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AES defends Warrior Run plant

February 25, 1997

By STEVEN T. DENNIS

Staff Writer

AES representatives told Washington County Commissioners that the benefits of the Warrior Run project under construction near Cumberland, Md., far outweigh the costs Allegheny Power customers will pay in higher electric rates.

Allegheny Power officials had waged a campaign to buy out the 30-year contract with the plant. They said customers would face a 13 percent rate hike in the year 2000 after the new plant comes on line. Officials of the utility also estimated the plant would cost $1.7 billion more than alternative power sources over the 30-year life of the contract.

Steve Hase, development manager of AES Warrior Run, continued to dispute the figures, and said AES has entered into more than $200 million in contracts and obligations to build the plant.

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Richard Tabors, an AES consultant from MIT, estimated rate increases for the first year Warrior Run comes on line wouldn't be more than 7.6 percent. Tabors said that over the life of the 30-year contract, the effect on rates could range from a decrease of .5 percent - provided that alternative fuel prices are high - to as much as 4.7 percent.

Tabors said after the presentation that Warrior Run's coal-produced electricity probably will cost more than alternative sources because prices for natural gas have fallen dramatically since the contract was first signed in the 1980s.

Tabors said there are no guarantees that natural gas prices will stay low, whereas the Warrior Run contract is fixed for 30 years.

"Think of it as a fixed-income mortgage versus an adjustable-rate mortgage," Hase said.

Hase said the plant would bring 600 to 700 construction jobs between now and its completion 65 to 70 plant operator jobs, benefits to Maryland's coal industry, and the benefits of a clean-burning plant.

Hase cited a study estimating the plant's positive impact on the area economy at $3 billion over 33 years.

Both sides agree that the subject is moot; Allegheny Power has stopped negotiating a buyout with AES and construction at the plant continues.

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