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Plans for $17.3 million power plant go forward

July 24, 2002|by STACEY DANZUSO

chambersburg@herald-mail.com

CHAMBERSBURG, Pa. - Chambersburg Borough Council threw its support behind an ambitious $17.3 million project Tuesday to build a new power plant.

The council awarded conditional approval in May to Wartsila for four diesel engines and the construction of a new power plant in the Chambers-5 Business Park in the south end of Chambersburg.

The Borough Council finalized the contract Tuesday and authorized borough staff to proceed with a power supply agreement, work on a $20 million bond issue and the purchase of five acres in the business park from the Chambersburg Area Development Corporation.

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The additional 20 to 25 megawatts of electrical generation will improve reliability for borough customers, protect against future price spikes and provide local control, Borough Manager Eric Oyer said.

The council has until Aug. 7 to finalize the contract with Wartsila and ensure it can line up financing and a power supply contract that will provide significant savings to justify the cost of building the facility.

By awarding the contract, the council dismissed a proposal from Hagerstown-based Allegheny Energy Supply to sell the borough a 25 percent interest in its 88-megawatt plant in Guilford Township that opened last year.

Consultants from Downes and Associates Inc., who have been analyzing the borough's power supply options, said economically it made more sense for the borough to build its own facility.

"Downes did a thorough analysis. The bottom line was not as favorable financially or operationally," Oyer said.

With the new facility, the borough will save $1.6 million annually. After subtracting a debt service of $1.2 million, the borough will see a net savings of $400,000 a year, said George Owens, a consultant.

Owens said the estimate is conservative, and he anticipates even greater savings.

"At the end of 20 years, the debt service goes away and we should still have an asset that will last another 30 years," Oyer said of the proposed facility.

Owens recommended the borough pursue a power supply agreement with Detroit Edison Energy Trading, which along with Wartsila, he called a "perfect match."

Council President Bill McLaughlin asked for reassurance before voting on the deal.

"Can we assume there is no better deal out there?" he asked.

Owens assured him it is a sound investment.

"This came out better than anyone believed it could come out," he said.

Tuesday's vote ended more than a year of discussion that was sparked by concerns local electricity costs could skyrocket the way they did in California over the last couple of years.

The vote was unanimous. Councilman Scott Thomas, who opposed the conditional contract award in May, was absent.

The new facility will add to the 7.5-megawatt generation capacity the borough currently has to cover the need generated during peak times, like hot summer days. The proposed 20 to 25 megawatt station would cover the variable usage on any given day, allowing the borough to enter into a wholesale power agreement to purchase just its basic power load.

The cost of the new facility does not include the purchase price of the land or the cost to extend the gas transmission line.

The new power plant could be up and running by June 2003.

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