Despite Atwood's happy tune, retail suppliers who compete with the major utilities said long-term contracts shift the financial risk from the supplier to the ratepayer in a volatile energy market. Even when energy prices go down, customers are locked into the fixed rate, they said.

"We want to put out products where we suppliers assume the risks, not you the ratepayers," said Jay L. Kooper, president of the Retail Energy Supply Association.

New generation is not the sole answer to Maryland's energy shortfall, Atwood said, acknowledging the need for expanded transmission, conservation and demand service.

Glen Thomas, a spokesman for PJM Power Providers Group, said it would be cheaper for the state to import energy from outside its borders rather than incur the high cost of building a new plant.

Atwood disputed that claim.

"Currently certain areas of Maryland are facing substantial congestion charges because it's very difficult to get electricity to those areas," he said.

"Our view is if you put additional supply into a constrained load zone, the additional supply will serve to reduce congestion charges, and ultimately, energy charges."

abrody@somdnews.com