Cleveland is among 60 municipalities across Ohio paying twice as much for electric power after buying into $5 billion power plant.
CLEVELAND - Cleveland is among 60 municipalities across Ohio paying twice as much for electric power after buying into a $5 billion coal plant.
The cost of generating electric power nationally is at an all time low, but not for cities like Cleveland that became part owners of the Prairie State Coal Plant in southern Illinois.
Cities are now being billed more than twice as much as market rates for electricity generated by the plant that began operating a year ago, but producing below capacity. Some cities have already increased electric rates to customers as a result.
Rate hikes made headlines for three cities in northern Illinois this summer that also purchased power from the plant. One town in Missouri even dumped its contract with the plant because the cost of electricity far exceed what the town could afford to pay.
And some critics of the plant predict electric rates will go up for others as well.
In Galion, Ohio, city council president Don Faulds is leading an effort to ask Ohio's attorney general to investigate the deal the city entered into that is now far exceeding the "cheap electricity" the city was promised.
"If we were to experience a number of increased billings to us, we may be forced to increase rates," Faulds said.
In Cleveland, city councilman Brian Cummins also signed another letter, along with Painesvile officials asking for a similar investigation.
"We have a lot of questions," Cummins said.
An exclusive 5 On Your Side investigation into the plant found half the plant, Unit 1, will shut down in upcoming weeks due to "design and construction deficiencies". Unit 2 will shut down early in 2014 for repairs as well.
According to documents filed with federal regulators, the plant is operating "below expectations" at just 62 percent capacity.
"What we were told back in 2007 relative to providing lower than market cost of power clearly does not seem to be the case," Cummins said.
Meanwhile, the Institute for Energy Economics, an advocacy group opposed to coal-fired power plants, insists cities were overpromised when it came to electric costs.
Executive Director Sandy Buchanan said the "plant is not producing at the rate it promised".
Even so, Cleveland's Public Utility Director Paul Bender insists electric rates for the 77,000 Cleveland Public Power customers "will not go up simply by Prairie State itself" but admits "it is more expensive than we originally anticipated."
In addition, Bender conceded that "we're going to have to make some decisions about Prairie State along with all of our power supplies."
To that end, he is spending $200,000 for a consultant's report evaluating Cleveland's energy needs that should be ready by the end of the year.
The U.S. Securities and Exchange Commission is also investigating business dealing surrounding the plant and municipal bonds sold to cities, like Cleveland and others across the state.
Neither the plant, nor American Municipal Power that helped broker the deal to cities, returned calls or emails for comment.