City of Hermann sues power commissions over coal plant costs

HERMANN, Mo. (AP) — The city of Hermann is suing state utility groups over the costs of electricity from a southern Illinois coal plant.

Mayor Tom Shabel says the costs are much higher than promised when the Prairie State Energy Campus was marketed to smaller towns across the Midwest. He says the city lost close to $1 million last year, causing economic damage to the town of 2,500.

The St. Louis Post-Dispatch reports (http://bit.ly/1bMmPBC) the city this month sued the Missouri Joint Municipal Electric Utility Commission and the Missouri Public Energy Pool, which buy power for municipalities around the state.

The lawsuit alleges that the city's share of almost $1.5 billion in debt issued by Missouri's public power agencies to finance the plant is in violation of the state constitution. Hermann has a share of $37.5 million, which is more than three times its annual operating revenue, according to the lawsuit.

Shabel, who was elected after the deal was signed, says the goal of the lawsuit is to get Hermann out of its long-term contract with Prairie State.

"We tried to negotiate with them," Shabel said. "It was destroying the city, this relationship. We've lost close to $1 million in the last year. . The only way you can negotiate with MoPEP or MJMEUC is to have some sort of club over their head."

The Missouri Public Utility Alliance said in a statement that "management has noted numerous misstatements or inaccuracies in Hermann's filing."

St. Louis-based Peabody Energy, which originally pitched the deal with the power plant, and others say that over time, the power costs from Prairie State will stabilize and become competitive. According to Tom Sanzillo, director of finance at the Institute for Energy Economics and Financial Analysis, the plant's competitiveness has been hurt by other energy sources.

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