CMEEC officials pitched their investment proposal at a recent special Town Council session. The cooperative is considering investing in two Massachusetts power plant projects - in Ludlow and Taunton - and one in Norwalk, said CMEEC Executive Director Maurice Scully.
"When you own a piece of a power plant, you're able to get it (electricity) at what the actual cost to produce it is," Scully said. "In the marketplace, the last (generation) unit that signs on to run is the most expensive to run and they are the ones t at set the prices that all the other power plants are paid."
None of the three power plants that CMEEC is asking Wallingford officials to invest in is expected to be operational until 2010 or later, Scully said.
But he said that time frame fits in well with CMEEC's future need for electricity; while the cooperative has filled it power procurement needs for the next few years, it needs to lock in lower costs power supplies from 2010 to 2020 and beyond. About a third of the amount of electricity CMEEC purchases for its members each year is used by Wallingford.
The power plant developers are looking to secure customers that would purchase the electricity those facilities would produce as they seek to finance their respective projects. With that in mind, Scully said CMEEC officials are looking for Wallingford and the five other municipalities that make up the cooperative's membership to decide whether they want to commit to projects by the end of March.
"If they have high quality entities involved, they will be able to get better financing terms," Scully said. If CMEEC decides to take an ownership stake in any of the three projects, it would finance a portion of the cost of the power plants through tax-exempt, 20-year bonds, he said. Wallingford and the other members of the cooperative would pay back their shares of the investment in the projects through ratepayers' monthly bills in each of the communities.
CMEEC and Wallingford already have track records of financing power plants. The town took a $49 million stake in restarting the Pierce Station power plant on East Street in Walligford.
The power plant, which was restarted last fall, only generates electricity during peak usage periods. But unlike Pierce Station, the three projects that CMEEC wants Wallingford to invest are what is know as "base load" power plants, which means they would generate electricity on a daily basis.
The Ludlow and Taunton plants would each generate a total of 263 megawatts, with 50 megawatts from each facility available to CMEEC. The Norwalk plant would generate 50 megawatts, with 30 megawatts available to CMEEC. Some of the dozen residents who attended the meeting, as well as Wallingford Mayor William Dickinson Jr., seemed skeptical about whether the town should invest in any of the projects.
"You've said some vague things tonight that are very difficult to analyze," said Wes Lubee Jr., a Montowese Trail resident. Dickinson questioned whether it made sense to become involved with either of the Massachusetts projects because Connecticut's transmission system limits how much power can be imported from out of state.
"Wouldn't it be better to be in-state?" Dickinson said of the Norwalk plant. But Council Chairman Michael Brodinsky said the proposals CMEEC is pitching to Wallingford merit serious consideration.
"The key is not to focus solely on the cost because the model for these plants is that the return on our investment is going to outstrip the cost involved in building it," Brodinsky said.